January Tax Decisions... [ read ]
This blog post summarizes a few noteworthy court decisions released in January 2022 that pertain to federal tax matters.
IRS Sends a Shot Across the Bow to Taxpayers With Grantor-Retained Annuity Trusts... [ read ]
An IRS legal memorandum involving a grantor-retained annuity trust (GRAT) released on December 30, 2021, should be a wake-up call to taxpayers and tax professionals. The memorandum blows up the taxpayer's GRAT by determining that the business asset held in the taxpayer's GRAT was egregiously undervalued allowing the IRS to disregard the GRAT and treat the entire transfer of assets to the trust as an outright gift. Not surprisingly, there are some unique and difficult facts regarding the GRAT and asset at issue, but it is a reminder of the importance of a good valuation and dotting all the I's and crossing all the T's when doing complex tax planning.
December Tax Decisions... [ read ]
This blog post summarizes a few noteworthy court decisions released in December 2021 that pertain to federal tax matters.
IRS Voluntary Disclosure Program Now Squarely Looks at Virtual Currency Issues and Provides Additional Clarity for Penalty Structure... [ read ]
On February 15, 2022, the IRS announced that it had changed its form (Form 14457) for making a voluntary disclosure with the IRS.
Crypto Clarity on the Horizon? Taxpayer Rejects Complete Government Concession for Issue Clarity... [ read ]
It is not every day that the IRS agrees to pay a refund and the taxpayer declines. In Jarrett v. United States, No. 3:21-cv-00419 (M.D. Tenn.), one taxpayer did just that.
Taxpayer Loses Round One on Substantial Compliance But Still Has a "Reasonable" Chance to Save Its Easement Charitable Deduction... [ read ]
In a February 8th order in Hickory Equestrian LLC v. Commissioner, USTC No. 347-21, the U.S. Tax Court partially granted the IRS motion for summary judgment regarding the taxpayer's $6.4 million easement deduction. The court agreed with the IRS that the partnership's omission of cost basis on Form 8283, "Noncash Charitable Contributions", constituted a failure to satisfy the substantiation requirements of Reg. Section 1.170A-13(c). However, the court left open the possibility that the taxpayer could still save its charitable contribution deduction based on reasonable cause.
Taxpayer Does Some Creative Do-It-Yourself Estate and Gift Tax Planning and Then Tells the World About It... [ read ]
On January 20th, a U.S. Magistrate Judge in Illinois issued a memorandum opinion and order in R. David Yost v. Morgan Carroll, No. 20-C-5393 (N.D. Illinois), which involved a promissory note enforcement dispute between a soon-to-be former father-in-law (Yost) and his soon-to-be former son-in-law (Carroll). The lawsuit was filed after Carroll and Yost's daughter, Annie, started divorce proceedings. The promissory note case does not involve the IRS or any tax issues, but based on the court's order, the IRS, and possibly the Department of Justice, could be making inquiries of the parties soon.
Taxpayer Advocate Report to Congress-Parts 2 & 3 (Sort of)... [ read ]
Have you ever committed to do something only to later discover that someone has already done it and done it very well? Well, I had one of those moments this week. Last week I wrote a blog post regarding the Taxpayer Advocate's 2021 report entitled The National Taxpayer Advocate's 2021 Report to Congress (Part 1). Because there is a tremendous amount of interesting material in the report (interesting to tax nerds like me), my intent was to write at least one or two other blog posts regarding the Advocate's report to Congress.
IRS Slow Down in Micro Captive Enforcement? Not so Fast…... [ read ]
Late last year, the IRS made a big splash in tax news when it conceded the deductions of micro captive planning in a filed Tax Court case (Puglisi v. Commissioner, available here). Since that time there has been much commentary on whether the IRS' concession marked a shift in its heavy-handed enforcement style against micro captive insurance. Well, the jury remains out, as just last week, IRS Chief Counsel announced plans to hire up to 200 additional attorneys to help combat allegedly abusive transactions. And what does the IRS include in that category? You guessed it: micro captive insurance arrangements.
The National Taxpayer Advocate's 2021 Report to Congress (Part 1)... [ read ]
On January 12th, the IRS National Taxpayer Advocate delivered her annual report regarding the IRS to Congress. The report contains statistical information and recommendations for how the IRS could improve its service and how Congress could assist the IRS in making the suggested improvements. For those of us who assist clients with IRS matters, we were not surprised that the Advocate's report stated that 2021 was the most challenging year ever for taxpayers and the IRS. "
