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Freeman Law Webinar on IRS Trends, Cryptocurrency, Reasonable Cpmpensation And More

Register TODAY For Wednesday, July 28th 2021 Tax Law Update

You are invited to attend a Freeman Law Webinar hosted by lawyers Jason Freeman, Matthew Roberts, John Reyna and Greg Mitchell at 2:00PM Central Time (Texas) on Wednesday, July 28th 2021. Freeman will provide attendees a law legal and tax update.

The topics to be discussed include:

  • IRS Enforcement Trends And Cryptocurrency Updates
  • Excess Benefit Transactions And Reasonable Compensation
  • Lifting The Automatic Stay To Proceed With State Court Litigation
  • Tax Court Updates

Click Here To Attend Complimentary Webinar

Freeman Law Legal and Tax Update Webinar-
Wednesday, July 28, 2:00 pm CT

What Are The Rules On Unreimbursed Employee Expenses? Freeman Law Tax Court In Brief

PEEPLES v. Comm’r, Summary Op. | May 19, 2021 | Paris, J. | Docket No. 17117-17S.

Short Summary: Mr. Peeples deducted unreimbursed employee business expenses on his 2014 federal income tax return. The IRS disallowed the deductions and issued a notice of deficiency. Mr. Peeples filed a petition with the United States Tax Court challenging the proposed adjustments in the notice of deficiency.

Key Issues: Whether Mr. Peeples is entitled to deduct (1) certain unreimbursed employee business expenses and (2) tax preparation fees (under Section 162) for 2014.

Primary Holdings: No, Mr. Peeples is not entitled to deduct either because he failed to provide the Court adequate documentation or information that would have substantiated either the application of the Cohan rule for the deductions or the tax preparation expense.
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Freeman Law Tax Court In Brief: Case Of State Senator Convicted On Federal Criminal Charges Including Fraud

Fumo v. Comm’r, T.C. Memo. 2021-31 | May 17, 2021 | Lauber, J. | Dkt. No. 17614-13

Short Summary

Taxpayer, a state senator with 30 years of service, was convicted on Federal criminal charges, including mail and wire fraud. One victim included a 501(c)(1) & (3) organization, exempt from Federal income tax.  Taxpayer influenced the tax-exempt organization’s formation as, at his direction, three members of his senatorial staff incorporated the organization for the purposes of maintaining and improving the aesthetic appearance of the taxpayer’s district. At all periods in question, at least one member of the taxpayer’s staff worked for the charity organization as either President or Executive Director while remaining employed by the Senator.  Taxpayer influenced, as chairman of a senate appropriations committee, funding for the charitable entity from public and private sources.

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Freeman Law Tax Update: What A Biden Presidency Means For Your Federal Income Taxes

(Reposted Blog From November 2020, They Are On Top Of It)

With the projected election of Joe Biden, Freeman Law has already begun to review what a Joe Biden presidency could mean to its clients.  And although many of determinations could potentially depend on results from President Trump’s election challenges and a final tally of the United States Senate, Freeman Law wants our clients to be aware of the potential tax changes that could occur in the next few years under Joe Biden.

Increase in Top Marginal Tax Rate for High-Earners.  Currently, the top federal tax rate is 37%.  Mr. Biden has proposed increasing the top federal tax rate to 39.6% for those making more than $400,000 per tax year.

Investment Income.  High-income taxpayers are currently taxed at approximately 23.8% on their net investment income, which includes capital gains and ordinary dividends.  Mr. Biden has proposed maintaining these rates except for those taxpayers who make over $1 million.  In these latter instances, Mr. Biden has proposed increasing the tax on net investment income to ordinary income tax rates of 39.6%.

