Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Pfetzer v. Commissioner
T.C. Memo. 2021-145

On December 30, 2021, the Tax Court issued a Memorandum Opinion in the case of Pfetzer v. Commissioner (T.C. Memo. 2021-145). The primary issue presented in Pfetzer was whether the settlement officer failed to fulfill duty to verify that valid notices of deficiency were issued and mailed to taxpayer. Held: You betcha...but the IRS still managed to lose. Background to Pfetzer v. Commissioner The petitioner was not a model taxpayer. In point of fact, the petitioner failed to file Federal income tax returns for 2004 through 2012. The IRS prepared substitutes for return pursuant to IRC § 6020(b), and it assessed tax for all nine years. Unfortunately for the IRS, the record does not include any notices of deficiency for these years. Consequently, the petitioner did not petition the Tax Court to challenge notices of deficiency for any of these years…because...well...there weren’t any. In June 2016, after failing to pay…

0 Comments
May 3, 2022
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Starcher v. Commissioner
T.C. Memo. 2021-144

On December 30, 2021, the Tax Court issued a Memorandum Opinion in the case of Starcher v. Commissioner (T.C. Memo. 2021-144). The primary issue presented in Starcher was whether the IRS abused its discretion in upholding the filing of a notice of intent to levy. Held: Discretion sound—no abuse here. Background The petitioner did not file an income tax return for 2014, so the IRS prepared a substitute for return (SFR) for her pursuant to IRC § 6020(b). On the basis of the SFR, on April 22, 2019, the IRS sent petitioner a notice of deficiency. Petitioner did not petition this Court for redetermination within the prescribed time limit under IRC § 6213(a), and the IRS thereafter assessed these amounts. Soon thereafter, the IRS sent a Notice of Intent to Levy to the petitioner, who timely requested a CDP hearing indicating she could not pay the balance and that she…

0 Comments
May 2, 2022
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Whistleblower 15977-18W v. Commissioner
T.C. Memo. 2021-143

On December 29, 2021, the Tax Court issued a Memorandum Opinion in the case of Whistleblower 15977-18W v. Commissioner (T.C. Memo. 2021-143). The primary issue presented in Whistleblower 15977-18W was whether the IRS’s Whistleblower Office (WBO) abused its discretion in concluding that the whistleblower claim did not provide specific and credible information sufficient to establish that the target taxpayer was citizen of United States at birth. Held: Discretion sound—no abuse here. Background In early September 2017 the WBO received the petitioner's Form 211. The petitioner provided information to the WBO attempting to show that a certain individual (target) was a dual citizen of the United States and Country X and was subject to, but failed to pay, substantial amounts of various Federal taxes. In support of that claim, the petitioner provided a copy of the target's birth certificate showing that the target was born in the United States, information about…

0 Comments
April 29, 2022
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Ahmed v. Commissioner
T.C. Memo. 2021-142

On December 28, 2021, the Tax Court issued a Memorandum Opinion in the case of Ahmed v. Commissioner (T.C. Memo. 2021-142). The primary issue presented in Ahmed was whether the taxpayer’s payment of all monies owed mooted his challenge to the IRS’s imposition of a lien and the trust fund recovery penalty (“TFRP”). Held: Yup. Background to Ahmed v. Commissioner In June 2020, the petitioner sent to the IRS a check for $625,000 along with a letter signed by petitioner's counsel. This letter stated that the $625,000 remittance “constitutes a cash bond deposit” for petitioner's TFRP liabilities.  More specifically, the letter stated Under IRC § 6603 and under Rev. Proc. 2005-18, we designate this remittance as a deposit in the nature of a cash bond for the TFRP liabilities of Faisal Ahmed, for the tax periods stated… This remittance is a deposit and not a payment of tax within the…

0 Comments
April 28, 2022
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Bunton v. Commissioner
T.C. Memo. 2021-141

On December 28, 2021, the Tax Court issued a Memorandum Opinion in the case of Bunton v. Commissioner (T.C. Memo. 2021-141). The primary issue presented in Bunton was whether the IRS office of Appeals abused its discretion by sustaining a levy upon the taxpayers’ (read: tax protesters) state tax refund. Held: Not so much. Background to Bunton v. Commissioner The petitioners are tax protesters, who adopted the good ol’ “we’re not federal workers or them foreigners, so we don’t owe no [sic] taxes” argument. And I quote: We are private sector workers. We do not live or work in Washington, D.C., Puerto Rico, Guam or any Federal territory. We do not work for the U.S. Federal Government. We do not make any income from foreign transactions and we are not foreigners living in the United States who derive any income. Therefore, payments made to us by these private sector companies…

1 Comment
April 27, 2022
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Huff v. Commissioner
T.C. Memo. 2021-140

On December 21, 2021, the Tax Court issued a Memorandum Opinion in the case of Huff v. Commissioner (T.C. Memo. 2021-140). The primary issue presented in Huff was whether the petitioners’ miniature donkey breeding operation was an activity engaged in for profit within the meaning of IRC § 183. Held: Actually, yes. Author’s Note on Huff v. Commissioner Judge Patrick J. Urda (who delivered this opinion) was a Classics major at Notre Dame, where he graduated summa cum laude. As an inveterate Latin nerd, my respect for Judge Urda it is unquestionable. The Huff opinion only furthers my admiration for the good jurist. Background to Huff v. Commissioner The petitioners “are an extremely wealthy couple who wanted to supplement the income of their adult daughter.” To do so, the petitioners did not let her rest on her parents' laurels or her trust fund.  Instead, they took a completely logical step…

2 Comments
April 26, 2022
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Skolnick v. Commissioner
T.C. Memo. 2021-139

On December 16, 2021, the Tax Court issued a Memorandum Opinion in the case of Skolnick v. Commissioner (T.C. Memo. 2021-139). The primary issue presented in Skolnick was whether the petitioner’s “horse activity,” undertaken through his LLC, was an activity not engaged in for profit within the meaning of IRC § 183 during 2010-2013. Held: Petitioners were just horsing around, but they had reasonable cause to avoid the accuracy-related penalties. On Horse Breeding and Miniature Donkeys This case is a classic example of equine-related deductions being disallowed. There is a LONG history of equine-related deduction cases, and very few ever turn out well for the taxpayers. One exception to this rule is the case of Huff v. Commissioner, T.C. Memo. 2021-140, the very next case on the Tax Court’s docket, in which Judge Urda found that the taxpayers credibly presented evidence that their miniature donkey breeding operation was engaged in…

0 Comments
April 25, 2022