Elizabeth Crewson Paris

This case involved Crystal R. Vettel’s petition for innocent spouse relief under IRC section 6015 from joint and several liability on understatements of tax for the years 2006 through 2010 and 2014, arising from her husband’s unreported foreign business income and investments. In a prior deficiency proceeding that resulted in a stipulated decision, Vettel had not raised the innocent spouse claim. The Tax Court held that res judicata barred the current request because Vettel had a full and fair opportunity to litigate the issue in the earlier case, as the petition was filed more than a year before settlement and nothing prevented her from amending the petition or filing Form 8857. The court found she meaningfully participated through counsel and that strategic decisions not to raise the claim did not negate the prior opportunity, so it did not reach the merits of relief under section 6015(b), (c), or (f).

taxesprocedure

This case involved a TEFRA partnership, Blomquist Holdings, LLC, that claimed a large charitable contribution deduction under IRC section 170 for donating a conservation easement, which the IRS largely disallowed in a Final Partnership Administrative Adjustment along with penalties. The tax matters partner, Crestlawn Investors, LLC, entered into a settlement with the IRS, prompting 39 nonparticipating partners to file amended motions for leave to participate late under Tax Court Rule 248(b)(4) in order to avoid the settlement and litigate further. The Tax Court ruled that partners' rights to participate under IRC section 6226(c)(2) are not absolute but are governed by the Tax Court Rules of Practice and Procedure. The court held that late participation requires a substantial showing justifying the request, which the partners failed to provide given their prior inaction, lack of evidence of misconduct by the tax matters partner, and absence of any explanation for the delay. Accordingly, the court denied the motions.

taxesprocedurebusiness & regulatory

This case involved Michael D. Taylor challenging an IRS Notice of Deficiency for his 2017 federal income tax return, which disallowed a claimed $49,500 casualty loss deduction under section 165 for damage from Hurricane Harvey to the Gatehouse Property. The Tax Court ruled that Taylor was not entitled to the deduction after the parties settled other issues. The court reasoned that a casualty loss deduction requires ownership of the affected property, but Taylor transferred his interest in the Gatehouse Property to his former spouse in 2000, held it only as guardian for his minor daughters until transferring it outright to his adult daughters in 2012, and had no ownership interest in 2017.

taxesproperty

The case involved consolidated Tax Court petitions by Ana M. Franklin challenging IRS notices of deficiency for her 2015 and 2018 federal income taxes. The court addressed whether Franklin had unreported income of $155,000 from a county jail food account in 2015 (and related net operating loss carryback and late-filing penalty issues), and whether $44,967 received in 2018 was business gross receipts or other income along with associated deductions for legal and professional expenses. The court held that the $155,000 was not includible in 2015 gross income and that Franklin was not entitled to the NOL carryback, though she remained liable for the section 6651(a)(1) addition to tax to the extent of any underpayment; it further held that the 2018 amount was properly characterized as other income rather than trade-or-business receipts and sustained the disallowance of the claimed deductions. The reasoning centered on findings that Franklin's handling of the jail food funds and related activities were performed as part of her duties as an elected county sheriff (an employee of the county commission) rather than as a separate trade or business, with the expenses either personal, employee-related, or suspended miscellaneous itemized deductions under section 67(g).

taxes

This Tax Court case involved a petition challenging a Notice of Determination that sustained a proposed IRS levy to collect Ronald Goldberg's unpaid income tax liabilities for 1998 and 2000. Goldberg, a partner in two oil and gas partnerships subject to TEFRA audit procedures, had his individual tax liabilities adjusted based on partnership-level determinations; he did not timely request a hearing after an earlier NFTL filing and did not participate in the TEFRA proceedings. The court addressed cross-motions for summary judgment on whether Goldberg could contest his underlying tax liabilities in the CDP hearing and whether the settlement officer abused discretion in sustaining the levy. The court granted the Commissioner's motion and denied Goldberg's, holding that he was barred from challenging the liabilities due to his prior failures to act and finding no abuse of discretion because all procedural requirements were met and no collection alternatives were proposed.

taxesprocedure

This U.S. Tax Court case involved Blossom Day Care Centers, Inc., an Oklahoma corporation operating child care centers, and its sole shareholders and officers, Barry and Celeste Hacker. The IRS determined that the Hackers were employees for employment tax purposes in 2005-2008, requiring the company to pay FICA and FUTA taxes on their compensation, along with failure-to-deposit and accuracy-related penalties. After concessions, the court addressed whether the Hackers qualified as employees, the amount of additional wages, and the penalties. The court sustained the IRS determinations, holding that the Hackers were employees based on their roles as corporate officers performing services for the company, that the company owed the taxes on the determined wages, and that the penalties applied due to lack of reasonable cause or supervisory approval issues.

