Read more about the article Woodland Property Holdings LLC v. Commissioner <section> T.C. Memo. 2020-55 </section>
Tax Opinions / Charitable Issues / Memorandum Opinions

Woodland Property Holdings LLC v. Commissioner
T.C. Memo. 2020-55

On May 13, 2020, the Tax Court issued a Memorandum Opinion in the case of Woodland Property Holdings LLC v. Commissioner (T.C. Memo. 2020-55). The basic issue before the court in Woodland Property Holdings LLC v. Commissioner was whether the conservation purpose underlying the easement is not “protected in perpetuity,” as required by IRC § 170(h)(5)(A) and Treas. Reg. § 1.170A-14(g)(6). The same question was presented and resolved in Railroad Holdings, LLC v. Commissioner, T.C. Memo. 2020-22 and Oakbrook Land Holdings, LLC v. Commissioner, T.C. Memo. 2020-54. The Doomed Deeds in Woodland Property Holdings LLC v. Commissioner To petitioner’s credit, it acknowledges that its position is identical to the question presented in Railroad Holdings, LLC v. Commissioner, T.C. Memo. 2020-22 and Oakbrook Land Holdings, LLC v. Commissioner, T.C. Memo. 2020-54. When the petitioner admitted that, however, these two cases had not yet been decided by the Tax Court. Unfortunately, both Railroad…

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May 13, 2020
Read more about the article Oakbrook Land Holdings LLC v. Commissioner <section> T.C. Memo. 2020-54 </section>
Tax Opinions / Charitable Issues / Memorandum Opinions

Oakbrook Land Holdings LLC v. Commissioner
T.C. Memo. 2020-54

On May 12, 2020, the Tax Court issued its Memorandum Opinion in Oakbrook Land Holdings LLC v. Commissioner, T.C. Memo. 2020-54 (Oakbrook I) concurrently with a full Tax Court opinion in Oakbrook Land Holdings v. Commissioner, 154 T.C. No. 10 (Oakbrook II). The issue presented in Oakbrook Land Holdings LLC v. Commissioner was whether Oakbrook’s conservation easement violated the “protected in perpetuity” requirement of IRC § 170(h)(5), as interpreted in Treas. Reg. § 1.170A-14(g)(6), because the donee’s share of the extinguishment proceeds (1) is based on a fixed historical value rather than a proportionate share, and (2) is reduced by the value of any improvements made by the donor. The separate but related issue in Oakbrook II was whether Treas. Reg. § 1.170A-14(g)(6) was a valid regulation under the Administrative Procedure Act (APA), 5 U.S.C. § 553 (2018) and under Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). You can find a copy of the Oakbrook II summary here. (more…)

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May 12, 2020
Read more about the article Oakbrook Land Holdings LLC v. Commissioner <section> 154 T.C. No. 10 </section>
Tax Opinions / Charitable Issues / Full Tax Court Opinions

Oakbrook Land Holdings LLC v. Commissioner
154 T.C. No. 10

On May 12, 2020, the Tax Court issued its opinion in Oakbrook Land Holdings LLC v. Commissioner (154 T.C. No. 10) (Oakbrook I) and concurrently issued a Memorandum Opinion in Oakbrook Land Holdings, LLC v. Commissioner, T.C. Memo. 2020-54 (Oakbrook II). The issue presented in Oakbrook Land Holdings LLC v. Commissioner was whether, for purposes of a conservation easement, the “protected in perpetuity” requirement of IRC § 170(h)(5), as interpreted in Treas. Reg. § 1.170A-14(g)(6), which was found to have been violated because the donee’s share of the extinguishment proceeds (1) is based on a fixed historical value rather than a proportionate share, and (2) is reduced by the value of any improvements made by the donor was valid under the Administrative Procedure Act (APA), 5 U.S.C. § 553 (2018) and under Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). In Oakbrook II, the issue presented…

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May 12, 2020
Penalties Under the Code
Tax Opinions / Memorandum Opinions / Penalties Under the Code

