Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Silver v. Commissioner (T.C. Memo. 2021-98)

On August 9, 2021, the Tax Court issued a Memorandum Opinion in the case of Silver v. Commissioner (T.C. Memo. 2021-98). The primary issue presented in Silver v. Commissioner was whether the petitioner’s arguments were frivolous, and if so whether the imposition of a penalty for bringing a frivolous or groundless position was warranted. Background to Silver v. Commissioner The petitioner, Mr. Silver, received $28,155 in wages and $5,000 as other income in tax year 2012. Not unsurprisingly, the 12 businesses that Mr. Silver worked for to earn $33,155 over two years did not withhold. His return for 2012, which was filed in March of 2016, reported no gross income and no tax liability. The return had a number of novel attachments, including eleven "substitutes" for Forms W-2, one “corrected” Form 1099-MISC, and one stub of a train ticket straight to crazytown. The “corrected” (the quotes and side-eye are straight…

1 Comment
September 28, 2021
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Abraham v. Commissioner
T.C. Memo. 2021-97

On August 3, 2021, the Tax Court issued a Memorandum Opinion in the case of Abraham v. Commissioner (T.C. Memo. 2021-97). The primary issue presented in Abraham v. Commissioner  was whether the settlement officer abused its discretion in rejecting the petitioners’ offer in compromise and by not performing a bankruptcy analysis. Initial Observations about Abraham v. Commissioner Father Abraham three wives—Hagar, Sarah, and Keteurah. Jerry Abraham had one wife. Her name was Debra. The Returns and Failure to Pay On their 2012-2016 returns, the Abrahams reported between $215,000 and $300,000 each year. They did not, however, fully “pay” their liabilities. The IRS assessed for each year the reported liability, an addition to tax for failure to timely pay under IRC § 6651(a)(2), an addition to tax for failure to pay estimated tax under IRC § 6654, and statutory interest. OIC Submission and Rejection The IRS issued a notice informing the…

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September 27, 2021
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Today’s Health Care II LLC v. Commissioner
T.C. Memo. 2021-96

On August 2, 2021, the Tax Court issued a Memorandum Opinion in the case of Today’s Health Care II LLC v. Commissioner (T.C. Memo. 2021-96). The primary issue presented in Today’s Health Care II LLC v. Commissioner was whether IRC § 280E (Expenditures in Connection with the Illegal Sale of Drugs) violated the Eighth or Sixteenth Amendments to the Constitution. Held: Not today, hippie. Note: Even the initials of the company (T.H.C.) are pot-induced. Kudos, stoners. Background to Today’s Health Care II LLC v. Commissioner Today’s Health Care (THC) is a Colorado LLC organized in 2010 for the purpose of doing business as a retail dispensary licensed and authorized to cultivate, manufacture, distribute, and sell medical marijuana products in accordance with Colorado State law. At the time it filed the petition, THC’s principal place of business was in Colorado Springs, Colorado. During 2014 and 2015, THC operated a marijuana grow facility…

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September 26, 2021
Penalties Under the Code
Memorandum Opinions / Penalties Under the Code / Tax Opinions

Harrington v. Commissioner
T.C. Memo. 2021-95

  On July 26, 2021, the Tax Court issued a Memorandum Opinion in the case of Harrington v. Commissioner (T.C. Memo. 2021-95). The primary issue presented in Harrington was whether the IRS’s assessment was assessment is barred by the three-year period of limitations in IRC § 6501(a), or whether the statute of limitations remained open due to fraud under IRC § 6501(c)(1). Summary1 “Sarah, I feel like I don’t even know you.” “It’s Vivian. Would you say that you’re completely full of shit, or just 50 percent.” “I hope just 50, but who knows?” Spoiler alert:  The petitioner, Mr. Harrington, was, unquestionably, unabashedly, and completely full of shit, and Judge Lauber had a field day sticking it to the petitioner. Background and Bad Judgment in Harrington v. Commissioner The petitioner was a glorified lumberjack. A U.S. citizen, the petitioner worked in the “forest product industry.” He started his career in…

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September 25, 2021
Read more about the article Ononuju v. Commissioner <section> T.C. Memo. 2021-94 </section>
Charitable Issues / Memorandum Opinions / Tax Opinions

Ononuju v. Commissioner
T.C. Memo. 2021-94

On July 26, 2021, the Tax Court issued a Memorandum Opinion in the case of Ononuju v. Commissioner (T.C. Memo. 2021-94). The primary issue presented in Ononuju v. Commissioner was whether the petitioner was liable for excise tax pursuant to IRC § 4958 as a “disqualified person” who engages in an “excess benefit transaction” with a tax-exempt charity. Background to Assessment in Ononuju v. Commissioner The IRS determined that the petitioner was a disqualified person with respect to American Medical Missionary Care, Inc. (AMMC), an organization tax exempt under IRC § 501(a) and IRC § 501(c)(3), and that she engaged in excess benefit transactions with it during 2014. The IRS accordingly determined a first-tier tax of $32,500 under section 4958(a) and (because petitioner failed to correct the improper transactions during the applicable period) a second-tier tax of $260,000 under section 4958(b). The IRS also determined additions to tax under IRC…

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September 24, 2021
Estate Tax Issues
All Articles / Estate Tax Issues / Tax Articles

Effects of the Build Back Better Act on Estates and Trusts

Examining the Effects of the Build Back Better Act on Estates and Trusts On September 13, 2021, the House Ways and Means Committee released the legislative text of proposed tax changes to be incorporated into the omnibus reconciliation bill known as the “Build Back Better Act.”  One wonders if the geniuses behind the BBBA intended the acronym to be pronounced as “Bubba,” but one thing is sure—having now read BBBA as “Bubba” you will never not pronounce it that way in your head going forward. So what are the effects of the Build Back Better Act on estates & trusts? While most of the focus has been the corporate[1] and individual tax changes,[2] the proposed changes to grantor trusts and other long-standing estate planning techniques will be the focus of this article. In Part One of this article, we’ll look to the technical provisions in the House Ways and Means…

2 Comments
September 20, 2021
Procedural Issues
All Articles / Procedural Issues / Tax Articles

Disqualification of an IRS Appeals Officer for Prior Involvement

Background to a Fair Collection Due Process Hearing In a previous Taxing, Briefly article, we discussed the IRS collection process including Collection Due Process (CDP) appeal procedures.  As we noted in that article, a CDP appeal is a taxpayer’s opportunity to dispute the appropriateness of a lien or levy.[1] In this post, we'll discuss the disqualification of an IRS Appeals Officer for prior involvement in a collection due process hearing and the IRS's vehement arguments against such "fairness" in a CDP hearing. When someone fails to pay tax, the IRS will assess the liability against her and send a notice and demand letter.[2] After that, things only get worse for the taxpayer. The taxpayer’s tax liability will become a lien in favor of the IRS against all of its property,[3] and if the taxpayer does nothing, shortly thereafter, the taxpayer will receive a notice of intent to levy (a politely…

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September 17, 2021