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Tax Court In Brief: Freeman Law

Catania v. Commissioner, T.C. Memo. 2021-33 | March 15, 2021 | Vasquez, J. | Dkt. No. 13332-19

Short Summary

Petitioner worked for Home Depot and participated in its section 401(k) plan. In 2014 he retired from Home Depot and transferred his section 401(k) plan account balance to a traditional individual retirement account (IRA) held at Vanguard Fiduciary Trust Co. (Vanguard). Petitioner was 55 years old at that time.

In 2016 petitioner withdrew $37,000 from his Vanguard IRA. Petitioner used the funds to pay for the maintenance of his home and other necessary living expenses. Petitioner was 57 years old as of December 31, 2016.

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Freeman Law: The Tax Court In Brief

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

The Week of March 1 – March 5, 2021

Brian D. Beland and Denae A. Beland | March 1, 2021 | Greaves | Dkt. No. 30241-15

Short Summary:  The Tax Court granted the taxpayers’ motion for partial summary judgment, on a finding that the IRS failed to secure timely written supervisory approval under section 6751(b)(1) of a civil fraud penalty under section 6663(a).

The taxpayer’s joint return was examined by the IRS following which the revenue agent had sent them a summons requiring their attendance at an in-person closing conference. The revenue agent provided the taxpayers with a completed, signed Form 4549, Income Tax Examination Changes, reflecting a Code Sec. 6663(a) civil fraud penalty. However, the taxpayers declined to consent to the assessment of the civil fraud penalty or sign Form 872, Consent to Extend the Time to Assess Tax, to extend the limitations period. Thereafter, the revenue agent obtained written approval from her immediate supervisor for the civil fraud penalty and sent the taxpayers a notice of deficiency determining the same.

Key Issue:  Whether petitioners civil fraud penalty was timely approved by the revenue agent’s supervisor?

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Freeman Law: The Tax Court In Brief

The Week of February 22 – February 26, 2021

Llanos v. Commissioner | February 22, 2021 | Kerrigan, K. | Dkt. No. 8424-19L 

Short Summary:  IRS assessed § 6702 penalties against petitioner for filing frivolous returns. Eventually the IRS issued a Final Notice of Intent to Levy, to which the taxpayer timely request a CDP hearing. At the CDP hearing, the petitioner indicated that he had not received the required notices of deficiency for the civil penalties. Petitioner did not request any collection alternatives. The settlement officer upheld the levy action, and petitioner filed in tax court. Tax court held for the IRS.

Key Issue:  Whether petitioner made a “meaningful” challenge to the penalties so as to trigger a de novo review, and whether the levy action was appropriate.

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Tax Court In Brief: Freeman Law
The Tax Court In Brief

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

The Week of February 8 – February 12, 2021

BM Construction v. Comm’r, T.C. Memo. 2021-13 | February 8, 2021 | Urda, J. | Dkt. No. 24352-17L

Short Summary: The IRS initiated an examination of the tax liabilities associated with Mr. Bernotas and his sole proprietorship, BM Construction. After issuing an initial report on May 7, 2014, the examination officer issued two Letters 950-D: (1) to Mr. Bernotas with respect to his income taxes on June 6, 2014; and (2) to BM Construction with respect to backup withholding tax liabilities on June 13, 2014. The examination officer detailed these actions in the file’s activity log and noted that neither of the mailed letters were returned. At more than one subsequent in-person meeting, Mr. Bernotas was notified of his appeal rights—particularly that he had 30 days from the date of Letter 950-D.

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Tax Court In Brief

The Tax Court in Brief

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

For a link to our podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project.

The Week of October 31 – November 6, 2020

Glade Creek Partners, LLC, Sequatchie Holdings, LLC, TMP v. Comm’r, T.C. Memo. 2020-148 | November 2, 2020 | Goeke, J. | Dkt. No. 22272-17

Short Summary:  In 2012, Glade Creek Partners, LLC (Glade Creek) donated a conservation easement on 1,313 acres of undeveloped real estate in Bledsoe County, Tennessee.  It claimed a $17.5 million charitable contribution deduction for its 2012 short tax year period.  The IRS challenged the charitable contribution deduction and sought penalties.

