Penalties Under the Code
Memorandum Opinions / Penalties Under the Code / Tax Opinions

Kazmi v. Commissioner
T.C. Memo. 2022-13

On March 1, 2022, the Tax Court issued a Memorandum Opinion in the case of Kazmi v. Commissioner (T.C. Memo. 2022-13). The primary issues presented in Kazmi v. Commissioner were (1) whether the petitioner is entitled to challenge the underlying liabilities, and if so, whether he is a responsible person who willfully failed to pay over employment taxes under IRC § 6672, and (2) whether the Appeals abused its discretion in sustaining the collection action. Held: Yup. The Parties Arguments in a Nutshell The petitioner’s Position The petitioner argued that he may challenge his underlying liabilities because a Letter 1153, Proposed Trust Fund Recovery Penalty, does not constitute a prior opportunity under IRC § 6330(c)(2)(B) since the IRS's denial of a Letter 1153 appeal does not result in an opportunity for the taxpayer to seek judicial review before the Tax Court. The petitioner further argued that he is not a…

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May 20, 2022
Read more about the article Corning Place Ohio LLC v. Commissioner <section> T.C. Memo. 2022-12 </section>
Charitable Issues / Memorandum Opinions / Tax Opinions

Corning Place Ohio LLC v. Commissioner
T.C. Memo. 2022-12

On February 28, 2022, the Tax Court issued a Memorandum Opinion in the case of Corning Place Ohio LLC v. Commissioner (T.C. Memo. 2022-12). The primary issue presented in Corning Place Ohio LLC v. Commissioner was whether the taxpayer and the tax matters partner substantially complied with the reporting requirements necessary to substantiate a conservation easement deduction for the façade of a historic building. Background to Corning Place Ohio LLC v. Commissioner This case involves a charitable contribution deduction claimed by Corning Place Ohio, LLC (Corning Place), for a conservation easement. The IRS issued Corning Place a notice of final partnership administrative adjustment (FPAA) disallowing this deduction. Before the Court on the IRS’s motion for summary judgment were three issues: (1) whether the easement deed failed to protect the conservation purpose in perpetuity, in alleged violation of IRC § 170(h)(5)(A); (2) whether Corning Place's appraisal and baseline documentation failed to…

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May 19, 2022
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Shaddix v. Commissioner
T.C. Memo. 2022-11

On February 28, 2022, the Tax Court issued a Memorandum Opinion in the case of Shaddix v. Commissioner (T.C. Memo. 2022-11). The primary issue presented in Shaddix was whether the IRS abused its discretion in upholding the filing of a notice of federal tax lien by denying the petitioner the ability to challenge his underlying liability. Held: In a rare abuse of discretion victory for a taxpayer, the Tax Court in Shaddix v. Commissioner actually held that the IRS did, in fact, abuse its discretion. Background to Shaddix v. Commissioner The petitioner had liabilities of $39,000 for the tax years 2013-2016. Whether he self-reported these liabilities, or the IRS pulled them from a hat is anyone’s guess, but Judge Lauber assumed for purposes of the IRS’s motion for summary judgment that they were self-reported. In support of said motion for summary judgment, the IRS attached account transcripts with entries for…

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May 18, 2022
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Hicks v. Commissioner
T.C. Memo. 2022-10

On February 23, 2022, the Tax Court issued a Memorandum Opinion in the case of Hicks v. Commissioner (T.C. Memo. 2022-10). The primary issue presented in Hicks v. Commissioner was whether the petitioner was entitled to the dependency exemption deductions and child tax credits claimed on his income tax return. Background to Hicks v. Commissioner The petitioner has two children with one Ms. Oddimissia N. Johnson who were minors in 2014, the year at issue. Oddimissia were never married and did not cohabitate in 2014. In fact, Oddimissia lived with her mother Juanita, as did the two children (for more than ½ of the year). The petitioner provided over ½ of the children’s financial support in 2014. In 2006, an Ohio state court adopted a shared parenting plan, signed by Oddimissia and the petitioner, which provided that Oddimissia could claim Child 1 every year for tax purposes, and the petitioner…

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May 17, 2022
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Hoops LP v. Commissioner
T.C. Memo. 2022-9

On February 23, 2022, the Tax Court issued a Memorandum Opinion in the case of Hoops LP v. Commissioner (T.C. Memo. 2022-9). The primary issues presented in Hoops LP v. Commissioner were whether partnership was entitled to deduct deferred compensation owed to two of its basketball franchise's players, and whether the partnership was required to take into account the amount of its deferred compensation liability for players when computing its taxable gain or loss from sale of franchise under IRC § 1231. Held: No. Yes. Win, IRS. Background to Hoops LP v. Commissioner The petition was before the court for readjustment of the final partnership administrative adjustment (FPAA) issued to the partnership’s tax matters partner for 2012. In the March 2018 FPAA, the IRS disallowed an additional deduction of $10,673,327 for salaries and wages that Hoops LP (“Hoops”) claimed on its Form 1065X, Amended Return or Administrative Adjustment Request (AAR),…

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May 16, 2022
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Harwood v. Commissioner
T.C. Memo. 2022-8

On February 15, 2022, the Tax Court issued a Memorandum Opinion in the case of Harwood v. Commissioner (T.C. Memo. 2022-8). The primary issue presented in Harwood was whether the taxpayer adequately substantiated his deductions for travel, residence, and “other” such deductions. Background to Harwood v. Commissioner During the years at issue, Mr. Harwood worked as a steamfitter and brazier on construction projects in Washington and Oregon. Mr. Harwood joined Plumber and Steamfitters Local 598 (Local), headquartered in Pasco, Washington, in the 1970s, and he obtained each of the jobs during the years at issue through the Local. The Local's territory straddles southern Washington and northern Oregon. At this point the Tax Court includes a rare visual:   The Harwoods lived in Yakima, Washington, nestled within the western part of the Local's territory. Mr. Harwood, a Yakima native, loved his hometown and took great pride in raising a family there…

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May 13, 2022
Penalties Under the Code
Memorandum Opinions / Penalties Under the Code / Tax Opinions

Williams v. Commissioner
T.C. Memo. 2022-7

On February 7, 2022, the Tax Court issued a Memorandum Opinion in the case of Williams v. Commissioner (T.C. Memo. 2022-7). The primary issues presented in Williams were (i) whether the disallowance of the petitioner’s deductions was warranted; and (ii) whether frivolous position penalty was warranted. A Brief Background of Williams v. Commissioner The IRS issued a notice of deficiency, in which it disallowed certain deductions claimed by the petitioner (Larry) in connection with his business. As Judge Urda observes, “[r]ather than attempting to demonstrate errors by the IRS in its determination, [Larry] has chosen to focus his challenge on frivolous and groundless arguments.” Representatives Larry appeared pro se. The IRS was represented by Mike Foster and Dan Munce, two of the best General Counsel attorneys I have ever met. Needless to say, this wasn’t a fair fight – even before the frivolity entered into the equation. The Frivolity in…

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May 12, 2022