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

Bidzimou v. Commissioner
T.C. Memo. 2020-85

On June 15, 2020, the Tax Court issued a Memorandum Opinion in the case of Bidzimou v. Commissioner (T.C. Memo. 2020-85). The primary issue before the court in Bidzimou v. Commissioner was whether a state court’s order awarding the petitioner the right to claim a tax exemption for petitioner’s minor child, despite not being the child’s custodial parent, could operate as a substitute Form 8332 (Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent), or equivalent declaration signed by the custodial parent. Dependency Exemption Deduction in Bidzimou v. Commissioner The Code allows taxpayers an annual exemption deduction for each of the taxpayer’s dependents. IRC § 151(a); IRC § 151(c). A dependent is either a qualifying child or a qualifying relative. IRC § 152(a). A qualifying child must meet five requirements for the taxpayer to qualify for the deduction. IRC § 152(c). To be a taxpayer’s qualifying child,…

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June 15, 2020
Business Related Issues
Tax Opinions / Business Related Issues / Memorandum Opinions / Procedural Issues

Sellers v. Commissioner (T.C. Memo. 2020-84)

On June 15, 2020, the Tax Court issued a Memorandum Opinion in the case of Sellers v. Commissioner (T.C. Memo. 2020-84). The primary issue before the court in Sellers v. Commissioner was whether the petitioner provided sufficient evidence to substantiate his bases in certain companies and his material participation (for passive activity loss purposes). This case also presents a very interesting question of whether the burden of proof really shifts to the IRS to prove additional deficiencies first asserted subsequent to the initial notice of deficiency (i.e., in the IRS’s answer to the petition). Brief Background to Sellers v. Commissioner Randy Sellers, the petitioner, was a Utahan jack-of-all-trades. Among his many trades were CPA, businessman, irascible bulldog collector of defunct real estate and semi-tractor trailer loans, investor, and seller of boats, boat parts, and marine accessories for enthusiasts of the great Salt Lake. The loan collector and boat businesses were…

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June 15, 2020
Procedural Issues
Tax Opinions / Memorandum Opinions / Procedural Issues

Schwager v. Commissioner (T.C. Memo. 2020-83)

On June 15, 2020, the Tax Court issued a Memorandum Opinion in the case of Schwager v. Commissioner (T.C. Memo. 2020-83). The issue before the court in Schwager v. Commissioner was whether the IRS abused its discretion in dismissing as frivolous the petitioner’s arguments made during the CPD hearing and sustaining the proposed levy action. Background to Schwager v. Commissioner The petitioner, Fritz Schwager, failed to file his income tax returns from 2009 through 2012. The IRS prepared substitutes for returns (SFRs) pursuant to its authority under IRC § 6020(b), and it sent Fritz a notice of deficiency for each year, consistent with the SFRs. Fritz weinte schlecht (cried foul) and filed a petitioner filed a petitioner with regard to 2012 but failed to prosecute. The case as dismissed, and the IRS assessed the deficiencies and additions to tax under IRC § 6651(a)(1) (failure to file); IRC § 6651(a)(2) (failure…

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June 15, 2020