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Federal Tax Update — February 2019

from By David S. De Jong, Esq., CPA, Stein Sperling Bennett De Jong PC

In Doyle v. Commissioner, TC Memo 2019-8, the Tax Court determined that a settlement received by an individual who was fired for “whistleblowing” which allegedly caused stress bringing on multiple physical problems was taxable. The complaint said nothing about emotional or physical injuries (the CPA reported the settlement payments over two years on a Schedule C, offsetting the payments in one year by the words “personal injury” and in the other year by the words “pain and suffering”).

In Siegel v. Commissioner, TC Memo 2019-11, the Tax Court allowed a deduction to the pre-2019 payor of lump sum alimony where a contempt order had been issued. The court distinguished a contempt order from a money judgment, payment under which would not have been deductible to the payor.

In Letter Ruling 201903017, the IRS indicated that employer provided “snacks,” even when continuously offered, are a de minimis fringe benefit, while meals are not and accordingly are subject to the “convenience of the employer” test to determine taxability. more

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