Lambert v. Commissioner
T.C. Memo. 2020-53

On May 6, 2020, the Tax Court issued a Memorandum Opinion in the case of Lambert v. Commissioner (T.C. Memo. 2020-53). The basic issue before the court in Lambert v. Commissioner was whether the Tax Court had jurisdiction to hear the petitioner’s arguments regarding his underlying liability for tax and the trust fund recovery penalty (TFRP). Factual Background to Lambert v. Commissioner Petitioner was the vice president of a concrete business (CJB) that was incorporated in Massachusetts. CBJ had the obligation to pay Federal employment taxes and excise (“trust fund”) taxes. Petitioner was a “responsible person” for CBJ, meaning that he had the authority (and duty) to direct the act of collection, accounting for, and paying over trust fund monies (employment taxes) to the IRS. The requisite funds, however, were not withheld or paid over to the IRS from September 2004 through December 2006. Procedural Background In December 2010, the…

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May 6, 2020
International Issues
Tax Opinions / Full Tax Court Opinions / International Issues

Whirlpool Financial Corporation v. Commissioner
154 T.C. No. 9

On May 5, 2020, the Tax Court issued its opinion in Whirlpool Financial Corporation v. Commissioner (154 T.C. No. 9). The issue presented in Whirlpool Financial Corporation v. Commissioner was whether the income earned by the petitioner’s Luxembourg controlled foreign corporation (CFC) from sales of appliances to the petitioner and the petitioner’s Mexican CFC constituted foreign base company sales income (FBCSI) under IRC § 954(d) and, as such, was taxable to the petitioner as subpart F income under IRC § 951(a). Three Refrigerator Salesmen Walk into the Tax Court in Whirlpool Financial Corporation v. Commissioner This is a bit of a simplification of the facts, but I have tried to distill the important players and relationships from the numerous (15 pages worth in the Tax Court opinion) factual findings made by the Tax Court. In the present case, there are three players: (1) petitioner, Whirlpool America (PWA), the domestic-beer-drinking parent corporation;…

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May 5, 2020
Business Related Issues
Business Related Issues / Memorandum Opinions / Tax Opinions

Richmond Patients Group v. Commissioner
T.C. Memo. 2020-52

On May 4, 2020, the Tax Court issued a Memorandum Opinion in the case of Richmond Patients Group v. Commissioner (T.C. Memo. 2020-52). The issues before the court in Richmond Patients Group v. Commissioner were (1) whether the petitioner is entitled to additional costs of goods sold or deductions for business expenses; (2) whether the petitioner was a reseller or a producer of marijuana pursuant to IRC § 471 during the years in issue; (3) whether the petitioner is allowed to change its accounting method pursuant to IRC § 446 for tax year 2015; and (4) whether the petitioner is liable for accuracy-related penalties pursuant to IRC § 6662(a). Background to Richmond Patients Group v. Commissioner The petitioner was a members-only medical marijuana dispensary. It offered no other services, therapeutic or otherwise, just the reefer. When the petitioner purchased bulk marijuana, it paid the seller a 25% to 50% down payment…

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May 4, 2020
Business Related Issues
Tax Opinions / Business Related Issues / Memorandum Opinions

Bridges v. Commissioner
T.C. Memo. 2020-51

On April 27, 2020, the Tax Court issued a Memorandum Opinion in the case of Bridges v. Commissioner (T.C. Memo. 2020-51). The issue before the court in Bridges v. Commissioner was whether the IRS appropriately relied on IRC § 6231(g)(2) in determining that TEFRA procedures did not apply to the petitioner’s LLC. TEFRA’s Application to Partnerships Appearing “Small” IRC § 6231(a)(1)(A) generally applies the TEFRA provisions to any entity that is required to file a partnership return. Under IRC § 6231(a)(1)(B)(i), however, TEFRA provisions do not apply to small partnerships, which include any partnership having 10 or fewer partners each of whom is an individual (other than a nonresident alien), a C corporation, or an estate of a deceased partner. TEFRA provisions do apply, however, if any partner in the partnership is a “pass-thru partner.” Treas. Reg. § 301.6231(a)(1)-1(a)(2). A “pass-thru partner” is a “partnership, estate, trust, S corporation, nominee,…

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April 27, 2020