Penalties Under the Code
Memorandum Opinions / Penalties Under the Code / Tax Opinions

Morris v. Commissioner
T.C. Memo. 2021-120

On October 25, 2021, the Tax Court issued a Memorandum Opinion in the case of Morris v. Commissioner (T.C. Memo. 2021-120). The primary issue presented in Morris v. Commissioner was whether the petitioner’s or liable for penalties for failure to timely file (IRC § 6651(a)(1)), failure to timely pay (IRC § 6651(a)(2)), and failure to pay estimated tax (IRC § 6654). Held: Yes. Yes, they were. Background to Morris v. Commissioner Mr. Morris was a successful businessman, but his businesses became a bit too big for his britches. In 2013, Mr. Morris expanded his packaging business into the manufacture of converted packaging and formed Morris Converting. Morris Converting expanded very, very rapidly and at the time of trial had about 175 employees. The petitioners’ returns for the years at issue (2015 and 2016) were prepared by their long-time CPA, Dennis. Once Morris Converting had grown too big for Dennis’ skillset…

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November 8, 2021
Income Tax Issues
Income Tax Issues / Tax Articles

The Claim of Right Doctrine and Illegally Obtained Funds

The Claim of Right Doctrine and Cousin Jethro After your Uncle Bill’s unfortunate forklift incident, mentioned here and here, you were surprised to hear that Bill’s idiot boy Jethro got a job at the tannery, especially in light of his somewhat checkered past and run-ins with the law. The more you learn about Jethro’s new job, however, the more it makes sense. Unbeknownst to you, the tanneries of New England are run by a group of families referred to as the “Suede Hand.” You learned about this mafioso-esque group after Jethro showed up to the family reunion in November, which you were somehow swindled into attending, in a brand-new cherry-red Corvette Z06. Despite yourself, you asked Uncle Bill how Jethro’s job at the tannery enabled him to purchase an $85,000 sports car. Bill chuckled, as he is wont to do when there is illegality afoot, and he said simply that…

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November 8, 2021