On October 14, 2020, the Tax Court issued a Memorandum Opinion in the case of Wienke v. Commissioner (T.C. Memo. 2020-143). The issues before the court in Wienke v. Commissioner are numerous and varied; in fact, the Tax Court lists eight specific, separate issues. (more…)
On October 14, 2020, the Tax Court issued a Memorandum Opinion in the case of Morning Star Packing Company L.P. v. Commissioner (T.C. Memo. 2020-141). The issues before the court in Morning Star Packing Company L.P. v. Commissioner. were whether the accrued production costs were: (1) fixed and binding where economic performance did not occur until the year following the tax year claimed for and (2) whether the partnerships’ inclusion of such production costs in COGS for the years in issue resulted in a more proper match against income than inclusion in the taxable year in which economic performance occurred under the IRC § 461(h)(3) recurring items exception to the all events test. Background to Morning Star Packing Company L.P. v. Commissioner The petitioners are in the tomato business. In fact, the petitioners provide approximately 40% of the United States’ tomato paste and diced tomatoes. My seven-year-old son accounts for…
On October 13, 2020, the Tax Court issued its opinion in Oropeza v. Commissioner (155 T.C. No. 9). The primary issue presented in Oropeza v. Commissioner was whether the IRS obtained prior supervisory approval pursuant to IRC § 6751(b)(1) prior to its initial determination to assess a penalty against the petitioner for tax year 2011. Specifically, the issue in Oropeza v. Commissioner was whether a Letter 5153 accompanied by a Form 4549-A (an RAR) constituted an initial determination of a penalty. Procedural Background to Oropeza v. Commissioner The petitioner was the sole shareholder of a microcaptive insurance company organized as an S corporation for tax purposes. In March 2014 an RA in Phoenix opened an examination of petitioner’s 2011 tax year, which was later expanded to subsequent years. On January 15, 2015, facing an expiring period of limitations, the revenue agent sent the petitioner a Letter 5153 and accompanying report.…
On October 8, 2020, the Tax Court issued a Memorandum Opinion in the case of Worthington v. Commissioner (T.C. Memo. 2020-141). The issue before the court in Worthington v. Commissioner was whether the IRS’s whistleblower office abused its discretion in denying or rejecting the petitioner’s claim. Not a Propitious Beginning to Worthington v. Commissioner In mid-November 2018, the petitioner filed a claim against John Worthington. The trouble was, the petitioner was John Worthington. Just like sitting in the corner sulking at the Buckner nuptials, John brought attention to himself under rather unflattering circumstances. He forgot rule number six – draw attention to yourself, but on your own terms. Correcting Course The target is a bit amorphous, which is perhaps why the IRS had such trouble reviewing and passing along the petitioner’s claim. The target is a “product of interlocal agreements” in which the “component entities” are county law enforcement agencies. …
On October 8, 2020, the Tax Court issued a Memorandum Opinion in the case of Spagnoletti v. Commissioner (T.C. Memo. 2020-140). The issue before the court in Spagnoletti v. Commissioner was whether the IRS abused its discretion in sustaining the proposed levy when it denied the petitioner’s request, who requested to full pay his liability in four payments but failed to submit financial documentation. Background to Spagnoletti v. Commissioner The petitioner (an attorney) filed delinquent Federal income tax returns for 2015 and 2016 and did not pay the full amount of tax shown as due on either return. The IRS assessed the tax shown as due plus additions to tax for failure to timely file, failure to timely pay, and failure to pay estimated tax. The IRS sent the petitioner a Notice of Intent to Levy and Notice of Your Rights to a Hearing. Petitioner timely requested a CDP hearing,…
On October 8, 2020, the Tax Court issued a Memorandum Opinion in the case of Doyle v. Commissioner (T.C. Memo. 2020-139). The issue before the court in Doyle v. Commissionerwas whether the IRS’s Whistleblower Office abused its discretion in issuing a determination which denied the petitioners’ two whistleblower claims based on the ground that the IRS took no action based on the information that the petitioners provided, even though the Criminal Investigative Division was unclear whether or not it was working with the petitioners to investigate the target. Background to Doyle v. Commissioner The petitioners filed two Forms 211 (Application for Award for Original Information) alleging that the target failed to comply with the requirements of section 501(c)(3) for tax-exempt organizations; that the target accepted foreign funds transfers as a “foreign agent,” thereby vitiating charitable tax-exempt protection; and that the target made material misrepresentations to the IRS and to other…
On October 5, 2020, the Tax Court issued a Memorandum Opinion in the case of Neal v. Commissioner (T.C. Memo. 2020-138). The issue before the court in Neal v. Commissioner was whether the IRS Whistleblower Office abused its discretion in failing to foreword the petitioner’s Form 211 to Exam, when the target’s returns were already being audited, and another whistleblower had already whistleblown against the target for the same tax year. Republication of Neal v. Commissioner Neal is simply a republication of Neal v. Commissioner, T.C. Memo. 2020-135. The holdings are identical. Moral of the Story The Roman emperor Augustus was famous for saying “Festina lente,” which means “make haste slowly.” Though admittedly oxymoronic, Augustus’ made him one of the most successful Roman leader and statesmen in history. Unlike his adopted father Julius Caesar who made haste with, well, haste, and then was famously stabbed by fifty of his closest…
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