IRS Acquiescence Gives Unmarried Couples a Double Deduction

Mortgage interest deduction limit applies on per taxpayer basis


A year ago, a divided Ninth Circuit reversed the Tax Court in Voss v. Commissioner, allowing two unmarried co-owners of real property to each claim a home mortgage interest deduction. Now, the IRS has acquiesced in the decision, giving a bonus to unmarried individuals who buy property together.

Bruce Voss and Charles Sophy, unmarried co-owners of the property, each claimed a home mortgage interest deduction under Tax Code section 163(h)(3). The Code section allows taxpayers to deduct interest on up to $1,000,000 of home acquisition debt and $100,000 of home equity debt. The IRS said Voss and Sophy were jointly subject to section 163(h)(3)’s debt limits, and therefore disallowed a substantial portion of their claimed deductions.

Voss and Sophy claimed the provision applies on a per-taxpayer basis, so they were each entitled to deduct interest on up to $1.1 million. While the Ninth Circuit conceded the language of the Code is “anything but plain,” it agreed with the taxpayers. 

The decision of the IRS to acquiesce opens the door for unmarried couples outside the Ninth Circuit to claim the deductions subject to the increased limit, and adds an additional element to the marriage penalty under the Code.


From the Wall Street Journal News of Over 100 Countries Agree to Share Tax and Bank Information.

A Shrinking World Spurs Calls to Rewrite the Tax Guidebook 


Jul 21, 2016 1:46 pm ET

  • Arguments to tax Capital Gains at rates close to or equal to rates for wages.
  • Agreement to share citizan's tax and bank details.
  • Expressed desire to shift tax burden to higher income individuals by taxing capital gains.



AICPA to Help Position CPAs in Fight Against Cyber Crime

(JULY 7, 2016)



With CPAs uniquely positioned to assist organizations in cybersecurity concerns, as publicly acknowledged by the U.S. Securities and Exchange Commission, the American Institute of CPAs announced a multifaceted action plan against cyber-crime.

Calling cyber-crime a “complex and difficult problem, and there is no one solution,” AICPA president and CEO Barry Melancon announced that the institute “is taking a multifaceted approach to cybersecurity through the work of the Assurance Services Executive Committee and the Center for Audit Quality. This work will allow CPAs to take a leadership role.”

The AICPA has observed explosive growth in the demand for cybersecurity related services building on the foundation for Service Organization Control.

The AICPA’s action plan includes:

  • Developing timely tools and education for CPAs to address risk in a number of areas. working to help CPAs address cybersecurity concerns through services in advisory, assurance, tax and management accounting.
  • Looking at how the profession can address cybersecurity as an extension of the platform of services CPAs currently perform. the AICPA is developing new examination engagements for members in public practice specific to cybersecurity, focusing on an entity’s cybersecurity risk program and supply chain 
  • Management for vendors and businesses to assess and manage risk. the advocacy team closely monitoring cyber related legislative
  • And regulatory developments in Washington so it can respond and keep members informed.

“We see numerous roles for CPAs in the battle against cyber-crime,” Melancon continued. “Within their businesses, CPAs must present their own front line against cyber-attacks, implementing controls that help protect data and prevent service disruptions. CPAs in business can use their knowledge of the organization to advise their employers on administering a cybersecurity risk management program and provide the best cyber solutions.

CPAs in pubic practice, or public accounting, can assist their clients in an advisory capacity, as they grapple with cyber concerns and provide assurance when needed.”

Melancon’s full statement on the AICPA’s work against cyber-crime can be found in this video. More information is also available at the AICPA’s Cybersecurity Resource Center.


IRS Civil Forfeiture Proceeds to be Returned.

Civil Forfeiture originated in British Maritime law as a means to enforce a law requiring ships carrying British goods to fly the British Flag. It was easier (and more profitable) to seize the ship than the owner. During the colonial period Crown Tax Collectors used Writs of Assistance to seize property from colonists. A Writ of Assistance was issued by a magistrate empowering the tax collector or other law enforcement official to seize property and were treated as general search warrants that did not expire. The use of these Writs of Assistance lead to the Fourth Amendment in the Bill of Rights prohibiting general search warrants. 

In the early republic Congress wrote Forfeiture Laws based on the British law to help federal tax collectors collect customs duties which finance most the the expenses of the federal government. The seizures allowed government take the property of citizens who failed to pay taxes or customs duties and were upheld by the Supreme Court where it proved impossible to capture the guilty but grab their property.

Forfeiture fell off until Prohibition to seize the bootlegger property and much of the forfeiture activity fell off after Prohibition ended in 1933. Forfeitures have increased over the last thirty years as a weapon in the War on drugs. The Supreme Court has held that prosecuting a person for a crime and using civil forfeiture is not double jeopardy and then later ruled civil forfeiture was not permitted if the amount seized was "grossly disproportionate" to the offense. 

