Last week, Medtronic Plc suffered a legal setback in its bid to avoid a $1.4 billion U.S. tax bill — a ruling that may have costly implications for other multinationals battling the Internal Revenue Service over the use of overseas payments to lower their taxes.
The Internal Revenue Service has prevailed in U.S. Tax Court in a case involving an Arizona jewelry store business that received a tax break by insuring itself for millions of dollars, in part against the risk of terrorism.
Just because you have years of experience in an activity and have made an occasional profit at it doesn’t mean you have a profit motive, according to the Tax Court. And without a profit motive, you don’t get to deduct losses from the activity.
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