Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Benson v. Commissioner
T.C. Memo. 2021-78

On June 29, 2021, the Tax Court issued a Memorandum Opinion in the case of Benson v. Commissioner (T.C. Memo. 2021-78). The primary issue presented in Benson v. Commissioner was whether the petitioner was precluded from challenging his underlying liabilities in a CDP case. Background to Benson v. Commissioner The petitioner has sought to challenge his 2008 and 2009 tax liabilities both in his CDP hearing and in this Court. The petitioner had two prior opportunities to contest his underlying liabilities for tax years 2008 and 2009. First, there is no dispute that the IRS sent, and Mr. Benson received, notices of deficiency for both years. Second, Mr. Benson does not contest, that the IRS issued a notice of intent to levy to him on October 18, 2016. Prior Opportunity to Challenge A taxpayer may challenge his underlying liability in a CDP proceeding if he “did not receive any statutory…

0 Comments
July 12, 2021
Penalties Under the Code
Memorandum Opinions / Penalties Under the Code / Tax Opinions

Muhammad v. Commissioner
T.C. Memo. 2021-77

On June 29, 2021, the Tax Court issued a Memorandum Opinion in the case of Muhammad v. Commissioner (T.C. Memo. 2021-77). The primary issue presented in Muhammad v. Commissioner was whether the petitioner’s arguments were completely frivolous, or just a little frivolous, so as to support the frivolous argument penalty under IRC § 6673(a)(1)(B). Held: Petitioner was completely full of shit; penalties ensued. Overview of Muhammad v. Commissioner The question presented in this case is whether the petitioner is taxable on wages of $48,535 received from her employer during 2016. The petitioner contends that her wages were not subject to Federal income tax because she was not engaging in the “exercise of Federal privileges.” Finding her argument to be frivolous, the Tax Court sustained the deficiency of $5,326 determined by the IRS and imposed a penalty of $250 under IRC § 6673(a)(1)(B). Income in a Nutshell IRC § 61(a) provides…

1 Comment
July 12, 2021
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Kelly v. Commissioner
T.C. Memo. 2021-76

On June 28, 2021, the Tax Court issued a Memorandum Opinion in the case of Kelly v. Commissioner (T.C. Memo. 2021-76). The primary issues presented in Kelly v. Commissioner were whether transfers from a company to the petitioner were loans, and if so, whether the petitioner received taxable distributions or cancellation of indebtedness (COD) income when the loans were cancelled. Background to Kelly v. Commissioner The petitioner was a 50% owner of Lucky Bastard Records. As of December 2007, Lucky Bastard owed nearly $1 million to petitioner’s S corporation, First Commercial Corp. (FCC). This was but one of many loans between the petitioner’s numerous companies. This fact bears absolutely no relevance to the decision, but the Tax Court thought it was funny and left it in the opinion.  This, Alanis, is irony... Over the decades of their operations, the petitioner's companies developed accounting departments that employed qualified professionals. They also…

0 Comments
July 12, 2021
Penalties Under the Code
Memorandum Opinions / Penalties Under the Code / Tax Opinions

Ervin v. Commissioner
T.C. Memo. 2021-75

On June 23, 2021, the Tax Court issued a Memorandum Opinion in the case of Ervin v. Commissioner (T.C. Memo. 2021-75). The primary issue presented in Ervin v. Commissioner was whether the petitioner’s criminal restitution payments satisfied his income tax liability. Background to Ervin v. Commissioner This may be a rather vast generalization, but most folks named Monty are not the most trustworthy.  Monty Ervin is one such Monty.  Monty failed to file Federal income tax returns for 2000-2009 and was convicted of tax crimes for 2004-2006. In June 2012 he was sentenced to imprisonment and ordered to pay restitution of $1,436,508, the amount of the Government's estimated tax loss. Monty, it seems, not only failed to pay taxes, but he tried really, really hard to do so. Monty’s alleged overt acts included purchasing and selling property in the names of nominees and trusts, creating false warranty deeds to facilitate…

0 Comments
July 12, 2021