There has been much debt and legal action on civil forfeiture shifting the burden of proof back and forth between authorities and those who have had property seized. A big shift required the government to pay some of the legal costs when the claimant wins. Many claimants do not know this and do not hire attorneys beliving the costs are prohibitive. 

The central difference between civil and criminal forfeiture is the "preponderance of the evidence" of wrong doing with the case being between the authorities and the thing itself. Which explains cases such as State of Texas vs Grain Silo. The property will be return once the claimant proves their innocence. 

The central idea for the use of civil forfeitures in the recent past is to discourage criminal activity were an inability to prosecute exists and to remove assets from the use or furtherence of criminal activity. Unfortunatly Civil Forfeiture has been used against people who had legitimate and honest reasons to conduct business in cash that attracted the attention of authorities. The IRS has ussed Civil Forfeiture to assets, mostly money from people arguing the cash is proceeds of a criminal activity. The most common is structuring deposits to avoid trigering filing of Form 8300 Reporting of Cash Receipts in a Trade or Business Over $10,000. Originally intended by lawmakers to identify Drug Dealers it now snares more innocents than criminals and provides the basis for  "preponderance of the evidence" of wrong doing.

The IRS recently chose to return seized assets as reported in Forbes in 700 cases. This is one of several articles recently reporting a change in the way the IRS handles Civil Forfeitures.


What falling oil prices mean for Houston's housing market


Dec 10, 2014, 4:10pm CST


Jim Gaines is a research economist at the Real Estate Center at Texas A&M University.

Reporter- Houston Business Journal
Email  |  Twitter

Realtors may be worried about how falling oil prices will affect their business, which depends on the strength of the local economy.

In the past six months, crude oil prices have dropped from more than $100 a barrel to below $70 a barrel. While consumers are rejoicing at the pump, Houston's oil and gas industry are planning to cut costs.

So how will falling oil prices affect Houston's housing market? It's hard to answer without knowing how low prices will go and for how long, according to Jim Gaines, a research economist with the Texas A&M University Real Estate Center.

"In the short run, we won't see a whole lot of direct impact on housing," Gaines said. "But it's one of those clouds on the horizon. We're not sure how hard its going to hit or how fast it's going to get here."

Loose association

The energy industry — feeling the storm coming — is cutting back on programs and new hires, and laying off some employees.

These cost-cutting measures could stem the flow of new residents to Houston, hurting Realtors' relocation business. Job cuts will curb families' incomes and plans to purchase homes. These impacts, however, will take time to trickle down to the housing market because the economic cycles of oil and housing aren't exactly aligned, Gaines said.

The housing market is "very loosely associated" to the energy industry, Gaines said. For example, Houston's best housing year before the recession – $15.8 billion in home sales in 2006 – also saw an average West Texas Intermediate crude oil price of $66 a barrel.

However, not all economists are so optimistic about Houston's housing market in the face of tumbling oil prices.

Ted Jones, Stewart Title's chief economist and former Houston Association of Realtors chairman, forecasts a 10 percent to 12 percent decline in home sales over the next 12 months. However, Jones also predicts a 6 percent increase in home prices, which could buoy Realtors' commissions.

On the bright side, oil prices could stabilize Houston's homebuying frenzy, which could alleviate fears of a possible housing bubble, Gaines said.

"We're anticipating, absent a major drop in oil prices, to have a relatively strong housing market in Houston next year," Gaines said. "We've been through the boom, now we're in the slow, steady go-forward."

A Realtor's perspective

Amy Bernstein has experienced several economic cycles in the energy sector during her more than 25 years in the real estate industry. The Houston Realtor and founder of Bernstein Realty said the falling oil prices haven't affected her business so far.

"It certainly gives us pause, but we haven't seen any slowdown," Bernstein said.

Houston's diverse economy will keep relocation activity high, in spite of possible retractions in energy hires, Bernstein said. Bernstein's company is still seeing plenty of relocation activity from the health care, technology, retail and financial sectors, she said.

Future housing reports from the Houston Association of Realtors will likely show a dip in home sales.

This shouldn't worry Realtors, however, Bernstein said. That's because historically, December is a slower month of the year for home sales. There are also other reasons that could explain a possible housing slowdown, such as increased home inventory as builders begin to deliver more homes to meet latent demand.

"I may be overly optimistic, and the supply of inventory is so low that I don't think (falling oil prices are) going to cause any drastic impact on the market," Bernstein said. "In fact, there may be more availability for consumers and not the type of bidding war frenzy that we've seen over the last couple of years."

Paul Takahashi covers residential and multifamily commercial real estate for the Houston Business Journal.