Income Tax Issues
Accuracy Related Penalty

Vennes v. Commissioner (T.C. Memo. 2021-93)

On July 20, 2021, the Tax Court issued a Memorandum Opinion in the case of Vennes v. Commissioner (T.C. Memo. 2021-93). The primary issues presented in Vennes were whether the petitioner was entitled to passthrough theft loss deductions for 2008, and whether the petitioner was liable for the accuracy‑related penalty pursuant to IRC § 6662(a). A Checkered Past In 1990, the petitioner completed a prison sentence for money laundering, narcotics, and firearms offenses. After his

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Income Tax Issues
Estate Tax

Estate of Morrissette v. Commissioner (T.C. Memo. 2021-60)

On May 12, 2021, the Tax Court issued a Memorandum Opinion in the case of Estate of Morrissette v. Commissioner (T.C. Memo. 2021-60). The primary issue presented in Estate of Morrissette was whether IRC § 2036 or IRC § 2038 applies to recapture significant inter vivos transfers made as part of the split-dollar agreements, and, if not, whether the special valuation rule of IRC § 2703 applies to require that the valuation disregard a provision

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Income Tax Issues
Accuracy Related Penalty

Berry v. Commissioner (T.C. Memo. 2021-52)

On May 5, 2021, the Tax Court issued a Memorandum Opinion in the case of Berry v. Commissioner (T.C. Memo. 2021-52). The primary issues presented in Berry were whether certain amounts characterized as gross receipts of a company should actually be other income to the petitioners, whether the company is entitled to deduct racecar expenses, and whether or not the petitioners substantiated COGS or a depreciation deduction under IRC § 167(a). Background You may remember

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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: Bamboozled, Hoodwinked, Swindled, and

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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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Procedural Issues
Accuracy Related Penalty

Reasonable Reliance on a Competent Advisor

Explaining Reasonable Reliance on a Competent Advisor to Uncle Bill. Reasonable cause, specifically, reasonable reliance on a competent advisor will prove rather important to Uncle Bill, and so when he calls you to discuss this great scheme plan he’s been introduced to, you know that this is the time to breach the subject with Bill. You see, Uncle Bill bought his first house from an infomercial he saw after the Ed Sullivan show in the mid-1960s. 

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Accuracy Related Penalty

Walton v. Commissioner (T.C. Memo. 2021-40)

On March 30, 2021, the Tax Court issued a Memorandum Opinion in the case of Walton v. Commissioner (T.C. Memo. 2021-40). The primary issue presented in Walton was whether the petitioner qualified for the reasonable cause exception to the imposition of an accuracy-related penalty. Background The petitioner was a New Yorker,[1] who failed to report $170,000 in nonemployee compensation in 2015. Strike one and two. The petitioner was terminated from her employment, and negotiated a

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Vennes v. Commissioner (T.C. Memo. 2021-93)

On July 20, 2021, the Tax Court issued a Memorandum Opinion in the case of Vennes v. Commissioner (T.C. Memo. 2021-93). The primary issues presented in Vennes were whether the petitioner was entitled to passthrough theft loss deductions for 2008, and whether the petitioner was liable for the accuracy‑related penalty

Read More »

Estate of Morrissette v. Commissioner (T.C. Memo. 2021-60)

On May 12, 2021, the Tax Court issued a Memorandum Opinion in the case of Estate of Morrissette v. Commissioner (T.C. Memo. 2021-60). The primary issue presented in Estate of Morrissette was whether IRC § 2036 or IRC § 2038 applies to recapture significant inter vivos transfers made as part

Read More »

Berry v. Commissioner (T.C. Memo. 2021-52)

On May 5, 2021, the Tax Court issued a Memorandum Opinion in the case of Berry v. Commissioner (T.C. Memo. 2021-52). The primary issues presented in Berry were whether certain amounts characterized as gross receipts of a company should actually be other income to the petitioners, whether the company is

Read More »

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 »

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 »

Reasonable Reliance on a Competent Advisor

Explaining Reasonable Reliance on a Competent Advisor to Uncle Bill. Reasonable cause, specifically, reasonable reliance on a competent advisor will prove rather important to Uncle Bill, and so when he calls you to discuss this great scheme plan he’s been introduced to, you know that this is the time to breach

Read More »

Walton v. Commissioner (T.C. Memo. 2021-40)

On March 30, 2021, the Tax Court issued a Memorandum Opinion in the case of Walton v. Commissioner (T.C. Memo. 2021-40). The primary issue presented in Walton was whether the petitioner qualified for the reasonable cause exception to the imposition of an accuracy-related penalty. Background The petitioner was a New

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