PODCAST Now Available 110-minute webinar with Q&A
This event was recorded live with Stafford Publishing on Thursday, November 10, 2016
“Section 1341 “Claim of Right” Refunds: Calculating Tax Benefits, Avoiding Double Taxation on Repayments and Claw-Backs”
Overview: The June 2016 tax court case of Udeobong vs. Comm’r illustrated the importance of tracking payments and clawbacks of previously taxed income. In Udeobong, a taxpayer who received insurance payments in one year, repaid the amount in the following year and then collected the money in a subsequent year, ended up paying tax on the amount twice due to his failure to pursue his claim of right to credit or deduction in the year he repaid the income.
Taxpayers facing income clawbacks or other repayments or forfeitures of previously reported income may request a refund under the claim of right doctrine of Section 1341, but must do so in the year of the repayment. However, identifying circumstances in which a claim of right deduction can be challenging, and failure to establish that the taxpayer has met the requirements to document a Section 1341 claim can result in costly tax consequences.
While the mechanics of reporting a Section 1341 claim are relatively straightforward, taxpayers have options as to how to claim the optimal tax benefit from the claim. Advisers should be able to determine whether claiming a Schedule A deduction or calculating and claiming a credit provides the best tax benefit. Advisers should also be aware of the impact of claim of right tax benefits on state income tax returns.
Richard S. Lehman and the panel will provide tax advisers and compliance professionals with a thorough and practical guide to claiming deductions or credits under the “claim of right” doctrine of Section 1341 of the Internal Revenue Code. The panel will detail the requirements for evaluating and claiming tax benefits due to claw-backs and other repayments of previously claimed income, including critical guidance on proper timing for making the claim, and will detail where and how to report the claim of right credit or deduction.
These and other important topics will be discussed:
• Identifying circumstances in which a claim of right claim is appropriate
• Documenting Section 1341 claim for tax benefit
• Reporting a Section 1341 claim for tax benefit
After the presentation, the panel will engage in a live question and answer session with participants to answer your important issues directly.