Read more about the article Montgomery-Alabama River LLC v. Commissioner <section> T.C. Memo. 2021-62 </section>
Charitable Issues / Memorandum Opinions / Tax Opinions

Montgomery-Alabama River LLC v. Commissioner
T.C. Memo. 2021-62

On May 17, 2021, the Tax Court issued a Memorandum Opinion in the case of Montgomery-Alabama River LLC v. Commissioner (T.C. Memo. 2021-62). The primary issue presented in Montgomery-Alabama River LLC v. Commissioner was whether the Tax Court should certify (to the Alabama Supreme Court) the question of whether, under Alabama law, the petitioner would be entitled to the full proceeds of any sale if the easement were extinguished. Basic Legal Framework in Montgomery-Alabama River LLC v. Commissioner The governing regulation requires that the grantee receive, in the event an easement is extinguished, a proportionate share of the proceeds upon any subsequent sale of the property. Treas. Reg. § 1.170A-14(g)(6)(ii). This regulation makes an exception, however, if the applicable State law allows the donor to receive “the full proceeds from the conversion without regard to the terms of the prior perpetual conservation restriction.” Id. Basic Background and Wild Turkeys In September 2014…

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May 28, 2021
Read more about the article Fumo v. Commissioner <section> T.C. Memo. 2021-61 </section>
Charitable Issues / Memorandum Opinions / Tax Opinions

Fumo v. Commissioner
T.C. Memo. 2021-61

On May 17, 2021, the Tax Court issued a Memorandum Opinion in the case of Fumo v. Commissioner (T.C. Memo. 2021-61). The primary issue presented in Fumo v. Commissioner was whether the petitioner, who was a very bad man who defrauded community charities, was liable for excise taxes under IRC § 4958(a)(1) as a “disqualified person.” Background to Fumo v. Commissioner The petitioner, as noted above, was (and likely still is) a real jerk.  He was elected to the Pennsylvania State Senate in 1978, representing the first district in Philadelphia. Reelected many times, he served as a State senator until 2008. His tenure ended in 2009 when he was convicted on Federal corruption charges and sentenced to 55 months in prison. One victim of his fraud was Citizens Alliance for Better Neighborhoods (Citizens Alliance), an IRC § 501(c)(3) charity. In May 2013, the IRS determined that petitioner was liable for excise…

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May 28, 2021
Taxing, Briefly
Taxing, Briefly
Taxing, Briefly

Taxing, Briefly: Will the IRS Take My House?

I met a new client about a month ago.  I was excited. It was the first in-person meeting I’d had for over a year due to COVID.  The client had settled a lawsuit, and the settlement income—though taxable—had been reported incorrectly on her Form 1099-MISC, so that the IRS got it into its administrative head that it was subject to self-employment income. It wasn’t. The client’s total liability would have been about $10,000, which was not insignificant to her, but to the IRS is like a grain of administrative sand.  Nonetheless, her number one concern was "Will the IRS take my house?"  My client was well educated, highly intelligent, and entirely serious. As such, laughing it off was out of the question. I received a call the other day from another client—different circumstances, same question. So, allow me to clear this up. A Bit of Background In an address to…

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May 27, 2021
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Mason v. Commissioner
T.C. Memo. 2021-64

On May 20, 2021, the Tax Court issued a Memorandum Opinion in the case of Mason v. Commissioner (T.C. Memo. 2021-64). The primary issue presented in Mason v. Commissioner was whether Appeals abused its discretion by reviewing the Centralized Unit's decision for abuse of discretion instead of reviewing the Masons’ offer on its merits. Background to Mason v. Commissioner: A Lesson in Bureaucracy Victor and Katherine Mason owed back taxes. They didn't deny it, but they said they didn't have the money to pay. They submitted an offer to compromise the debt, and the IRS routed it to the part of the bureaucracy--the Centralized Offer-In-Compromise Unit--that reviews these offers. But another part of the IRS began sending collection notices to the Masons. The Masons asked for a hearing with the IRS Appeals Office. IRS Appeals is supposed to consider alternatives to forced collection at these hearings, including offers like the…

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May 26, 2021
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Shitrit v. Commissioner
T.C. Memo. 2021-63

On May 20, 2021, the Tax Court issued a Memorandum Opinion in the case of Shitrit v. Commissioner (T.C. Memo. 2021-63). The primary issue presented in Shitrit v. Commissioner was whether the Tax Court had jurisdiction to entertain the suit subsequent to the IRS’s concession that its certification of the petitioner’s tax debt as “seriously delinquent” was erroneous. Background to Shitrit v. Commissioner Mr. Uriah Shitrit is a dual citizen of Israel and the United States. Mr. Shitrit did not file a Federal income tax return for 2006. Unfortunately for Mr. Shitrit, three separate companies reported that he received income in 2006. In light of this third-party reporting, the IRS prepared an IRC § 6020(b) substitute for return for Mr. Shitrit's 2006 tax year. The IRS issued a notice of deficiency to Mr. Shitrit, determining a deficiency of $102,000, interest of $4,300, and additions to tax of $37,000 for failure to…

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May 26, 2021
Taxing, Briefly
Taxing, Briefly
Taxing, Briefly

The IRS Collection Process – Taxing, Briefly

The Basic Principles of the IRS Collection Process In our previous post, we discussed how audits are performed and your available options throughout the examination process.  Once the audit is complete, and all administrative and legal remedies are exhausted, how does the IRS actually collect taxes?  The first step in the IRS collection process is assessment. The IRS cannot collect a tax until it has assessed it. There are a bevy of rules surrounding assessments.  In general, the IRS has three years to assess tax after a return was filed.  If the return was fraudulent, or the taxpayer substantially omitted income, then the IRS has six years to assess.  If no return was filed, then the IRS has carte blanche to assess at any time.  However, it’s the IRS’s stated policy not to look back further than six years. Although this time frame is not absolutely set in stone, it’s…

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May 25, 2021
Taxing, Briefly
Taxing, Briefly
Taxing, Briefly

The IRS Examination Process – Taxing, Briefly

Like Ten Thousand Spoons When All You Need is a Knife Do you feel like you are cursed to forever draw the short straw in life? Is Alanis Morrisette’s Ironic more of a personal anthem than an indictment of the Canadian educational system’s failure to properly differentiate between irony and unfortunate occurrences?  What does this have to do with the IRS examination process?  All in good time... In this post, we will assume that, in addition to the black fly in your chardonnay, you were greeted with a care package in your mailbox from the IRS stating, in short, that your returns had been weighed, measured, and found wanting. Shock and denial set in, followed by pain and anguish, then anger, then bargaining, and, as you are halfway through the second tub of Cherry Garcia in the day, you finally you call your tax attorney to talk about the IRS examination…

1 Comment
May 25, 2021