IRS Offer-in-Compromise vs. Chapter 7 Bankruptcy

Hurricane Harvey Irma, IRS casualty loss deduction, IRS car and truck deduction, IRS coronavirus tax relief

A common misconception is that you cannot discharge federal tax debt in Chapter 7 bankruptcy. In fact you can both discharge some of your tax debts under Chapter 7 Bankruptcy, as well as settle your debts with an Offer in Compromise.

Chapter 7 Bankruptcy

Tax debt is dischargeable in Chapter 7 bankruptcy if they meet specific requirements under the Bankruptcy Code. These requirements are often called the 3-year, 2-year, and 240-day rules.

  1. The 3-year rule. The return was due at least three years ago before you file for bankruptcy. For example, Bob’s 2010 return was due on April 15, 2011. The earliest he can file for bankruptcy for his 2010 tax debt is April 15, 2014. Note that a tax return extension will also extend the 3-year rule.
  2. The 2-year rule. The return must be filed at least two years before the bankruptcy filing. For example, Bob’s 2010 return was due on April 15, 2011, but didn’t actually file his tax return until October 31, 2011. The earliest he can file for bankruptcy for his 2010 tax debt is October 31, 2013.
  3. The taxes were assessed at least 240 days ago. For most taxpayers, the taxes are considered assessed as of the date the return was filed. However, if you file an amended return or are audited and owe additional taxes, then the 240 days on the additional tax begins to run when the additional taxes are assessed.

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Business Expense 101 – Tax Deductible Car and Truck Expenses

IRS notice of deficiency, audit reconsideration

There are several different types of tax deductible car and truck expenses that individuals and business taxpayers are eligible to deduct on their return. The record-keeping requirements are the same no matter what type of tax deductible car and truck expenses you claim.

Deductible Vehicle Expenses

There are two methods of claiming car and truck expenses. You can either claim standard mileage or actual expense. The IRS standard mileage rate differs year-to-year. 

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Casualty Loss Deductions

Hurricane Harvey Irma, IRS casualty loss deduction, IRS car and truck deduction, IRS coronavirus tax relief

Hurricane Harvey and Irma & IRS Casualty Loss Deduction

Casualty Loss Deduction – an Overview

Harvey Disaster Areas

In Texas : Aransas, Austin, Bastrop, Bee, Bexar, Brazoria, Burleson, Caldwell, Calhoun, Chambers, Colorado, Comal, Dallas, De Witt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Grimes, Guadalupe, Hardin, Harris, Jackson, Jasper, Jefferson, Jim Wells, Karnes, Kleberg, Lavaca, Lee, Liberty, Madison, Matagorda, Milam, Montgomery, Newton, Nueces, Orange, Polk, Refugio, Sabine, San Augustine, San Jacinto, San Patricio, Tarrant, Travis, Tyler, Victoria, Walker, Waller, Washington, and Wharton Counties.

In Louisiana : The parishes of Acadia, Allen, Assumption, Beauregard, Calcasieu, Cameron, DeSoto, Iberia, Jefferson Davis, Lafayette, Lafourche, Natchitoches, Plaquemines, Rapides, Red River, Sabine, St. Charles, St. Mary, Vermilion and Vernon.

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