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Federal tax update

from by David S. De Jong, Stein Sperling Bennett De Jong Driscoll PC

In Veriha v. Commissioner, 139 TC No. 13, the tax court determined that each self-leased vehicle was a separate item of property for a purpose of the recharacterization rule. The rule converts otherwise passive income into nonpassive income for the purpose of preventing taxpayers with other passive losses from artificially creating passive income to permit offset. The court based its decision on the fact that there were separate lease agreements and indicated that it might reach a different result under alternative facts.

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