Business Related Issues
Tax Opinions / Business Related Issues / Memorandum Opinions

Costello v. Commissioner
T.C. Memo. 2021-9

On January 25, 2021, the Tax Court issued a Memorandum Opinion in the case of Costello v. Commissioner (T.C. Memo. 2021-9). The primary issues presented in Costello v. Commissioner was whether the would-be-chicken-farmers (petitioners) were entitled to deductions for losses from farming activities, or whether the losses were startup expenses for which IRC § 195 prohibits a current deduction. Author’s Note Schadënfreude is German for happiness at the misfortune of others.  The Greek ἐπιχαιρεκακία is a similar thought, as is delectatio morosa in Latin.  Call it what you want, the utter ineptitude of petitioner-wife’s farming “activities” is funny as hell. I like to garden. I am not a farmer. The petitioner-wife is not a farmer either. For at least seven years, and I quote, “her serial attempts at raising chickens, growing vegetables, and raising cattle were all unsuccessful.” This woman was a livestock murderer from all accounts. Did she forget…

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January 25, 2021
Business Related Issues
Tax Opinions / Business Related Issues / Memorandum Opinions

Aspro Inc. v. Commissioner
T.C. Memo. 2021-8

On January 21, 2021, the Tax Court issued a Memorandum Opinion in the case of Aspro Inc. v. Commissioner (T.C. Memo. 2021-8). The sole issue presented in Aspro Inc. v. Commissioner was whether the petitioner was entitled to deductions for management fees paid to three shareholders. Background to Aspro Inc. v. Commissioner I find the petitioner suspect.  First off, it is an Iowa C corporation, but it is not involved with the production or processing of corn.  Strike one, Aspro.  Second, the fine founders of the company actually chose the name "As[s]pro."  Apparently, there are no marketing interns in Iowa who used to be a 12 year old boy, who might have seen the flaw in this nomenclature.  Strike two, As[hats]. Instead of making corn flakes or good decisions, the petitioner operated two stationary asphalt plants in Iowa and was limited to projects in the surrounding counties. Most of petitioner’s revenue…

1 Comment
January 21, 2021
Income Tax Issues
Full Tax Court Opinions / Income Tax Issues / Penalties Under the Code / Tax Opinions

San Jose Wellness v. Commissioner
156 T.C. No. 4

On February 17, 2021, the Tax Court issued its opinion in San Jose Wellness v. Commissioner (156 T.C. No. 4). The underlying issue presented in San Jose Wellness v. Commissioner was whether the petitioner, a marijuana dispensary, was prohibited from claiming deductions for depreciation and charitable contributions under IRC § 280E. Background to San Jose Wellness v. Commissioner The petitioner operated a medical marijuana dispensary pursuant to California law from 2010 to 2015. It sold marijuana to individuals who held a valid doctor’s recommendation to use the drug. It also sold T-shirts, pipes, and batteries; and it offered acupuncture, chiropractic, and “holistic” services.  (One questions the illegality of this, as well, but here we are.)  The petitioner did not charge a separate fee for membership, acupuncture, chiropractic services, or any other services. In each year at issue, the petitioner had gross receipts of $5 million to nearly $7 million, $3,000 to…

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January 17, 2021
Procedural Issues
Full Tax Court Opinions / Procedural Issues / Tax Opinions

Ramey v. Commissioner
156 T.C. No. 1

On January 14, 2021, the Tax Court issued its opinion in Ramey v. Commissioner (156 T.C. No. 1). The underlying issue presented in Ramey v. Commissioner was whether notice sent to last known address, shared by multiple businesses, and not left with anyone authorized to receive the petitioner’s mail, started the CDP Appeal clock in IRC § 6330(a)(2) and (3). Legal Background to Ramey v. Commissioner The IRS may not make a levy unless the IRS notifies the taxpayer in writing of the right to a hearing before the levy is made. IRC § 6330(a); IRC § 6330(b). The IRS must provide the required notice not less than 30 days before the day of the first levy. IRC § 6330(a)(2). The Code enumerates three acceptable ways of providing the notice. The notice may be (A) given in person; (B) left at the dwelling or usual place of business of such…

1 Comment
January 14, 2021
Income Tax Issues
Tax Opinions / Income Tax Issues / Memorandum Opinions

James v. Commissioner (T.C. Memo. 2021-7)

On January 13, 2021, the Tax Court issued a Memorandum Opinion in the case of James v. Commissioner (T.C. Memo. 2021-7). The issue presented in James v. Commissioner was whether the petitioner was entitled to innocent spouse relief under IRC § 6015(e)(1). A Tangled Marital Web in James v. Commissioner The petitioner was married to her husband from 2003 until 2006. Nevertheless, the petitioner lived with her husband in 2010, when the petitioner went through a serious illness. During that time the petitioner’s husband was primarily responsible for the household’s finances. Although they had been divorced for several years at that point, the petitioner’s husband “worked with his accountant to file a joint Federal income tax return” for 2010.  Trusting her husband, the petitioner did not review the return before signing it. The IRS issued a refund of $11,000, which was deposited into the petitioner’s husband’s bank account. The IRS…

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January 13, 2021
Business Related Issues
Tax Opinions / Business Related Issues / Memorandum Opinions

Filler v. Commissioner
T.C. Memo. 2021-6

On January 13, 2021, the Tax Court issued a Memorandum Opinion in the case of Filler v. Commissioner (T.C. Memo. 2021-6). The issues presented in Filler v. Commissioner were whether the petitioner (1) properly reported $100,000 in income received as capital gain rather than ordinary income; (2) is liable for self-employment tax; (3) is entitled to deduct a net operating loss carryover originating in tax year 2012; and (4) is liable for penalty under IRC § 6662(a). Background to Filler v. Commissioner The petitioner is no idiot. He is, quite literally, a brain surgeon - a board-certified one at that. Nevertheless, he represented himself pro se, and so he might as well be a brain plumber in my estimation…not that there is anything wrong with plumbers, just the pro-se-dingbat-cheapskate-brain-plumber in question. It should come as no surprise the good doctor organized, owned, and/or provided services to at least five corporations…

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January 13, 2021
Business Related Issues
Tax Opinions / Business Related Issues / Memorandum Opinions

Hohl et al. v. Commissioner
T.C. Memo. 2021-5

On January 13, 2021, the Tax Court issued a Memorandum Opinion in the case of Hohl et al. v. Commissioner (T.C. Memo. 2021-5). The issue presented in Hohl et al. v. Commissioner was whether failure to repay loans provided to a partnership by a partner, which the partnership treated as contributions upon dissolution, resulted in cancellation of indebtedness income. Background to Hohl et al. v. Commissioner Hohl, Blake, and Bowles were partners in a partnership from which they reported guaranteed payments. ¼ partner, Rodriguez, regularly infused money into the partnership, which the partnership and the partners generally treated as loans. When the partnership ceased operation in 2012, however, the partners treated Rodriguez’s loans as contributions, and the partners were not called on to repay their respective shares of the loans.  The IRS issued notices of deficiency to the partners determining COD income for 2012, on account of the funds provided…

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January 13, 2021