Income Tax Issues
Al Capone

The Deductibility of Criminal Restitution & The Claim of Right Doctrine

You have made it a habit to screen your calls, even since your mother gave Uncle Bill your direct line at work. Sure enough, 5:59 PM rolls around, and you have one foot physically out of your office door when your phone rings. Mother of all that is good and holy… As you put your briefcase down in the doorway and slowly amble back to your desk, you are at once relieved that it is

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Scott St. Amand April 29, 2021
Income Tax Issues
Capital Expenditures

Deducting Legal and Professional Fees

Income tax deductions are rather like hard truths. A client may not want to hear that an item is not deductible, but you know in your heart of hearts that you cannot, in good conscience, advise them otherwise. No doctor relishes the prospect of telling a patient that he is terminal. Often met with a similar grief-stricken reaction, explaining to a client that the “big ticket” deduction that they wanted to claim (or in my

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Scott St. Amand April 29, 2021
Income Tax Issues
Abandonment

Reckless (albeit Tax Conscious) Abandonment under IRC § 165

Uncle Bill is somewhat of a hoarder.  In truth, the only thing that he has ever abandoned was his first wife…in a Waffle House at 2:15 AM on the outskirts of Norman, Oklahoma. In Bill’s defense, she had tried to stab him. In her defense, he probably deserved it. When Bill comes to you to chat about IRC § 165 losses—so-called “abandonment” losses—you know he has some hairbrained scheme in his head to stick it

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Scott St. Amand April 29, 2021
Income Tax Issues
Accuracy Related Penalty

Baum v. Commissioner
T.C. Memo. 2021-46

On April 27, 2021, the Tax Court issued a Memorandum Opinion in the case of Baum v. Commissioner (T.C. Memo. 2021-46). The primary issues presented in Baum were whether the petitioners were entitled to deductions for expenses as reported on Schedules C (Profit or Loss from Business) for the years in issue and whether the petitioners were entitled to a theft loss deduction pursuant to IRC § 165 for 2015. Background to Baum v. Commissioner:

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Scott St. Amand April 27, 2021
Business Related Issues
Accuracy Related Penalty

Plentywood Drug Inc. v. Commissioner
T.C. Memo. 2021-45

On April 26, 2021, the Tax Court issued a Memorandum Opinion in the case of Plentywood Drug Inc. v. Commissioner (T.C. Memo. 2021-45). The primary issues presented in Plentywood Drug, Inc. were whether the petitioner’s owners received “fair rent” or constructive dividends for the rental of the petitioner’s drug store, and whether the petitioner (a corporation) satisfied its burden to show that the IRS failed to receive prior supervisory approval for the accuracy-related penalties at

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Scott St. Amand April 26, 2021
Business Related Issues
Corporations

De Los Santos v. Commissioner
156 T.C. No. 9

On April 12, 2021, the Tax Court issued its opinion in De Los Santos v. Commissioner, 156 T.C. No. 9. The underlying issue presented in De Los Santos v. Commissioner was whether the benefits (a split-dollar life insurance arrangement) received by the petitioners were received in their capacity as employees or shareholders, and, in turn, whether such economic benefits or taxable to the petitioner’s as ordinary compensation income or as a distribution under IRC § 301.

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Scott St. Amand April 12, 2021
Business Related Issues
Burden of Proof

Berry v. Commissioner
T.C. Memo. 2021-42

On April 7, 2021, the Tax Court issued a Memorandum Opinion in the case of Berry v. Commissioner (T.C. Memo. 2021-42). The primary issues presented in Berry v. Commissioner were whether the petitioners S corporation underreported its income, whether the petitioners’ S corporation is entitled to certain claimed deductions, whether the petitioners are entitled to certain claimed deductions, and whether the petitioners are liable for accuracy-related penalties under IRC § 6662. Background to Berry v.

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Scott St. Amand April 7, 2021
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Deducting Legal and Professional Fees

Income tax deductions are rather like hard truths. A client may not want to hear that an item is not deductible, but you know in your heart of hearts that you cannot, in good conscience, advise them otherwise. No doctor relishes the prospect of telling a patient that he is

Read More »
Scott St. Amand April 29, 2021

Baum v. Commissioner
T.C. Memo. 2021-46

On April 27, 2021, the Tax Court issued a Memorandum Opinion in the case of Baum v. Commissioner (T.C. Memo. 2021-46). The primary issues presented in Baum were whether the petitioners were entitled to deductions for expenses as reported on Schedules C (Profit or Loss from Business) for the years

Read More »
Scott St. Amand April 27, 2021

Plentywood Drug Inc. v. Commissioner
T.C. Memo. 2021-45

On April 26, 2021, the Tax Court issued a Memorandum Opinion in the case of Plentywood Drug Inc. v. Commissioner (T.C. Memo. 2021-45). The primary issues presented in Plentywood Drug, Inc. were whether the petitioner’s owners received “fair rent” or constructive dividends for the rental of the petitioner’s drug store,

Read More »
Scott St. Amand April 26, 2021

De Los Santos v. Commissioner
156 T.C. No. 9

On April 12, 2021, the Tax Court issued its opinion in De Los Santos v. Commissioner, 156 T.C. No. 9. The underlying issue presented in De Los Santos v. Commissioner was whether the benefits (a split-dollar life insurance arrangement) received by the petitioners were received in their capacity as employees or

Read More »
Scott St. Amand April 12, 2021

Berry v. Commissioner
T.C. Memo. 2021-42

On April 7, 2021, the Tax Court issued a Memorandum Opinion in the case of Berry v. Commissioner (T.C. Memo. 2021-42). The primary issues presented in Berry v. Commissioner were whether the petitioners S corporation underreported its income, whether the petitioners’ S corporation is entitled to certain claimed deductions, whether

Read More »
Scott St. Amand April 7, 2021