Mathews v. Commissioner (T.C. Memo. 2021-28)

On March 9, 2021, the Tax Court issued a Memorandum Opinion in the case of Mathews v. Commissioner (T.C. Memo. 2021-28). The primary issue presented in Mathews was whether the petitioner was entitled to car and truck expenses which were incurred driving from his residence to the location of his employer, a trucking company. General Rule As a general rule, expenses for traveling between one’s home and one’s place of business or employment are commuting expenses and, consequently, nondeductible personal expenses. See IRC § 262(a); Fausner v. Commissioner, 413 U.S. 838 (1973); Commissioner v. Flowers, 326 U.S. 465 (1946); Feistman v. Commissioner, 63 T.C. 129, 134 (1974); Bogue v. Commissioner, T.C. Memo. 2011-164, *5. The petitioner testified that the reported mileage was for his commuting expenses…which begs the question, why has the court even bothered issuing a memorandum opinion in this case… I think that simply popping the petitioner on…

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Chiarelli v. Commissioner (T.C. Memo. 2021-27)

On March 3, 2021, the Tax Court issued a Memorandum Opinion in the case of Chiarelli v. Commissioner (T.C. Memo. 2021-27). The primary issues presented in Chiarelli were whether the petitioner was entitled to noncash charitable contribution deductions for the years at issue and whether the petitioner was liable for the IRC § 6662(a) accuracy-related penalties for 2012 and 2013. Incomplete Form 8283 The petitioner inherited valuable property from his late mother, had the items appraised by an auction company, and donated significant portions of the property, claiming charitable deductions of $90,000 in 2012, $93,000 in 2012, and $77,000 in 2015, respectively.  For each of the years at issue Section A of Form 8283 directed petitioner to list each item or group of similar items of donated property with a value of $5,000 or less and provide the name and address of the donee organization, a description of the donated…

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Pankratz v. Commissioner (T.C. Memo. 2021-26)

On March 3, 2021, the Tax Court issued a Memorandum Opinion in the case of Pankratz v. Commissioner (T.C. Memo. 2021-26). The primary issue presented in Pankratz was whether the failure to attach appraisals can be due to reasonable cause when a taxpayer admits that he did not review his tax returns before filing. Introductory Notes: I cannot say for sure whether the return preparers were actually the fire chief and the village idiot, but they might be.  The only thing that cuts against this supposition is that if Judge Holmes had caught wind of such a happening, you can be damn sure that he would have mentioned it in a footnote.  Or seven. Background The petitioner was a successful veterinarian, who (on a dare, it seems) invented a vaccine for a particular animal virus that caught the attention of the USDA.  Though the petitioner came to work for the…

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Gallegos v. Commissioner (T.C. Memo. 2021-25)

On March 2, 2021, the Tax Court issued a Memorandum Opinion in the case of Gallegos v. Commissioner (T.C. Memo. 2021-25). The primary issue presented in Gallegos was whether the team roping expenses the petitioner claimed on his Schedule C as business losses were business or personal in nature. Giddy-up, ya’ll… Setting the Stage First, this is a Judge Holmes opinion, so you know it’s going to be gold. Second, it involves competition team roping, which might even make for an entertaining opinion if it were authored by Judge Gustafson, who is a rather straight-laced jurist. How many sentences will Judge Holmes be able to write without a pun? One. One sentence. I am so excited…like, Jessie Spano on caffeine pills excited. Background (on Roping Steers) The petitioner grew up on the “largest ranch” in the largest town in New Mexico.  “But it was not on horses that he rode…

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Galloway v. Commissioner (T.C. Memo. 2021-24)

On February 24, 2021, the Tax Court issued a Memorandum Opinion in the case of Galloway v. Commissioner (T.C. Memo. 2021-24). The primary issue presented in Galloway was whether, during his CDP hearing, the petitioner was “improperly barred from resuscitating an offer-in-compromise” that had been rejected prior to the NFTL filing. Background By the time his second offer was rejected, the petitioner owed $81,500 in tax for 2014.  In 2016, he submitted an OIC for $9,138, which was rejected on the grounds that he could pay the full amount due.  Rather than appealing that rejection to Appeals, the petitioner submitted a new Form 656, Offer in Compromise, in January 2017, proposing to settle for $8,900. The petitioner argued “exceptional circumstances” with respect to his 2017 offer, including being fired for drinking in 2012 and having a “sustained period of unemployment thereafter.” Ah, the old "can't collect from an ol' drunk"…

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Anikeev v. Commissioner (T.C. Memo. 2021-23)

On February 23, 2021, the Tax Court issued a Memorandum Opinion in the case of Anikeev v. Commissioner (T.C. Memo. 2021-23). The primary issue presented in Anikeev was whether the “rewards” earned from the purchase of gift cards…a lot of gift cards…were income. Background The petitioners were crafty Russians, who gamed the credit card reward system.  They joined a credit card rewards program and proceeded to purchase their credit limit worth of prepaid gift cards.  With the gift cards, they bought money orders, and with the money orders deposited in their bank accounts, they paid off the credit cards.  This process cost, on average, $6, whereas they could make anywhere from $5 to $25 on each purchase. In 2013, the petitioners charged $1,219,077 on their credit card, $1,208,376 of which was used to purchase gift cards.  In 2014, they spent $5,184,033 on gift cards.  They made $36,200 in 2013 and…

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Desert Organic Solutions v. Commissioner (T.C. Memo. 2021-22)

On February 22, 2021, the Tax Court issued a Memorandum Opinion in the case of Desert Organic Solutions v. Commissioner (T.C. Memo. 2021-22). The primary issue presented in Desert Organic Solutions was whether the petitioner, a marijuana-based California business, was liable for a deficiency on the grounds that its activities were illegal under federal law. Note on My Tax Court Hero This is the first of Judge Holmes’ decisions with which I was a bit disappointed.  On the one hand, I had four decisions to summarize this morning, and a three-page opinion was welcome.  On the other, it lacked Judge Holmes’ wit and wisdom.  Any opinion of his without a zinger is a lost opportunity in my opinion.  Further, the marijuana jokes practically write themselves.  Judge Holmes just let the potential for good puns go up in smoke... The Appeal of Patients Mutual Judge Holmes notes succinctly that “[w]e’ve been…

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