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

Daichman v. Commissioner
T.C. Memo. 2020-126

On August 31, 2020, the Tax Court issued a Memorandum Opinion in the case of Daichman v. Commissioner (T.C. Memo. 2020-126). The primary issue before the court in Daichman v. Commissioner was whether the petitioners are entitled to a short-term capital loss deduction of $2.1 million in connection with the dissolution of their S corporation or whether their tax transactions lacked economic substance. Brief Background to the Shenanigans in Daichman v. Commissioner During 2009 the petitioners transferred personal assets of cash and marketable securities to a wholly owned S corporation, which in turn immediately transferred those assets to a family limited partnership. A few weeks later, the petitioners dissolved the S corporation and received the partnership interest as a liquidating distribution. In connection with the liquidation, the petitioners claimed a nonpassive loss deduction on Schedule E, Supplemental Income and Loss. The claimed nonpassive loss deduction reflected a substantially discounted value…

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August 31, 2020
Income Tax Issues
Tax Opinions / Income Tax Issues / Memorandum Opinions

Savedoff v. Commissioner
T.C. Memo. 2020-125

On August 31, 2020, the Tax Court issued a Memorandum Opinion in the case of Savedoff v. Commissioner (T.C. Memo. 2020-125). The primary issues before the court in Savedoff were whether the petitioner received proper notice of the Notice of Federal Tax Lien filing and whether the IRS abused its discretion in its ultimate determination against the petitioner. Background to Savedoff v. Commissioner The petitioner is a self-employed attorney. Although she filed income tax returns for 2013 and 2014 reporting over $20,000 and tax each year, she failed to pay her reported tax obligations. Therefore, the IRS asserted a failure to timely pay under IRC § 6651(a)(2) and a failure to pay estimated tax penalty under IRC § 6654. The petitioner thereafter entered into installment agreement with the IRS under which she paid $600 per month. The IRS terminated the installment agreement in February 2017. In September 2017 the IRS…

1 Comment
August 31, 2020
Penalties Under the Code
Tax Opinions / Full Tax Court Opinions / Penalties Under the Code

Thompson v. Commissioner
155 T.C. No. 5

On August 27, 2020, the Tax Court issued its opinion in Thompson v. Commissioner (155 T.C. No. 5). The primary issue presented in Thompson v. Commissioner was whether the offer of settlement of the petitioners’ tax liabilities under reduced penalty rates on any later-determined underpayment arising out of an abusive tax transaction was an “initial determination” of a penalty for purposes of IRC § 6751(b)(1)’s prior written supervisory approval requirement. Background to Thompson v. Commissioner The petitioners engaged in an abusive transaction known as a distressed asset trust transaction, which they reported on their 2005 return. The IRS audited multiple years including 2005. In 2007, the IRS mailed a letter to the petitioners which stated that the IRS was aware that the petitioners participated in an abusive transaction and offered them the opportunity to resolve their tax liabilities associated with that transaction in accordance with the terms set forth in Announcement…

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August 27, 2020
Procedural Issues
Tax Opinions / Full Tax Court Opinions / Procedural Issues

Van Bemmelen v. Commissioner
155 T.C. No. 4

On August 27, 2020, the Tax Court issued its opinion in Van Bemmelen v. Commissioner(155 T.C. No. 4). The primary issue presented in Van Bemmelen v. Commissioner was whether the administrative record could be supplemented with evidence not considered by the IRS’s Whistleblower Office when it rejected the petitioner’s claim. Background to Van Bemmelen v. Commissioner In 2018, the petitioner submitted a Form 211 to the IRS’s Whistleblower Office (WBO). In this claim, the petitioner references an October 2012 submission regarding the same taxpayer. The claim alleged that a multinational insurance company had engaged in a tax evasion scheme in the amount of approximately $858 million. In a memorandum rejecting that the petitioner’s claims be rejected, the WBO stated that the allegations were not specific, credible, or were speculative in nature. The memorandum also stated that the information in the claim referenced the 2012 claim, which was likewise determined to lack…

4 Comments
August 27, 2020
Income Tax Issues
Tax Opinions / Full Tax Court Opinions / Income Tax Issues

TGS-NOPEC Geophysical Company v. Commissioner
155 T.C. No. 3

On August 26, 2020, the Tax Court issued its opinion in TGS-NOPEC Geophysical Company v. Commissioner (155 T.C. No. 3). The primary issue presented in TGS-NOPEC Geophysical Company v. Commissioner is whether the IRS’s disallowance of petitioner’s deduction for income attributable to domestic production activities pursuant to IRC § 199 was appropriate. Business Background in TGS-NOPEC Geophysical Company v. Commissioner The petitioner is engaged in the business of acquires, processes, and licenses marine seismic data. Raw seismic data is collected through seismic surveys, during which reflected energy waves are recorded on magnetic tapes. The data on those tapes is then processed to develop an image of subsurface geophysical structures. The processed data is ultimately purchased or licensed by companies in the oil and gas industry. The petitioner generated revenue by, among other activities, licensing the use of the processed seismic data to its clients in the oil and gas industry. Further,…

0 Comments
August 26, 2020
Procedural Issues
Tax Opinions / Full Tax Court Opinions / Procedural Issues

Whistleblower 21276-13W v. Commissioner
155 T.C. No. 2

On August 26, 2020, the Tax Court issued its opinion in Whistleblower 21276-13W v. Commissioner (155 T.C. No. 2). The primary issue presented in Whistleblower 21276-13W v. Commissioner was whether the Tax Court had jurisdiction to hear and determine a whistleblower-related issue rather than remand it to the IRS Whistleblower Office when remand would have been futile because there was only one possible disposition, as a matter of law, and such matter was before the court. The Parties’ Positions in Whistleblower 21276-13W v. Commissioner in a Nutshell The petitioners/whistleblowers asked the Tax Court to compel the IRS to pay the amounts set forth in in previous decisions and stipulations, rather than smaller amounts diminished by “sequester reductions.” The IRS replied that it has paid in full the awards to which the whistleblowers are entitled: the amounts specified in the decisions less the sequester reductions to which the parties agreed. Jurisdiction to…

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August 26, 2020
Procedural Issues
Tax Opinions / Memorandum Opinions / Procedural Issues

Rivas v. Commissioner
T.C. Memo. 2020-124

On August 25, 2020, the Tax Court issued a Memorandum Opinion in the case of Rivas v. Commissioner (T.C. Memo. 2020-124). The primary issue before the court in Rivas v. Commissioner was whether the petitioner timely filed her petition.  Spoiler alert: she didn’t. Background to Rivas v. Commissioner The IRS mailed a notice of deficiency by certified mail petitioner on May 21, 2019. The notice of deficiency was sent both to the petitioner’s last known address, which was the same address as the one that the petitioner provided as her address on the petition that she filed with the court. The petitioner does not challenge the receipt of the notice of deficiency, instead she argues that her attorney “dropped the petition in the United States mail drop box on the night of August 19, 2019.” Given the time that the attorney allegedly deposited the petition in the drop box, the…

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August 25, 2020