Income Tax Issues
Tax Opinions / Income Tax Issues / Memorandum Opinions

Williams v. Commissioner
T.C. Memo. 2020-48

On April 14, 2020, the Tax Court issued a Memorandum Opinion in the case of Williams v. Commissioner (T.C. Memo. 2020-48). The primary issue before the court in Williams v. Commissioner was whether the petitioners were entitled to deductions on Schedule C (Profit or Loss from Business) for the expenses of the petitioner-husband’s new business venture as he grew it and prior to the business’ actual operation. The Basic Nature of Deductions in Williams v. Commissioner As a starting point, taxpayers generally bear the burden of proving that they have met all requirements to be entitled to any deductions claimed. See Tax Court Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Taxpayers must maintain sufficient records to enable the IRS to determine their correct tax liability. IRC § 6001. The determination of whether an expenditure satisfies…

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April 14, 2020
Penalties Under the Code
Tax Opinions / Memorandum Opinions / Penalties Under the Code

Patrick’s Payroll Services Inc. v. Commissioner
T.C. Memo. 2020-47

On April 14, 2020, the Tax Court issued a Memorandum Opinion in the case of Patrick's Payroll Services Inc. v. Commissioner (T.C. Memo. 2020-47). The issue properly before the court in Patrick's Payroll Services Inc. v. Commissioner was whether the petitioner is barred from challenging its underlying liabilities at trial. Background to Patrick's Payroll Services Inc. v. Commissioner The petitioner was an employee leasing company providing payroll services in 2010 and 2011 with one client, a private security company for whom the owner of the petitioner worked as a security guard. The petitioner, however, treated the security company’s workers “as its own” in all respects, except for one minor respect, with which the IRS took issue – it failed to file the required Federal employment tax returns (Form 940 and Form 941) and, likewise, did not pay over any Federal employment taxes. Like any good payroll company would do, the petitioner…

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April 14, 2020