VoIP Company Partners Must Pay More Tax After Bankruptcy Deal

The shareholders of a telecom company must capitalize all payments made in connection with a bankrupt VoIP company they acquired, the US Tax Court said Monday.

Judge Elizabeth A. Copeland said the IRS correctly determined between $2,000 and $500,000 in tax deficiencies from five partners of S Corporation Broadvox Inc. in 2012, after their company acquired another bankrupt firm, Infotelecom LLC. The deal entailed payments to Broadvox’s as well as payments to two of its major creditors, Verizon and AT&T. Broadvox reported all three payments on its tax returns as cost of goods sold, resulting it it claiming a loss ...