Key Issue:  Whether Glade Creek is entitled to the charitable contribution deduction under the technical requirements of Section 170 and whether Glade Creek is liable for a 40% gross valuation misstatement penalty under Section 6662(e) and (h) or alternatively the 20% valuation penalty under Section 6662(b)(3).

Primary Holdings

  • Glade Creed is not entitled to a full conservation easement deduction because the easement’s conservation purposes are not protected in perpetuity. However, Glade Creek is entitled to a cash charitable contribution deduction of $35,077.  In addition, Glade Creek is liable for a 20% accuracy-related penalty for a substantial valuation misstatement for any claimed charitable contribution deduction in excess of $8,876,771.

Key Points of Law:

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Attorneys Discuss Key Insights On IRS Voluntary Disclosure: Listen To The Freeman Law Project Podcast

In this episode of the Freeman Law Project, host Jason B. Freeman is joined by Matthew Roberts and Ryan Dean as they delve into the concept of an IRS voluntary disclosure. The discussion covers the history of the voluntary disclosure practice, its evolution, and key insights and observations from years of practice representing taxpayers with IRS fraud and tax-related criminal exposure.

Listen To Podcast At This Link

Presented By Jason Freeman, Matthew Roberts and Ryan Dean.

Freeman Law: The Tax Court in Brief

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

For a link to our podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project.

The Week of September 12 – September 18, 2020

Deckard v. Comm’r, 155 T.C. No. 8  | September 17, 2020 | Thornton, J. | Dkt. No. 11859-17

Short Summary:  Waterfront Fashion Week, Inc. (Waterfront) was organized under Kentucky law as a nonstock, nonprofit corporation in 2012.  Mr. Deckard was Waterfront’s president and one of its three directors.  Waterfront never applied for recognition of tax-exempt status with the IRS.

On October 28, 2014, Waterfront mailed to the IRS Form 2553, Election by a Small Business Corporation.  In the Form 2553, Waterfront sought to elect to be an S corporation retroactively as of the date of its incorporation in 2012.  Mr. Deckard signed the Form 2553 in his capacity as Waterfront’s president.  In addition, Mr. Deckard signed the Form 2553 shareholder’s consent statement, indicating that he owned 100% of Waterfront.

In 2015, Waterfront filed Forms 1120S, U.S. Income Tax Return for an S Corporation, for its taxable years 2012 and 2013, reporting operating losses.  Mr. Deckard reported these flow-through losses on his 2012 and 2013 returns.

The IRS disallowed the losses on the ground that Waterfront filed to make a valid S corporation election and alternatively that Mr. Deckard was not a shareholder of Waterfront.  Mr. Deckard filed a timely petition with the United States Tax Court.

Key Issue:  Whether Mr. Deckard can claim the losses from Waterfront on his 2012 and 2013 tax returns?

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Tax Court In Brief

The Tax Court in Brief

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

For a link to our podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project.

The Week of September 5 – September 11, 2020

Sutherland v. Comm’r, 155 T.C. No. 6 | September 8, 2020 | Lauber, J. | Dkt. No. 3634-18

Short Summary:  In 2010, Ms. Sutherland’s husband was indicted for tax crimes.  He pled guilty, and as part of his plea agreement he was required to submit delinquent tax returns for 2005 and 2006 (among other years).  Ms. Sutherland signed the returns for 2005 and 2006.

Later, Ms. Sutherland filed an IRS Form 8857, Request for Innocent Spouse Relief, for 2005 and 2006.  The IRS reached a preliminary determination to deny her request for innocent spouse relief, and she appealed.  During the IRS Appeals process, Ms. Sutherland’s attorney determined that the Appeals Officer (AO) was not properly applying the innocent spouse factors.  Because no progress was being made, her attorney chose not to submit additional evidence on the belief that Ms. Sutherland would receive de novo review in the Tax Court.

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