Income Tax Issues
Costs of Goods Sold (COGS)

Lord v. Commissioner
T.C. Memo. 2022-14

On March 1, 2022, the Tax Court issued a Memorandum Opinion in the case of Lord v. Commissioner (T.C. Memo. 2022-14). The primary issue presented in Lord was whether the tax depreciation methods for inventory production assets can be used under either section 263A or section 471 when section 280E is applied. Holding: In a battle of Lord versus the IRS, one would think the almighty would prevail. Turns out, not so. Background to Lord

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Scott St. Amand May 23, 2022
Income Tax Issues
COGS

Today’s Health Care II LLC v. Commissioner
T.C. Memo. 2021-96

On August 2, 2021, the Tax Court issued a Memorandum Opinion in the case of Today’s Health Care II LLC v. Commissioner (T.C. Memo. 2021-96). The primary issue presented in Today’s Health Care II LLC v. Commissioner was whether IRC § 280E (Expenditures in Connection with the Illegal Sale of Drugs) violated the Eighth or Sixteenth Amendments to the Constitution. Held: Not today, hippie. Note: Even the initials of the company (T.H.C.) are pot-induced. Kudos, stoners.

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Scott St. Amand September 26, 2021
Charities

Bad News Regarding Religious Tax Exemptions: Peyote is not a “Sacrament”

You can fault Cousin Jedediah for many things—many things—but charisma is not amongst them. It turns out that Jed has developed something of a following. He assures you that it is not a cult, which you have to imagine are the first words out of every cult leader’s mouth when questioned about it. Having drank Jed’s Kool-Aid, the members of his new religious “order” follow him around like willing lambs, but they have made musings

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Scott St. Amand April 16, 2021
Income Tax Issues
Accuracy Related Penalty

Purple Heart Patient Center Inc. v. Commissioner
T.C. Memo. 2021-38

On March 29, 2021, the Tax Court issued a Memorandum Opinion in the case of Purple Heart Patient Center Inc. v. Commissioner (T.C. Memo. 2021-38). The primary issues presented in Purple Heart Patient Center Inc. v. Commissioner were whether the petitioner (1) was entitled to offset its gross receipts with any cost of goods sold (COGS), (2) underreported its gross income, and (3) is liable for the accuracy-related penalty pursuant to IRC § 6662(a). Background to Purple

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Scott St. Amand March 29, 2021
Income Tax Issues
Deficiency

Desert Organic Solutions v. Commissioner
T.C. Memo. 2021-22

On February 22, 2021, the Tax Court issued a Memorandum Opinion in the case of Desert Organic Solutions v. Commissioner (T.C. Memo. 2021-22). The primary issue presented in Desert Organic Solutions v. Commissioner was whether the petitioner, a marijuana-based California business, was liable for a deficiency on the grounds that its activities were illegal under federal law. Note on My Tax Court Hero This is the first of Judge Holmes’ decisions with which I was a

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Scott St. Amand February 22, 2021
Charities

No Charitable Exemption for Medical Marijuana Nonprofits

Uncle Bill is a child of the Sixties. He is told you the story many a time how the lead singer for the Zombies stole his Beatle boots when they played at Old Orchard Beach the summer when he was 17. When Bill calls you out of the blue to discuss a hypothetical charitable exemption for medical marijuana nonprofits, you assume his interest is more than simply academic. After all, as Bill describes it, he

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Scott St. Amand February 8, 2021
Income Tax Issues
Deductions

San Jose Wellness v. Commissioner
156 T.C. No. 4

On February 17, 2021, the Tax Court issued its opinion in San Jose Wellness v. Commissioner (156 T.C. No. 4). The underlying issue presented in San Jose Wellness v. Commissioner was whether the petitioner, a marijuana dispensary, was prohibited from claiming deductions for depreciation and charitable contributions under IRC § 280E. Background to San Jose Wellness v. Commissioner The petitioner operated a medical marijuana dispensary pursuant to California law from 2010 to 2015. It sold marijuana

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Scott St. Amand January 17, 2021
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Most popular tagged posts:

Lord v. Commissioner
T.C. Memo. 2022-14

On March 1, 2022, the Tax Court issued a Memorandum Opinion in the case of Lord v. Commissioner (T.C. Memo. 2022-14). The primary issue presented in Lord was whether the tax depreciation methods for inventory production assets can be used under either section 263A or section 471 when section 280E

Read More »
Scott St. Amand May 23, 2022

Today’s Health Care II LLC v. Commissioner
T.C. Memo. 2021-96

On August 2, 2021, the Tax Court issued a Memorandum Opinion in the case of Today’s Health Care II LLC v. Commissioner (T.C. Memo. 2021-96). The primary issue presented in Today’s Health Care II LLC v. Commissioner was whether IRC § 280E (Expenditures in Connection with the Illegal Sale of Drugs)

Read More »
Scott St. Amand September 26, 2021

Purple Heart Patient Center Inc. v. Commissioner
T.C. Memo. 2021-38

On March 29, 2021, the Tax Court issued a Memorandum Opinion in the case of Purple Heart Patient Center Inc. v. Commissioner (T.C. Memo. 2021-38). The primary issues presented in Purple Heart Patient Center Inc. v. Commissioner were whether the petitioner (1) was entitled to offset its gross receipts with any

Read More »
Scott St. Amand March 29, 2021

Desert Organic Solutions v. Commissioner
T.C. Memo. 2021-22

On February 22, 2021, the Tax Court issued a Memorandum Opinion in the case of Desert Organic Solutions v. Commissioner (T.C. Memo. 2021-22). The primary issue presented in Desert Organic Solutions v. Commissioner was whether the petitioner, a marijuana-based California business, was liable for a deficiency on the grounds that its

Read More »
Scott St. Amand February 22, 2021

San Jose Wellness v. Commissioner
156 T.C. No. 4

On February 17, 2021, the Tax Court issued its opinion in San Jose Wellness v. Commissioner (156 T.C. No. 4). The underlying issue presented in San Jose Wellness v. Commissioner was whether the petitioner, a marijuana dispensary, was prohibited from claiming deductions for depreciation and charitable contributions under IRC § 280E.

Read More »
Scott St. Amand January 17, 2021