Gregory v. Commissioner T.C. Memo. 2021-115
On September 29, 2021, the Tax Court issued a Memorandum Opinion in the case of Gregory v. Commissioner (T.C. Memo. 2021-115). The primary issue presented in Gregory v. Commissioner was whether the claimed deductions permitted under IRC § 183(b) for activities not engaged in for profit are not subject to the 2% floor on miscellaneous itemized deductions set forth in IRC § 67(a). Background to Gregory v. Comissioner During the years at issue, 2014 and 2015, the petitioners operated CLC Ventures, Ltd. (CLC), which generated income and incurred expenses from boat chartering activities. CLC was incorporated in the Cayman Islands and elected to be treated as a disregarded entity in 2012. The petitioners jointly filed tax returns for the years at issue and reported the income and expenses from their CLC activity on Schedules C (Profit or Loss From Business). The IRS audited the petitioners’ 2014 and 2015 returns and issued a…
