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Mohamed H. Elbasha
United States Tax Court · 2022-01-12
The case involves Mohamed H. Elbasha challenging IRS determinations of tax deficiencies and penalties for 2008 and 2009 related to his Schedule C medical practice and other business activities. The court addressed the taxpayer's filing status as single or head of household despite being married, the deductibility of Schedule C expenses including cost of goods sold for an overseas venture, continuing education trips, rent, and other items, and accuracy-related penalties under section 6662. After concessions by the petitioner, the court determined that the proper filing status was married filing separately, disallowed the majority of the claimed deductions for lack of substantiation or business purpose, and upheld the penalties because the taxpayer failed to show reasonable cause or adequate reliance on his tax preparer.
taxesbusiness & regulatory
Forrest Crawley & Shawna Crawley
United States Tax Court · 2021-11-16
This Tax Court case concerned whether Forrest and Shawna Crawley could deduct $26,439 in moving expenses claimed on their 2015 federal income tax return after relocating from Pennsylvania to Georgia due to the wife's job transfer at UPS. The IRS disallowed the full deduction in a notice of deficiency, and the taxpayers, who had lost detailed records, relied on testimony, bank withdrawals, a stock sale, and an online cost estimate to support their claim. The court held that the taxpayers were entitled to a partial deduction of $21,969, allowing $20,000 for the movers, $1,439 for travel, and $530 for lodging. Its core reasoning was that section 217 permits deductions for reasonable moving expenses tied to starting new employment, and under the Cohan rule the court could estimate amounts where the taxpayers proved that deductible expenses were incurred even without complete substantiation.
taxes
Angela West
United States Tax Court · 2021-07-26
The case involved Angela West, a nurse who worked full time at a VA hospital in Kentucky while maintaining a residence in Georgia, challenging the IRS's disallowance of $35,044 in miscellaneous itemized deductions on her 2017 tax return for vehicle, travel, parking, and meal expenses incurred traveling between the two states. The Tax Court granted the Commissioner's motion for partial summary judgment, holding that West was not entitled to deduct the expenses under section 162(a)(2). The court determined that Kentucky was her tax home because her employment there was indefinite rather than temporary, as shown by her full-time work, apartment rental, vehicle registrations, and other ties in the state, while her Georgia connections were personal. Travel expenses motivated by a taxpayer's choice to maintain a distant residence are not deductible when they do not serve a business purpose of the employer.
taxesbusiness & regulatory
Bell Capital Management, Inc.
United States Tax Court · 2021-06-14
This Tax Court case concerned whether Bell Capital Management, Inc. was liable for employment taxes on wages paid to its sole owner and director, Ron H. Bell, for tax periods in the late 1990s and early 2000s. The IRS determined Bell was an employee under FICA, FUTA, and withholding rules despite the company's use of offshore leasing arrangements to compensate him, and assessed taxes plus fraud and deposit penalties. The court granted the IRS's motion for summary judgment, ruling that the company was collaterally estopped from contesting liability, that Bell was correctly classified as an employee, that fraud penalties applied due to intentional underpayment, and that assessment periods had not expired. It based its decision on facts established in a related prior case and found no valid defenses or calculation errors by the petitioner.
taxeslabor & employmentbusiness & regulatory
Clarence J. Mathews
United States Tax Court · 2021-03-09
This U.S. Tax Court case involved petitioner Clarence J. Mathews, who filed a 2011 return reporting Schedule C business expenses tied to his role as a minister and later attempted to recharacterize them as employee business expenses on an amended return. The IRS disallowed the deductions, leading to a deficiency determination that included self-employment tax and an accuracy-related penalty. The court held that the expenses were nondeductible commuting costs between home and work, lacked required substantiation under section 6001, and that the Schedule C income was not actually received, eliminating self-employment tax liability. It also found that the IRS failed to show supervisory approval for the penalty under section 6751(b), so no penalty applied. The court upheld the deficiency without the self-employment tax or penalty components.
taxes