Marijuana's Tax Paradox (or the Uncanny Cannabis Controversy) (Currently Unavailable)

Author: Eva Rosenberg

CPE Credit:  2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC

The Untouchables never caught Al Capone – the IRS did. One of Al Capone’s big crimes was bootlegging – and not paying the tax on his illegal income. As you’ve guessed, illegal income is taxable. And yes, the income from marijuana sales is still illegal on the federal level. But on the state level, it’s perfectly legal. So, how do we prepare tax returns with this tax dichotomy?

Publication Date: August 2016

Designed For
Practitioners at all levels regardless of practice concentration, whose clients are venturing into the growing, selling, distribution of medical marijuana.

Topics Covered

  • Explore licensing of operations
  • Outlining the types of marijuana-related businesses
  • Situations where the entire business reporting is the same for IRS and state
  • Reporting for state-only purposes
  • Deductions that are legal for the IRS (Sec 280E issues)
  • What to do with deductions the IRS won't allow (if anything)
  • Controls for cash-based businesses
  • Individuals — health care deductions — possible?
  • Individuals — growing pot for personal use

Learning Objectives

  • Recognize the reporting rules for state purposes
  • Recognize the IRS filing rules without turning our clients into federal tax criminals
  • Identify which marijuana purveyors/distributes the federal government is not actively pursuing
  • Describe how the OPR views tax professionals working with the marijuana trade in legal states
  • Recognize why the banks won't allow medical marijuana-based business to open bank accounts
  • Describe the meaning of CONF.REP.NO 97-760, at 598 (1982), 1982 - 2 C.B. 661
  • Recognize the views of Karen Hawkins
  • Identify the IRS penalty for not paying payroll taxes electronically
  • Differentiate which federal agency has been enjoined from raiding all state licensed marijuana
  • Describe which government agency the FinCEn is an arm of
  • Recognize the specific tax code section related to trafficking in controlled substances
  • Differentiate which Revenue Procedures and Regulations are related to inventory
  • Describe "associated businesses"
  • Recognize non common marijuana-related business
  • Identify which costs are not deductible in relation to cost of inventory
  • Describe businesses that maintain an inventory required to file taxes on an accrual basis
  • Recognize the percentage of the CHAMPS' facility not used in the marijuana business according to the Court's determination

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None

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