Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Pragias v. Commissioner
T.C. Memo. 2021-82

On June 30, 2021, the Tax Court issued a Memorandum Opinion in the case of Pragias v. Commissioner (T.C. Memo. 2021-82). The primary issue presented in Pragias v. Commissioner was whether the six-year statute of limitations under IRC § 6501(e) (substantial omission of items) applied. The Substantial Omission Extension under IRC § 6501(e) in Pragias v. Commissioner IRC § 6501(a) generally requires that the IRS assess tax within three years after the taxpayer files his return. However, IRC § 6501(e), as relevant to this case and as in effect at the relevant time, extends this period to six years for returns that satisfy a two-part test. See Quick Tr. v. Commissioner, 54 T.C. 1336, 1346 (1970), aff'd per curiam, 444 F.2d 90 (8th Cir. 1971). First, the extended limitations period applies only if “the taxpayer omits from gross income an amount properly includible therein” and that amount “is in excess…

0 Comments
July 12, 2021
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Long v. Commissioner
T.C. Memo. 2021-81

On June 30, 2021, the Tax Court issued a Memorandum Opinion in the case of Long v. Commissioner (T.C. Memo. 2021-81). The primary issue presented in Long v. Commissioner was whether the petitioner was entitled to dispute her underlying liabilities when she failed to do so with prior opportunity arising out of a notice of deficiency that was mailed to the petitioner’s last known address—which she did not receive. Underlying Liability in CDP Case in Long v. Commissioner A taxpayer's underlying liability is properly at issue if she did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute the liability. IRC § 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609 (2000). Generally, a notice of deficiency is valid if it was properly mailed to the taxpayer at her last known address. IRC § 6212(b)(1); Hoyle v. Commissioner, 131 T.C. 197, 200, 203-204 (2008),…

0 Comments
July 12, 2021
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Geiman v. Commissioner
T.C. Memo. 2021-80

On June 30, 2021, the Tax Court issued a Memorandum Opinion in the case of Geiman v. Commissioner (T.C. Memo. 2021-80). The primary issue presented in Geiman v. Commissioner was whether the petitioner was a tax “itinerant” or whether he had a tax home, for purposes of unreimbursed business expenses. Background to Geiman v. Commissioner The petitioner is a union electrician who spent most of 2013 on jobs in various parts of Wyoming and Colorado. He claimed on his 2013 Federal income tax return: an unreimbursed employee business expense deduction of $39,392 for meals, lodging, vehicle expenses, and union dues and a (2) deduction for “other” expenses of $6,025. The petitioner was a licensed journeyman electrician who owned a trailer home in Clifton, Colorado, as well as a rental property in nearby Grand Junction, Colorado. He had lived in Clifton since at least 2007 with his 2013 tax return showing…

2 Comments
July 12, 2021
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Nurumbi v. Commissioner
T.C. Memo. 2021-79

On June 30, 2021, the Tax Court issued a Memorandum Opinion in the case of Nurumbi v. Commissioner (T.C. Memo. 2021-79). The primary issue presented in Nurumbi v. Commissioner was whether the petitioner was subject to the heightened substantiation rules under IRC § 274(d), or whether the exception to such rules for vehicles for hire applied. Held:  Background to Nurumbi v. Commissioner The petitioner was an Uber pimp. He maintained a stable of Uber drivers under his iron fist and gold cane.  Just guessing here. Every week Uber would pay petitioner for his own driving activity and for that of the drivers under his Uber account, subtracting its fee and depositing the remaining funds into a Bank of America account. Petitioner would withdraw funds from the BoA account, deposit some of the withdrawn funds into the BBVA account, and retain the remainder as cash. Then he would pay the drivers…

0 Comments
July 12, 2021
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Benson v. Commissioner
T.C. Memo. 2021-78

On June 29, 2021, the Tax Court issued a Memorandum Opinion in the case of Benson v. Commissioner (T.C. Memo. 2021-78). The primary issue presented in Benson v. Commissioner was whether the petitioner was precluded from challenging his underlying liabilities in a CDP case. Background to Benson v. Commissioner The petitioner has sought to challenge his 2008 and 2009 tax liabilities both in his CDP hearing and in this Court. The petitioner had two prior opportunities to contest his underlying liabilities for tax years 2008 and 2009. First, there is no dispute that the IRS sent, and Mr. Benson received, notices of deficiency for both years. Second, Mr. Benson does not contest, that the IRS issued a notice of intent to levy to him on October 18, 2016. Prior Opportunity to Challenge A taxpayer may challenge his underlying liability in a CDP proceeding if he “did not receive any statutory…

0 Comments
July 12, 2021
Penalties Under the Code
Memorandum Opinions / Penalties Under the Code / Tax Opinions

Muhammad v. Commissioner
T.C. Memo. 2021-77

On June 29, 2021, the Tax Court issued a Memorandum Opinion in the case of Muhammad v. Commissioner (T.C. Memo. 2021-77). The primary issue presented in Muhammad v. Commissioner was whether the petitioner’s arguments were completely frivolous, or just a little frivolous, so as to support the frivolous argument penalty under IRC § 6673(a)(1)(B). Held: Petitioner was completely full of shit; penalties ensued. Overview of Muhammad v. Commissioner The question presented in this case is whether the petitioner is taxable on wages of $48,535 received from her employer during 2016. The petitioner contends that her wages were not subject to Federal income tax because she was not engaging in the “exercise of Federal privileges.” Finding her argument to be frivolous, the Tax Court sustained the deficiency of $5,326 determined by the IRS and imposed a penalty of $250 under IRC § 6673(a)(1)(B). Income in a Nutshell IRC § 61(a) provides…

1 Comment
July 12, 2021
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Kelly v. Commissioner
T.C. Memo. 2021-76

On June 28, 2021, the Tax Court issued a Memorandum Opinion in the case of Kelly v. Commissioner (T.C. Memo. 2021-76). The primary issues presented in Kelly v. Commissioner were whether transfers from a company to the petitioner were loans, and if so, whether the petitioner received taxable distributions or cancellation of indebtedness (COD) income when the loans were cancelled. Background to Kelly v. Commissioner The petitioner was a 50% owner of Lucky Bastard Records. As of December 2007, Lucky Bastard owed nearly $1 million to petitioner’s S corporation, First Commercial Corp. (FCC). This was but one of many loans between the petitioner’s numerous companies. This fact bears absolutely no relevance to the decision, but the Tax Court thought it was funny and left it in the opinion.  This, Alanis, is irony... Over the decades of their operations, the petitioner's companies developed accounting departments that employed qualified professionals. They also…

0 Comments
July 12, 2021