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Archive for Tax Court In Brief

The 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.

Plentywood Drug, Inc. | April 26, 2021 | Holmes| Dkt. No. 17753-16

Short Summary:  The Tax Court was asked to decide whether rent paid by the Taxpayer was reasonable.  The Taxpayer was owned by four related individuals (the “Shareholders”).  The Shareholders owned the building where the the Taxpayer was operating.  The Taxpayer paid rent of $83,584, $192,000, and $192,000 for 2011, 2012 and 2013, respectively.

The IRS disallowed certain rent deductions by the Taxpayer to the Shareholders because the IRS stated that the rent paid by the Taxpayer was greater than what the fair market rent would have been paid at an arm’s length transaction.  The IRS recharacterized the excess rent as dividends, therefore, the Taxpayer would not be able to deduct the dividends.

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Tax Court In Brief: Freeman Law

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: 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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The Tax Court in Brief: Tax Court Opinions And Decisions

The Tax Court in Brief: Tax Court Opinions And Decisions

The Week of January 11 – January 15, 2021

Kenneedy v. Comm’r, T.C. Memo. 2021-3 | January 12, 2021 | Copeland, E. | Dkt. No. 5687-17W

Short Summary:  Petitioner appealed, pursuant to § 7623(b)(4), three determinations of the Whistleblower Office (WBO) of the Internal Revenue Service (IRS) that declined to make awards to him.  Petitioner filed a single whistleblower claim, but the WBO split it into three distinct claims. Petitioner’s whistleblower claim alleged that three taxpayers and related subsidiaries owed $150,103,245 in unpaid excise taxes, penalties, and interest. The IRS processed the claims, and it took no action against two of the taxpayers, and no change resulted from the examination of the third taxpayer.  Petitioner challenged the WBO’s determinations. The Tax Court held that the WBO did not abuse its discretion in declining any awards to Petitioner.

Key Issue:  Whether the WBO abused its discretion in declining to award the Petitioner any amount under his whistleblower claims when it took no action against two taxpayers and issued no changes after the examination of the third taxpayer.

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The Tax Court in Brief: Freeman Law

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 October 10 – October 16, 2020

Jesus R. Oropeza v. Comm’r, 155 T.C. No. 9 | October 13, 2020 | Lauber, J. | Dkt. No. 15309-15

Short Summary:  The case involved the issuance of a notice of deficiency without the proper written supervisory approval provided by I.R.C. sec 6751(b)(1).

The IRS opened an examination to review Mr. Oropeza’s (the “taxpayer”) tax return for the 2011 tax year. The period of limitations for 2011 was set to expired on April 15, 2015.

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Freeman Law’s: The Tax Court In Brief

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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