Income Tax Issues
Tax Opinions / Income Tax Issues / Memorandum Opinions

Pinkston v. Commissioner
T.C. Memo. 2020-44

On April 13, 2020, the Tax Court issued a Memorandum Opinion in the case of Pinkston v. Commissioner (T.C. Memo. 2020-44). The issue properly before the court in Pinkston v. Commissioner was whether the IRS appropriately “recaptured” depreciation deductions that the petitioners claimed on rental properties prior to the years at issue, as to which years the limitation period had expired. Background to Pinkston v. Commissioner In 2003 and 2010, the petitioners acquired two rental properties in Hawaii (a beach-front home and a condo), for which they claimed depreciation deductions under the Modified Accelerated Cost Recovery System (MACRS) established by IRC § 168. The IRS examined the petitioners’ returns and adjusted the depreciation deductions downward by reallocating a larger portion of petitioners’ cost basis to non-depreciable land (for the property purchased in 2003) and by reclassifying most of the petitioners cost basis into a MACRS class with a much longer…

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April 13, 2020
Procedural Issues
Tax Opinions / Memorandum Opinions / Procedural Issues

Kansky v. Commissioner
T.C. Memo. 2020-43

On April 13, 2020, the Tax Court issued a Memorandum Opinion in the case of Kansky v. Commissioner (T.C. Memo. 2020-43). The issue properly before the court in Kansky v. Commissioner was whether the Whistleblower Office of the IRS abused its discretion in rejecting the petitioner’s claim on the basis that it was speculative and did not provide specific or credible information regarding a violation of the Federal tax laws. Background to the Claim in Kansky v. Commissioner In May 2018, the petitioner filed a Form 211 (Application for Award for Original Information) with the Whistleblower Office of the IRS (WBO) identifying two target taxpayers: (1) a corporation that connects workers with medical offices to provide temporary services and (2) the president of that corporation. Petitioner asserted that the target taxpayers had misclassified their employees as independent contractors and had erroneously sent them Forms 1099-MISC, Miscellaneous Income. Petitioner indicated that…

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April 13, 2020
Income Tax Issues
Tax Opinions / Income Tax Issues / Penalties Under the Code

Littlejohn v. Commissioner (T.C. Memo. 2020-42)

On April 9, 2020, the Tax Court issued a Memorandum Opinion in the case of Littlejohn v. Commissioner (T.C. Memo. 2020-42). The issues properly before the court in Littlejohn v. Commissioner were whether (1) the petitioners are entitled to certain rental real estate deductions for the tax years at issue; (2) whether the petitioners are entitled to theft loss deductions for their tax years 2010 and 2013; and (3) whether the petitioners are liable for the IRC § 6662(a) accuracy-related penalty for each tax year at issue. Background to Littlejohn v. Commissioner It is never a good sign for the petitioner when the Tax Court begins its finding of facts with the observation that not only does petitioner-husband a law degree, but also that the petitioner-husband previously taught law at the Southern California Institute of Law in Santa Barbara. It is likely that the professor did not teach tax law,…

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April 9, 2020
Procedural Issues
Tax Opinions / Full Tax Court Opinions / Procedural Issues

Lewis v. Commissioner
154 T.C. No. 8

On April 8, 2020, the Tax Court issued its opinion in Lewis v. Commissioner (154 T.C. No. 8). The issue presented in Lewis v. Commissioner was whether the IRS abused its discretion in the computation of his award by excluding reported, paid tax from the collected proceeds and by determining that there was no possibility of future proceeds relating to the deceased target taxpayer’s estate. Background to Lewis v. Commissioner The moral of the story in this case is simple. As my dad’s father was wont to say: “Pigs get fat. Hogs get slaughtered.” At least that’s what I’m told he said. He only spoke French, and even then, only in the same disapproving mutter, which very loosely translated (I say “loosely,” because it was Quebecois French, that’s the only way it makes any damn sense, if at all) apparently meant “That’s not right, that.” The background to this case…

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April 8, 2020
Read more about the article Campbell v. Commissioner <section> T.C. Memo. 2020-41 </section>
Charitable Issues / Memorandum Opinions / Tax Opinions

Campbell v. Commissioner
T.C. Memo. 2020-41

On April 7, 2020, the Tax Court issued a Memorandum Opinion in the case of Campbell v. Commissioner (T.C. Memo. 2020-41). The primary issue before the court in Campbell v. Commissioner was whether petitioners are entitled to a charitable contribution deduction with respect to donation, which hinges on the issues of whether the taxpayer submitted appropriate substantiation for the contribution and/or reasonably relied on the advice of a CPA that the charitable deduction was appropriate. Background to Campbell v. Commissioner In 2006, petitioner-husband learned about a charitable program (through his CPA) that sold units of eyewear (approximately 3,500 pairs of glasses per unit) for $50,000, the purchaser of which unit could then (purportedly) donate the glasses (after a 1-year holding period) to a qualified IRC § 501(c)(3) organization and claim a charitable deduction at the appraised FMV of the eyewear at the time of the donation, which was advertised as…

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April 7, 2020
Income Tax Issues
Tax Opinions / Income Tax Issues / Memorandum Opinions

Estate of Moore v. Commissioner
T.C. Memo. 2020-40

On April 7, 2020, the Tax Court issued a Memorandum Opinion in the case of Estate of Moore v. Commissioner (T.C. Memo. 2020-40). The general issues before the court in Estate of Moore v. Commissioner were (1) whether the petitioner’s complex estate plan actually reduced the size of his taxable estate and (2) whether the petitioner’s estate planning resulted in unintended taxable gifts. The Tax Court answers these questions through a most thorough analysis of IRC § 2035 and IRC § 2036. This post only scratches the surface of the analysis. Background to Estate of Moore v. Commissioner Petitioner Moore began his life poor as dirt, but being an enterprising man, he took that dirt and built a large and very lucrative farm in Arizona. In September 2004, he began negotiating the sale of the farm, but he became seriously ill. He went into hospice care, and that is when (Judge…

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April 7, 2020
Income Tax Issues
Tax Opinions / Income Tax Issues / Memorandum Opinions

Biddle v. Commissioner
T.C. Memo. 2020-39

On April 6, 2020, the Tax Court issued a Memorandum Opinion in the case of Biddle v. Commissioner (T.C. Memo. 2020-39). The issue before the court in Biddle v. Commissioner was whether the petitioner’s payments to his former spouse, which, under the terms of a divorce decree, ended at his youngest child’s 18th birthday, were deductible alimony payments under IRC § 215 or whether the contingency related to his children transformed the “alimony” into nondeductible child support. Background to Biddle v. Commissioner The petitioner divorced his wife in 2010. The divorce decree included provisions pertaining to “child support” and “alimony.” The petitioner was ordered to pay his ex-spouse monthly child support and alimony. Under both the child support and alimony provisions the petitioner would be discharged from his payment obligation under certain conditions, one of which was each child reaching the age of majority. On his 2015 return, the petitioner…

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April 6, 2020