Procedural Issues
Tax Opinions / Memorandum Opinions / Procedural Issues

Peacock v. Commissioner
T.C. Memo. 2020-63

On May 19, 2020, the Tax Court issued a Memorandum Opinion in the case of Peacock v. Commissioner (T.C. Memo. 2020-63). The issue before the court in Peacock v. Commissioner was whether a remittance that petitioners made to the IRS before the mailing of the notice of deficiency deprives the Tax Court of jurisdiction, which question turns on whether the remittance was in the nature of a payment or a deposit. Background to Peacock v. Commissioner The petitioners were issued a notice of deficiency regarding certain “fraud loss” deductions that were disallowed in full by the IRS. The day after the notice of deficiency was issued, petitioner-husband (PH) hand delivered a check payable to the U.S. Treasury. The memo line of the check contained two lines, one containing the PH’s Social Security number and the word “payment,” and the next contained the words “2013 Federal Income Tax.” Critically, the Tax…

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April 30, 2021
International Issues
Tax Articles / All Articles / International Issues

A Primer on FIRPTA Withholding

At its most basic, any disposition of a U.S. real property interest by a foreign person (as transferor) is subject to the Foreign Investment in Real Property Act of 1980, more commonly known as FIRPTA.[1] So, when a foreign person or entity sells, transfers, or otherwise disposes of a piece of U.S. real property, the transferee will likely have to withhold a certain percentage of the sales price.[2] Defining Disposition The term disposition as used in FIRPTA is not limited to the sale of property.  A FIRPTA disposition is any exchange, liquidation, gift, transfer, redemption, etc. of real property or an interest in such property.[3]  The term is very broadly defined,[4] and so when in doubt, it is best to treat a transaction or transfer with a foreign transferor and with respect to real property as a FIRPTA disposition. Defining U.S. Real Property Interest A U.S. real property interest under…

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April 30, 2021
Procedural Issues
Tax Articles / All Articles / Penalties Under the Code / Procedural Issues

Current Developments on Prior Written Supervisory Approval under IRC § 6751(b)(1)

The Statute No penalty under the Code[1] may be assessed unless the initial determination of such assessment is personally approved in writing by the immediate supervisor of the individual/agent making such determination (or another appropriate higher-level official).[2] This approval requirement, introduced in 1998, was the subject of only three substantial decisions prior to 2020. This year, however, was a boon for taxpayers, and the full opinions of the Tax Court defined the metes and bounds of the prior written supervisory approval requirement of IRC § 6751(b)(1). History of Statute IRC § 6751 was added to the code in 1998,[3] but it did not really hit its stride until 2017 and the two decisions in Chai v. Commissioner[4] and Graev v. Commissioner (Graev III).[5] In Chai, the Second Circuit held that IRC § 6751(b)(1) requires written approval of the “initial penalty determination” no later than the date that the IRS issues…

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April 30, 2021
Income Tax Issues
Tax Articles / All Articles / Income Tax Issues

Understanding the Doctrine of Constructive Receipt

Uncle Bill Sells the Buick Your dear Uncle Bill calls you all in a tizzy asking for some (free) legal advice from his “favorite” nephew. You want to remind him that you are (a) the only lawyer in the family, and (b) the only one of his nephews who not currently in the hoosegow, but you think better of it and indulge him. Bill and Aunt Ethel, who apparently are back together after the Thanksgiving turkey-leg-fisticuffs, sold their old trusty Buick on December 30th two years ago for $1,500 to Ethel’s step-nephew Jim-Bob for bail money. (You don’t ask questions at this point.) Ol’ Jim-Bob gave Bill a check, but Bill had been day-drinking on New Years Eve, and he was in no shape to visit the bank until a few days after the ball dropped and Bill’s blood alcohol content followed suit in the days afterwards. Bill included the…

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April 30, 2021