Another Tax Court case involving the Danielson Rule and this Time the Taxpayer Wins... [ read ]
In a prior blog post, I discussed a Tax Court memorandum opinion in Watts v. Comm'r, 2020-144, in which the Tax Court cited to the Danielson rule in holding for the IRS. The last line of that blog post reads, "The lesson from Watts and Danielson is that a taxpayer who attempts to disavow the tax consequences of an arm's length agreement will face a significant uphill battle." Well, only a few months later, the taxpayer in another Tax Court memorandum opinion, Complex Media Inc. v. Commissioner, T.C. Memo 2021-14, prevailed in that uphill battle and convinced the Tax Court that the taxpayer could disavow and recharacterize the form of a transaction.
To Tax or Not to Tax: Should PPP Loans That Are Forgiven Under Federal Law Be Subject to the Texas Franchise Tax?... [ read ]
Among the many issues confronting taxpayers, legislators and the Texas Comptroller related to COVID-19 is whether Paycheck Protection Program (PPP) loans forgiven pursuant to federal law should be subject to the Texas franchise tax.
Timely Filed IRS Documents and the Mailbox Rule... [ read ]
In a prior blog post, I discussed when the statute of limitation for the IRS assessing tax starts. The simple answer is, the statute of limitations starts when the tax return is filed. I recently read a case, Taha v. United States, which is being appealed by the taxpayer to the Federal Circuit Court of Appeals and involves a refund claim, the statute of limitations and the common law "mailbox rule".
When Does the Statute of Limitations for Assessing Tax Start?... [ read ]
I thought I would blog about a couple of December 2020 tax cases, decided within five days of each other, that involved taxpayers arguing that the IRS was time barred from assessing tax because the statute of limitations had run. In both cases, the IRS argued an assessment of tax was not time barred because the taxpayer had failed to file the required tax returns. In one case, Quezada v. IRS , the Fifth Circuit held in favor of the taxpayer, and in the other, Coffey v. Commissioner, the Eighth Circuit held in favor of the IRS.
Form 2848 and 8821 Now Accepted Online with E-signatures... [ read ]
On January 25, 2021, the IRS debuted an online tool to allow tax practitioners to obtain electronic signatures from clients and submit Forms 2848 and 8821 electronically. Practitioners may still mail or fax Forms 2848 or 8821 to the IRS; however, these methods require that all signatures on the Forms be handwritten and no electronic signatures are allowed. It is clear that the IRS is trying to entice practitioners to go "paperless," but is it worth the hassle?
IRC Section 6901 and Transferee Liability... [ read ]
In a previous blog post, I discussed a case involving the liability of an executor for unpaid federal estate taxes. In this blog post, I will discuss the basics of transferee liability for a transferor's taxes.
The Department of Justice Announces First Guilty Pleas in Conservation Easement Transactions... [ read ]
On Monday, December 21, 2020, Stein and Corey Agee of Atlanta, Georgia entered guilty pleas in federal court to conspiracy charges related to their roles in syndicated conservation easement transactions. These are the first guilty pleas related to the continuing IRS and Department of Justice criminal investigations across the country pertaining to easement transactions.
IRS Doubles Down on Pursuing High Income Non-Filers... [ read ]
Eric Hylton, the commissioner of the IRS Small Business/Self-Employed Division, threw down the gauntlet December 3, 2020 with an article the IRS pushed out on the IRS Newswire on how the IRS views high income non-filers.
Section 469 and Material Participation... [ read ]
One of the tools in the IRS toolkit for limiting a taxpayer's business and investment loss deductions is IRC Section 469 and material participation. In Gurpreet S. Padda and Pamela B. Kane v. Commissioner, the U.S. Tax Court held that a practicing medical doctor met the IRC Section 469 material participation requirements for five restaurants and a brewery, and could deduct the losses generated by those business in full.
Can An Executor of An Estate That Owes Taxes Be Personally Liable?... [ read ]
In an unpublished decision, a U.S. District Court in New Jersey granted the government summary judgment against the executors of two related estates for fiduciary liability claims for failure to pay federal estate tax. United States v. Estate of Lorraine Kelley, et. al has a detailed discussion of how an estate executor can become personally liable for the estate tax and is a good example of what an executor should not do.