Procedural Issues
Full Tax Court Opinions / Procedural Issues / Tax Opinions

Mainstay Business Solutions v. Commissioner
156 T.C. No. 7

On March 4, 2021, the Tax Court issued its opinion in Mainstay Business Solutions v. Commissioner (156 T.C. No. 7). The underlying issue presented in Mainstay Business Solutions v. Commissioner was whether the Tax Court has the discretion to allow a petitioner to withdraw a petition when the petitioner did not invoke the Tax Court’s jurisdiction to redetermine a deficiency. Context to Mainstay Business Solutions v. Commissioner I am a bit delinquent in my summaries. Mea culpa. Nonetheless, at the time of writing this summary, Judge Holmes just issued the opinion in Jackson v. Commissioner, T.C. Memo. 2021-48 (May 3, 2021), which is 271 pages long.  A memorandum opinion is an opinion without a significant legal issue or principle at issue.  A full Tax Court opinion is issued when there is a sufficiently important legal issue or principle involved. So, consider me confused with the five page FULL Tax Court opinion…

1 Comment
March 4, 2021
Penalties Under the Code
Tax Opinions / Charitable Issues / Memorandum Opinions / Penalties Under the Code

Chiarelli v. Commissioner
T.C. Memo. 2021-27

On March 3, 2021, the Tax Court issued a Memorandum Opinion in the case of Chiarelli v. Commissioner (T.C. Memo. 2021-27). The primary issues presented in Chiarelli v. Commissioner were whether the petitioner was entitled to noncash charitable contribution deductions for the years at issue and whether the petitioner was liable for the IRC § 6662(a) accuracy-related penalties for 2012 and 2013. Incomplete Form 8283 in Chiarelli v. Commissioner The petitioner inherited valuable property from his late mother, had the items appraised by an auction company, and donated significant portions of the property, claiming charitable deductions of $90,000 in 2012, $93,000 in 2012, and $77,000 in 2015, respectively.  For each of the years at issue Section A of Form 8283 directed petitioner to list each item or group of similar items of donated property with a value of $5,000 or less and provide the name and address of the donee…

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March 3, 2021
Read more about the article Pankratz v. Commissioner <section> T.C. Memo. 2021-26 </section>
Tax Opinions / Charitable Issues / Memorandum Opinions

Pankratz v. Commissioner
T.C. Memo. 2021-26

On March 3, 2021, the Tax Court issued a Memorandum Opinion in the case of Pankratz v. Commissioner (T.C. Memo. 2021-26). The primary issue presented in Pankratz v. Commissioner was whether the failure to attach appraisals can be due to reasonable cause when a taxpayer admits that he did not review his tax returns before filing. Introductory Notes: I cannot say for sure whether the return preparers were actually the fire chief and the village idiot, but they might be.  The only thing that cuts against this supposition is that if Judge Holmes had caught wind of such a happening, you can be damn sure that he would have mentioned it in a footnote.  Or seven. Background to Pankratz v. Commissioner The petitioner was a successful veterinarian, who (on a dare, it seems) invented a vaccine for a particular animal virus that caught the attention of the USDA.  Though the…

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March 3, 2021
Procedural Issues
Full Tax Court Opinions / Procedural Issues / Tax Opinions

McCrory v. Commissioner
156 T.C. No. 6

On March 2, 2021, the Tax Court issued its opinion in McCrory v. Commissioner (156 T.C. No. 6). The underlying issue presented in McCrory v. Commissioner was whether the preliminary award recommendation issued by the IRS’s Whistleblower Office under IRC § 7623(a) constitutes a binding “determination” within the meaning of IRC § 7623(b)(4).  Not so much. Procedural Background to McCrory v. Commissioner The petitioner filed 21 Forms 211 (Application for Award for Original Information) with the IRS’s Whistleblower Office (WBO), alleging that 21 taxpayers underreported their tax obligations. The WBO sent the petitioner a letter recommending a preliminary award under IRC § 7623(a). The petitioner neither agreed nor disagreed with the preliminary award recommendation. What the petitioner did instead was file a petition seeking review of the preliminary award recommendation. The IRS moved to dismiss, arguing that the Tax Court lacked jurisdiction. Short Holding and Takeaway in McCrory v. Commissioner…

0 Comments
March 2, 2021
Read more about the article Substantiation of Charitable Contributions Under DEFRA
Tax Articles / All Articles / Charitable Issues

Substantiation of Charitable Contributions Under DEFRA

The deductibility of a charitable contribution depends on the donor-taxpayer meeting several conditions, which conditions are determined by the size and type of contribution.  The larger the contribution, the more stringent the documentation and substantiation that is needed.[1]  With respect to non-cash donations, the amount of the contribution is generally equal to the fair market value of the property at the time of contribution.[2] Determining the FMV, however, is the factor that taxpayers so often fail to meet. Are You (Compliant with) DEFRA? In 1984, Congress passed the Deficit Reduction Act of 1984 (DEFRA).[3] Section 155(a) of DEFRA authorized (and required) the Treasury to prescribe regulations implementing substantiation requirements for noncash charitable contributions in excess of $5,000, which substantiation necessarily would require “qualified appraisals” of the donated property.[4] The Treasury’s authority to promulgate regulations related to charitable donations is further set forth in IRC § 170(a)(1). In response to DEFRA,…

2 Comments
March 2, 2021
Income Tax Issues
Tax Opinions / Income Tax Issues / Memorandum Opinions

Gallegos v. Commissioner
T.C. Memo. 2021-25

On March 2, 2021, the Tax Court issued a Memorandum Opinion in the case of Gallegos v. Commissioner (T.C. Memo. 2021-25). The primary issue presented in Gallegos v. Commissioner was whether the team roping expenses the petitioner claimed on his Schedule C as business losses were business or personal in nature. Giddy-up, ya’ll… Setting the Stage for Gallegos v. Commissioner First, this is a Judge Holmes opinion, so you know it’s going to be gold. Second, it involves competition team roping, which might even make for an entertaining opinion if it were authored by Judge Gustafson, who is a rather straight-laced jurist. How many sentences will Judge Holmes be able to write without a pun? One. One sentence. I am so excited…like, Jessie Spano on caffeine pills excited. Background (on Roping Steers) The petitioner grew up on the “largest ranch” in the largest town in New Mexico.  “But it was…

1 Comment
March 2, 2021
Penalties Under the Code
Full Tax Court Opinions / Penalties Under the Code / Tax Opinions

Beland v. Commissioner
156 T.C. No. 5

On March 1, 2021, the Tax Court issued its opinion in Beland v. Commissioner (156 T.C. No. 5). The underlying issue presented in Beland v. Commissioner was whether the civil fraud penalty was not timely approved pursuant to IRC § 6751(b)(1). Background to Beland v. Commissioner The petitioners filed a joint return for 2011.  The IRS audited the return and required the petitioners to attend an in-person closing conference.  During the conference, the revenue agent presented the petitioners with a completed, signed Form 4549 (Income Tax Examination Changes), which reflected an IRC § 6663(a) civil fraud penalty. The petitioners declined to consent to the assessment of the civil fraud penalty. Thereafter, the revenue agent obtained written approval from her immediate supervisor for the civil fraud penalty and sent the petitioners a notice of deficiency determining the same. The petitioner’s mood for partial summary judgment under IRC § 6751(b)(1), arguing that…

2 Comments
March 1, 2021