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Tag Archive for Tax Court Case

Innocent Spouse Taxpayer Court Case

Donna M. Sutherland v. Comm’r, No. 3634-18, T.C. Memo 2021-110 | September 16, 2021 | Lauber | Dkt. No. 3634-18

Short Summary:  This is an innocent spouse case in which the taxpayer, Ms. Sutherland, sought relief from joint and several liability under the equitable relief provision of 26 U.S.C. 6015(f).  The Court ultimately found that the taxpayer was not entitled to the relief requested.

Key Issues:

  • Did the taxpayer qualify for relief from joint and several liability for the unpaid employment taxes that accrued from taxpayer’s husband’s business?

Facts and Primary Holdings:

  • The taxpayer was married to her husband Scott in 1990. She has a high school education and completed a few college courses.  She gave birth to the couple’s only child in 1991, and after her child was born, she worked primarily at home or in Scott’s business.

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Tax Court In Brief: A Single Shareholder Corporation

JASON FREEMAN, JD - Tax Court Case

Bell Capital Management, Inc. v. Commissioner, T.C. Memo. 2021-74 | June 14, 2021 | Wells, J. | Dkt. No. 21714-07

Short Summary

A single shareholder (“Shareholder”) owned 100% of the stock and served as the sole director for the petitioner.  For a period of 5 years, petitioner paid the Shareholder wages until a change in compensation structure.  Moving forward, petitioner leased the Shareholder’s services through offshore employee leasing transactions (OEL transactions).  During this period, petitioner furnished Shareholder with space to perform personnel services, loaned Shareholder an automobile for business use, and provided health insurance benefits, at petitioner’s cost.  Additionally, Shareholder signed petitioner’s Form 1120S, in his capacity as president.  Shareholder, further, listed himself on an annual corporate registration as CEO, CFO and President, as well as, admitted such status to the SEC as part of a settlement.  After the years of exclusive service to the petitioner (“Years at Issue”), Shareholder began leasing his services to other operations.

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When Is the Accrual Method Available to Taxpayers? A Tax Court Case

When Is the Accrual Method Available to Taxpayers? A Tax Court Case
When is the accrual method available to taxpayers?

A recent Tax Court case addresses the accrual method of accounting in the cost-of-goods-sold (COGS) contexts:

The Morning Star Packing Company, L.P., et al. v. Comm’r, T.C. Memo. 2020-142 | October 14, 2020 | Cohen A. | Dkt. Nos. 5013-15, 5015-15, 16684-16, 16842-16

Short Summary:  Petitioners sought review of the IRS’ determination that they were not entitled to increase their cost of goods sold (“COGS”) for the costs to restore, rebuild, recondition, and retest their manufacturing facilities for years of 2008 – 2011.  The Tax Court found in favor of the IRS.

Key Issue:  Two key issues: (1) were certain accrued production costs fixed and binding where economic performance did not occur until the year following the tax year claimed for those costs; and (2) did Petitioners’ inclusion of such production costs in COGS for the years in issue result in a more proper match against income than inclusion in the taxable year.

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When Is The Accrual Method Available To Taxpayers? The Tax Court In The Morning Star Packing Company Case

When Is The Accrual Method Available To Taxpayers? The Tax Court In The Morning Star Packing Company Case

A Tax Court case addresses the accrual method of accounting in the cost-of-goods-sold (COGS) contexts:

The Morning Star Packing Company, L.P., et al. v. Comm’r, T.C. Memo. 2020-142 | October 14, 2020 | Cohen A. | Dkt. Nos. 5013-15, 5015-15, 16684-16, 16842-16

Short Summary:  Petitioners sought review of the IRS’ determination that they were not entitled to increase their cost of goods sold (“COGS”) for the costs to restore, rebuild, recondition, and retest their manufacturing facilities for years of 2008 – 2011.  The Tax Court found in favor of the IRS.

Key Issue:  Two key issues: (1) were certain accrued production costs fixed and binding where economic performance did not occur until the year following the tax year claimed for those costs; and (2) did Petitioners’ inclusion of such production costs in COGS for the years in issue result in a more proper match against income than inclusion in the taxable year.

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