Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Shaddix v. Commissioner
T.C. Memo. 2022-11

On February 28, 2022, the Tax Court issued a Memorandum Opinion in the case of Shaddix v. Commissioner (T.C. Memo. 2022-11). The primary issue presented in Shaddix was whether the IRS abused its discretion in upholding the filing of a notice of federal tax lien by denying the petitioner the ability to challenge his underlying liability. Held: In a rare abuse of discretion victory for a taxpayer, the Tax Court in Shaddix v. Commissioner actually held that the IRS did, in fact, abuse its discretion. Background to Shaddix v. Commissioner The petitioner had liabilities of $39,000 for the tax years 2013-2016. Whether he self-reported these liabilities, or the IRS pulled them from a hat is anyone’s guess, but Judge Lauber assumed for purposes of the IRS’s motion for summary judgment that they were self-reported. In support of said motion for summary judgment, the IRS attached account transcripts with entries for…

2 Comments
May 18, 2022
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Hicks v. Commissioner
T.C. Memo. 2022-10

On February 23, 2022, the Tax Court issued a Memorandum Opinion in the case of Hicks v. Commissioner (T.C. Memo. 2022-10). The primary issue presented in Hicks v. Commissioner was whether the petitioner was entitled to the dependency exemption deductions and child tax credits claimed on his income tax return. Background to Hicks v. Commissioner The petitioner has two children with one Ms. Oddimissia N. Johnson who were minors in 2014, the year at issue. Oddimissia were never married and did not cohabitate in 2014. In fact, Oddimissia lived with her mother Juanita, as did the two children (for more than ½ of the year). The petitioner provided over ½ of the children’s financial support in 2014. In 2006, an Ohio state court adopted a shared parenting plan, signed by Oddimissia and the petitioner, which provided that Oddimissia could claim Child 1 every year for tax purposes, and the petitioner…

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May 17, 2022
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Hoops LP v. Commissioner
T.C. Memo. 2022-9

On February 23, 2022, the Tax Court issued a Memorandum Opinion in the case of Hoops LP v. Commissioner (T.C. Memo. 2022-9). The primary issues presented in Hoops LP v. Commissioner were whether partnership was entitled to deduct deferred compensation owed to two of its basketball franchise's players, and whether the partnership was required to take into account the amount of its deferred compensation liability for players when computing its taxable gain or loss from sale of franchise under IRC § 1231. Held: No. Yes. Win, IRS. Background to Hoops LP v. Commissioner The petition was before the court for readjustment of the final partnership administrative adjustment (FPAA) issued to the partnership’s tax matters partner for 2012. In the March 2018 FPAA, the IRS disallowed an additional deduction of $10,673,327 for salaries and wages that Hoops LP (“Hoops”) claimed on its Form 1065X, Amended Return or Administrative Adjustment Request (AAR),…

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May 16, 2022
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Harwood v. Commissioner
T.C. Memo. 2022-8

On February 15, 2022, the Tax Court issued a Memorandum Opinion in the case of Harwood v. Commissioner (T.C. Memo. 2022-8). The primary issue presented in Harwood was whether the taxpayer adequately substantiated his deductions for travel, residence, and “other” such deductions. Background to Harwood v. Commissioner During the years at issue, Mr. Harwood worked as a steamfitter and brazier on construction projects in Washington and Oregon. Mr. Harwood joined Plumber and Steamfitters Local 598 (Local), headquartered in Pasco, Washington, in the 1970s, and he obtained each of the jobs during the years at issue through the Local. The Local's territory straddles southern Washington and northern Oregon. At this point the Tax Court includes a rare visual:   The Harwoods lived in Yakima, Washington, nestled within the western part of the Local's territory. Mr. Harwood, a Yakima native, loved his hometown and took great pride in raising a family there…

0 Comments
May 13, 2022
Penalties Under the Code
Memorandum Opinions / Penalties Under the Code / Tax Opinions

Williams v. Commissioner
T.C. Memo. 2022-7

On February 7, 2022, the Tax Court issued a Memorandum Opinion in the case of Williams v. Commissioner (T.C. Memo. 2022-7). The primary issues presented in Williams were (i) whether the disallowance of the petitioner’s deductions was warranted; and (ii) whether frivolous position penalty was warranted. A Brief Background of Williams v. Commissioner The IRS issued a notice of deficiency, in which it disallowed certain deductions claimed by the petitioner (Larry) in connection with his business. As Judge Urda observes, “[r]ather than attempting to demonstrate errors by the IRS in its determination, [Larry] has chosen to focus his challenge on frivolous and groundless arguments.” Representatives Larry appeared pro se. The IRS was represented by Mike Foster and Dan Munce, two of the best General Counsel attorneys I have ever met. Needless to say, this wasn’t a fair fight – even before the frivolity entered into the equation. The Frivolity in…

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May 12, 2022
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Slone v. Commissioner
T.C. Memo. 2022-6

On February 7, 2022, the Tax Court issued a Memorandum Opinion in the case of Slone v. Commissioner (T.C. Memo. 2022-6). The primary issues presented in Slone were (i) whether the IRS bore the burden of production to show timely supervisory approval of the accuracy-related penalty; (ii) whether the IRS was entitled to maintain claims against the petitioners and the trusts at issue. Editor's Note to Slone v. Commissioner The contempt that Judge Lauber (appropriately) has for the Ninth Circuit Court of Appeals is palpable in this opinion. As you can see from this history of this case, the Tax Court and the Ninth Circuit had a veritable measuring contest, and, sadly, the Ninth Circuit won (most of) the day. Because, you know, Article I supremacy. That doesn't mean Albert Lauber is going to take it without a few jabs, though. Kudos, Judge Lauber. Stick it to the hippies. Case…

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May 11, 2022
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Flynn v. Commissioner
T.C. Memo. 2022-5

On February 3, 2022, the Tax Court issued a Memorandum Opinion in the case of Flynn v. Commissioner (T.C. Memo. 2022-5). The primary issue presented in Flynn was whether the settlement officer abused her discretion in rejecting an offer-in-compromise based on reporting housing expenses which deviated from the IRS’s standard housing amount allowance. Background to Flynn v. Commissioner As of February 2018, Mr. Flynn's outstanding 2012–14 tax liabilities totaled $15,557. To collect this amount, the IRS sent Mr. Flynn a levy notice informing him of its intent to seize his assets and apprising him of his right to a hearing. Mr. Flynn timely submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing, expressing his interest in either an offer-in-compromise (OIC) or an installment agreement. The case thereafter was assigned to a settlement officer. The settlement officer held a telephone CDP hearing with Mr. Flynn in June 2018.…

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May 10, 2022