Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Hamilton v. Commissioner
T.C. Memo. 2022-21

On March 15, 2022, the Tax Court issued a Memorandum Opinion in the case of Hamilton v. Commissioner (T.C. Memo. 2022-21). The primary issues presented in Hamilton v. Commissioner were (1) whether the Tax Court would consider taxpayers’ testimony and documentary evidence; (2) whether the notices of determination contained plain errors; (3) whether the omission of documents from administrative record called into question completeness of record (and, if so, whether settlement officer’s determination to sustain notice would have been same had she been aware of documents); and (4) whether taxpayers presented officer with substantial reason to grant extension of time to submit financial information. Held: Yes, on all counts. Remanded. Background to Hamilton v. Commissioner During 2016 and 2017, Mr. Hamilton worked as an attorney (first as a solo practitioner and then in a partnership), while Mrs. Hamilton worked as a chaplain. The Hamiltons reported on their 2016 Form 1040…

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June 17, 2022
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Bunton v. Commissioner
T.C. Memo. 2022-20

On March 10, 2022, the Tax Court issued a Memorandum Opinion in the case of Bunton v. Commissioner (T.C. Memo. 2022-20). The primary issues presented in Bunton v. Commissioner were (1) whether Brian and Karen were entitled to challenge the existence and amounts of their underlying tax liabilities for the tax years at issue during their collection due process (CDP) proceeding, (2) whether Appeals properly verified the requirements of applicable law and procedure were met, (3) whether Appeals abused its discretion in denying Brian and Karen a face-to-face hearing, and (4) whether Appeals abused its discretion in considering issues raised under IRC § 6330(c)(2). Held: No, not even a little bit. Also, tax protester alert! Background to Bunton v. Commissioner (Featuring the Tax Protesters, Brian and Karen Bunton) On April 15, 2014, Brian and Karen (Brian and Karen…of course she’s a Karen) timely filed a joint 2013 Form 1040. Brian…

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June 16, 2022
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

DelPonte v. Commissioner
158 T.C. No. 7

On May 5, 2022, the Tax Court issued the full opinion in DelPonte v. Commissioner (158 T.C. No. 7). The primary issue presented in DelPonte v. Commissioner was whether the IRS’s Cincinnati Centralized Innocent Spouse Operation (CCISO) or the IRS’s Office of Chief Counsel has the final authority to determine whether taxpayer was entitled to innocent spouse relief when such relief is first raised as an affirmative defense in a Tax Court petition. Held: Chief Counsel, all the way. Background to DelPonte v. Commissioner Michelle DelPonte separated from her ex-husband, William Goddard, in 2000. She is still, more than twenty years later, trying to untangle his affairs from her own. What concerns the Tax Court is her effort to be relieved of her liability on the joint tax returns she filed with Goddard while they were married. The part of the IRS bureaucracy that usually handles these sorts of requests…

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June 15, 2022
Business Related Issues
Business Related Issues / Memorandum Opinions / Tax Opinions

Treece Financial Services Group v. Commissioner
158 T.C. No. 6

On April 19, 2022, the Tax Court issued the full opinion in Treece Financial Services Group v. Commissioner (158 T.C. No. 6). The primary issue presented in Treece Financial Services Group v. Commissioner was whether the Tax Court had jurisdiction to determine whether Voluntary Classification Settlement Program (VCSP) entered into computation of taxes owed by the taxpayer. Held: Indeed, it did. Treece Financial Services Group v. Commissioner in a Nutshell Treece Financial Services Group, a corporation, petitioned for review of a notice of employment tax determination under IRC § 7436. The parties agree that the IRS properly determined that Mr. Treece is an employee of Treece Financial Services Group, but they dispute the proper amount of employment tax under that determination. Treece Financial Services Group asserts that the amount should be computed using the IRS’s Announcement 2012-45, and that it is entitled to use the Voluntary Classification Settlement Program (VCSP)…

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June 14, 2022
Business Related Issues
Business Related Issues / Memorandum Opinions / Tax Opinions

BATS Global Markets Holdings Inc. v. Commissioner
158 T.C. No. 5

On March 31, 2022, the Tax Court issued the full opinion in BATS Global Markets Holdings Inc. v. Commissioner (158 T.C. No. 5). The primary issue presented in BATS Global Markets Holdings Inc. v. Commissioner was whether the petitioner's transaction fees, routing fees, and logical port fees qualify as domestic production gross receipts (DPGR) for the purpose of calculating deductions pursuant to IRC § 199. Held: No dice, BATS. Procedural Background to BATS Global Markets Holdings Inc. v. Commissioner The IRS issued a notice of deficiency determining deficiencies of $900,000 (2011), $1.3 million (2012), and $1.4 million (2013). Factual Overview of BATS Global Markets Holdings Inc. v. Commissioner During the years in issue (2011-2013) BATS Global Markets Holdings, Inc. (Bats Global) owned 100% of BATS Exchange, Inc., BATS Y-Exchange, Inc., and BATS Trading, Inc. It was the common parent of a group of corporations (collectively, the petitioner) which filed consolidated…

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June 13, 2022
International Issues
International Issues / Memorandum Opinions / Tax Opinions

Aptargroup Inc. v. Commissioner
158 T.C. No. 4

On March 16, 2022, the Tax Court issued the full opinion in Aptargroup Inc. v. Commissioner (158 T.C. No. 4). The primary issue presented in Aptargroup Inc. v. Commissioner was whether the taxpayer was required to characterize stock in controlled foreign corporation using gross income method. Held: Yes, indeed it was. Aptargroup Inc. v. Commissioner in a Nutshell Aptargroup Inc. owns stock in a controlled foreign corporation (CFC). The CFC apportioned interest expenses under the modified gross income method. Aptargroup claimed a foreign tax credit under IRC § 904 as to the tax imposed on the income from the CFC. Aptargroup characterized its stock in the CFC (in order to determine the amount of the foreign tax credit) using the asset method. This, dear readers is the crux of the issue: Aptargroup did not use the same method that the CFC used for interest expense apportionment. The IRS issued a…

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June 10, 2022
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Lewis v. Commissioner
158 T.C. No. 3

On March 3, 2022, the Tax Court issued the full opinion in Lewis v. Commissioner (158 T.C. No. 3). The primary issues presented in Lewis v. Commissioner were (i) whether the letter that the taxpayer sent to the IRS constituted a “qualified offer” (sorry, Gina, but no) and (ii) whether the IRS’s position in the litigation was “substantially justified” (don’t quit your job at the diner, because the position was justified…substantially). Lewis v. Commissioner in a Nutshell The taxpayer, Gina Lewis, worked the diner all day, working for her man (Tim—not Tommy, as the Tax Court had initially guessed). She brought home her pay for love, for love.[1] And where did this get Gina? On the hook, jointly and severally, for Tim’s income tax deficiencies. Gina petitioned for innocent spouse relief after the IRS issued notice of deficiency to her and former spouse Tim. Following the resolution of the related…

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June 9, 2022