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Keith Schumacher & Rhonda Schumacher
United States Tax Court · 2026-06-09
The case involved Keith and Rhonda Schumacher, who operated Schumacher Quarter Horses as a sole proprietorship breeding and training show horses. The IRS examined their 2017-2019 tax returns and disallowed deductions for these activities under section 183, determining they were not engaged in for profit, leading to tax deficiencies and accuracy-related penalties. The Tax Court held that the Schumachers' horse activities lacked a profit motive based on an evaluation of facts and circumstances, including their lack of profitability over years and other factors, thus disallowing the business expense deductions. However, the court found that the Schumachers had reasonable cause and good faith due to reliance on professional tax advice, so they were not liable for the penalties.
taxesbusiness & regulatory
Jonathan D. Sawyer
United States Tax Court · 2026-04-16
This U.S. Tax Court case involved Jonathan D. Sawyer, who owned a family printing business and held a life insurance policy on himself. After taking loans against the policy to support the business, the policy terminated automatically in 2015 when the loan balances exceeded its cash surrender value, leading the IRS to issue a notice of deficiency for unreported income and additions to tax for failing to file and pay on time. The court held that Sawyer constructively received $160,900 in taxable income upon termination because the loans triggered cancellation under the policy terms, creating income without cash distribution. It allowed a partial deduction for investment interest paid on the loans up to the amount of net investment income but found him liable for the failure-to-file addition due to lack of reasonable cause, while excusing the failure-to-pay addition based on demonstrated inability to pay despite ordinary business care. The decision turned on application of tax rules for life insurance policy terminations and additions to tax under sections 6651(a)(1) and (a)(2).
taxes
Thermal Circuits, Inc.
United States Tax Court · 2026-03-30
The case concerned whether Thermal Circuits, Inc., a C corporation that manufactures foil heating components, had to include in its gross income approximately $4.3 million that NVT provided in 2017 and 2018 to fund an expansion of Thermal's leased manufacturing facility. Thermal did not report any of the payments on its 2017 or 2018 corporate tax returns, leading the IRS to issue notices of deficiency asserting income inclusions and accuracy-related penalties. The Tax Court held that Thermal must include the entire amount in income because it received the funds and obtained possession and use of the resulting leasehold improvements. The court reasoned that the payments constituted taxable income under general principles of federal income taxation, though it found Thermal had reasonable cause for its position and therefore was not liable for the accuracy-related penalty.
taxesbusiness & regulatory
Daniel Isaiah Thody
United States Tax Court · 2026-03-30
The case involved Daniel Isaiah Thody, who operated businesses selling airplane parts to the U.S. Government from 2006 to 2010 but did not report or pay tax on the income from those contracts. Following his criminal conviction for tax evasion under section 7201, the IRS conducted a civil examination and issued a notice of deficiency asserting income tax liabilities plus additions to tax under section 6651(a)(1) and (f) for fraudulent failure to file returns. The Tax Court upheld the deficiencies, holding that Thody's unreported business income was taxable and that the Commissioner’s determinations were presumed correct in the absence of contrary evidence. The court also sustained the section 6651(f) additions to tax, relying on the criminal conviction and records showing no returns were filed, while declining to impose a section 6673 penalty for Thody’s frivolous arguments in this first proceeding.
taxescriminal law
Tibor Gyarmati
United States Tax Court · 2026-03-26
The case concerned Tibor Gyarmati's 2015 federal income tax deficiency of $860,547 and additions to tax totaling over $424,000, arising primarily from the sales of rental property in Michigan and a Florida condominium. After multiple concessions by the parties, the Tax Court examined Gyarmati's claims to increase his adjusted basis in the Florida condo for additional capital improvements or to reduce the amount realized by allocating part of the sale price to furnishings, as well as his liability for the additions to tax. The court found that Gyarmati did not substantiate any further basis adjustments or allocations beyond those conceded and offered no evidence of reasonable cause for failing to timely file, pay, or make estimated payments, resulting in a determination of $1,208,073 in taxable gain and liability for the additions under sections 6651(a)(1), (a)(2), and 6654.
taxes
Shazia Zulfiqar
United States Tax Court · 2026-01-22
This consolidated U.S. Tax Court case involves collection due process proceedings for tax year 2015, where petitioners Muhammad and Shazia Zulfiqar challenged the IRS Commissioner's proposed levy to collect assessed taxes and additions to tax. The parties filed cross-motions for summary judgment, disputing the impact of a prior Stipulated Decision from Docket No. 14881-20 on the petitioners' remaining 2015 liabilities, including whether it resolved or omitted certain section 6651(a)(1), (a)(2), and 6654 additions to tax that had been assessed earlier. The court held a hearing and reviewed the record, including account transcripts and settlement documents, but found that material facts remain genuinely disputed, such as the parties' intent and the precise scope of the prior decision. Accordingly, the court denied both motions for summary judgment and allowed the cases to proceed.
taxesprocedure