taxeslabor & employmentbusiness & regulatory

This U.S. Tax Court case concerns Blossom Day Care Centers, Inc., an Oklahoma corporation operating childcare centers, which challenged IRS notices of deficiency for tax years 2004-2007 asserting income tax deficiencies totaling over $420,000, civil fraud penalties, alternative accuracy-related penalties, and a late-filing addition to tax. The disputes centered on adjustments to gross receipts, unreported capital gains from asset dispositions and property transfers, rental income, and the allowability of deductions for depreciation, business expenses, management fees, interest, repairs, supplies, wages, and Indian employment tax credits, along with worker classification issues. After party concessions and review of evidence on each item, the court resolved the factual and legal questions on income inclusions and deductible amounts, sustained the accuracy-related penalties for negligence and substantial understatements because the taxpayer lacked reasonable cause, and directed entry of decision under Rule 155 for the resulting deficiencies and addition to tax.

taxesbusiness & regulatory

This U.S. Tax Court case involved Blossom Day Care Centers, Inc., an Oklahoma corporation operating daycare centers, challenging IRS notices of deficiency for tax years 2004 through 2007. The IRS had determined adjustments to gross receipts, unreported capital gains and rental income, disallowed deductions for depreciation, business expenses, management fees, interest, repairs, supplies, wages, and Indian employment tax credits, plus civil fraud penalties (or alternatively accuracy-related penalties) and a late-filing addition to tax. After concessions by the parties, the court resolved the remaining issues by making specific findings on the taxpayer's income and deductible expenses based on the record evidence and sustained the accuracy-related penalties under section 6662(a) due to the taxpayer's disregard of rules and lack of reasonable cause, along with the section 6651(a)(1) addition for 2007.

taxesbusiness & regulatory

This U.S. Tax Court case involved Blossom Day Care Centers, Inc., an Oklahoma corporation operating child care centers, and whether its sole corporate officers and shareholders (the Hackers) must be classified as employees for federal employment tax purposes. The IRS had issued a notice determining that the Hackers were employees for 2005-2008, making the company liable for FICA and FUTA taxes on their compensation plus failure-to-deposit and accuracy-related penalties. After concessions, the court held that the Hackers qualified as employees due to their officer positions and that the company owed the taxes and penalties, finding proper supervisory approval for the penalties and no reasonable cause to avoid them. The decision sustained the IRS determinations in full.

taxeslabor & employmentbusiness & regulatory

In this U.S. Tax Court case, petitioner Nickels B. Peeples challenged the IRS's disallowance of $27,205 in miscellaneous itemized deductions on his 2014 return, specifically unreimbursed employee business expenses for mileage, travel, safety equipment, and $77 in tax preparation fees. The court decided for the respondent, sustaining the deficiency of $3,657 and denying all deductions. It reasoned that the taxpayer bears the burden of substantiation under sections 162 and 274 of the Internal Revenue Code, but provided no contemporaneous records, logs, receipts, or detailed testimony to establish the business purpose, amounts, or locations of the claimed expenses, and the only available receipt related to a later amended return rather than the original filing.

taxes

This case involved taxpayer Connie Sue Heston, who received advance premium tax credits (APTC) under the Affordable Care Act for 2017 health insurance while also receiving a lump-sum Social Security disability insurance payment covering 2015-2017. The IRS determined that the full lump-sum amount had to be included in her modified adjusted gross income for that year, which increased her household income above allowable limits for the premium tax credit and created excess APTC of $1,428.66. The Tax Court held that Heston received excess APTC subject to a $1,275 repayment cap and was not entitled to the $327 net premium tax credit she claimed on her return, resulting in a $1,602 deficiency. The court reasoned that the lump-sum distribution must be counted in the year received under the statutory MAGI rules for PTC eligibility, regardless of the years it covered, and that this adjustment triggered repayment obligations under section 36B. The decision was entered for the Commissioner.

taxeshealthcare

This U.S. Tax Court case involved petitioner William E. Flynn, who did not file federal income tax returns for 1999, 2000, and 2001. The IRS determined deficiencies based on unreported gambling income and other income totaling over $700,000 across those years, stemming from Flynn's role in promoting Access Financial, a fraudulent investment scheme falsely presented as a tax-free church operation that defrauded hundreds of investors. The court addressed whether Flynn was liable for the tax deficiencies plus additions to tax under sections 6651(f) for fraudulent failure to file, 6651(a)(2) for failure to pay, and 6654 for failure to pay estimated taxes, or alternatively under section 6651(a)(1). After reviewing stipulated facts, evidence from the related criminal conspiracy prosecution, and Flynn's lack of filings or payments, the court held Flynn liable for the deficiencies and all additions to tax, finding the IRS met its burdens and no exceptions applied.

taxescriminal law