Whistleblower 11099-13W
United States Tax Court · 2026-01-13
This case involved a whistleblower who applied for an IRS award under I.R.C. § 7623(b), claiming his information about a taxpayer's alleged manipulation of LIFO inventory accounting led to additional tax collections after the taxpayer switched to FIFO and ceased the practices. The IRS investigated but could not substantiate the claims and collected no proceeds from the taxpayer as a result. The Tax Court granted the Commissioner's motion for summary judgment, holding that the whistleblower was ineligible for an award because no proceeds were collected based on the provided information. The court followed its precedent in Lewis v. Commissioner that self-reported taxes paid on original returns do not qualify as 'collected proceeds' under the statute, rendering the whistleblower's allegations immaterial even if true. It also denied the whistleblower's motions to supplement the record or admit additional evidence, as they would not alter the outcome.
taxes
Patricia Marcello Anderson
United States Tax Court · 2024-10-17
This U.S. Tax Court case involved consolidated proceedings for two petitioners who engaged in various business activities but did not file federal income tax returns for 2010-2013 and 2015; the IRS prepared substitutes for returns and issued notices of deficiency asserting substantial tax liabilities plus additions to tax. The court addressed whether the petitioners could substantiate claimed Schedule C and E business expense deductions and net operating loss carryovers, and whether they were liable for failure-to-file, failure-to-pay, and estimated-tax additions. The petitioners relied primarily on cash disbursements journals and account registers, with limited bank statements, but offered no further evidence of actual payments, citing the volume of records or their involvement in other litigation. The court held that the journals and registers did not prove payment, declined to apply the Cohan doctrine to estimate expenses because adequate recordkeeping was feasible, disallowed the NOL deductions for lack of supporting documentation, and sustained the additions to tax under sections 6651(a)(1) and (2) and 6654 because the petitioners did not challenge them. The decisions were entered under Rule 155 after concessions on filing status and certain additions.
taxesbusiness & regulatory
Ya Global Investments, LP F.K.A. Cornell Capital Partners, LP, Yorkville Advisors, GP LLC, Tax Matters Partner and Ya Global Investments, LP F.K.A. Cornell Capital Partners, LP, Yorkville Advisors, LLC, Tax Matters Partner
United States Tax Court · 2024-08-08
This U.S. Tax Court case involved YA Global Investments, LP, a partnership that provided funding to portfolio companies through stocks, convertible debentures, promissory notes, and warrants, and the IRS's adjustments to its 2009 tax reporting via final partnership administrative adjustments. The court held that the partnership was engaged in a U.S. trade or business, requiring it under I.R.C. § 475 to recognize gain or loss on securities held at year-end as if sold at fair market value, and that the partnership had not shown any portion of reported values was attributable to non-securities. It further ruled that foreign special purpose vehicles holding participation interests were partners in the partnership under I.R.C. § 704(e)(1), so withholding tax under § 1446 applied to their allocable share of income, and that the partnership had not established a lack of reasonable expectation of collecting accrued interest later written off, meaning the full interest income must be recognized.
taxesbusiness & regulatory
Steve M. Wright & Tami Wright
United States Tax Court · 2024-06-10
This U.S. Tax Court case involved petitioners Carol A. Wright and Steve M. Wright and Tami A. Wright, who challenged IRS deficiency notices for tax years 2014-2016 asserting additional income tax liabilities after disallowing claimed deductions. The disputes centered on whether the petitioners could deduct flowthrough business expenses from an S corporation on Schedule E and various Schedule C expenses for a restaurant and construction business. After concessions on penalties, the court placed the burden of proof on the petitioners and examined their substantiation for the expenses. The court held that the petitioners were not entitled to the disputed deductions, finding that much of the supporting documentation for meal and entertainment expenses was inconsistent, lacked credibility, or appeared fabricated, and thus insufficient to meet substantiation requirements beyond amounts the IRS had already allowed.
taxesbusiness & regulatory
Stephen J. Major
United States Tax Court · 2022-05-26
This Tax Court case involved petitioner Stephen J. Major challenging the IRS's determination of income tax deficiencies for tax years 2017 and 2018, along with an accuracy-related penalty under I.R.C. section 6662(a) for 2017. The deficiencies stemmed from disallowed deductions for unreimbursed employee business expenses, including vehicle mileage and other costs, which the petitioner claimed on his returns. Following a trial, the court issued oral findings sustaining the deficiencies in full, concluding that the petitioner failed to adequately substantiate the expenses through proper records or documentation as required. The court entered a decision for the respondent on the deficiencies but declined to sustain the accuracy-related penalty for 2017.
taxes
Gregory Miles Carmichael
United States Tax Court · 2022-05-26
This Tax Court case concerned a petition filed by Gregory Miles Carmichael challenging the IRS Commissioner's determinations of federal income tax deficiencies and additions to tax under sections 6651(a)(1), 6651(a)(2), and 6654 for the 2017 taxable year. After a trial session in Reno, Nevada, at which the petitioner did not appear despite notice, the court issued oral findings of fact and an opinion sustaining the Commissioner's positions on the deficiencies and most additions. The decision will be entered for the respondent except as to the section 6654 addition for 2017. The reasoning centered on the petitioner's failure to appear or present evidence, allowing the court to uphold the IRS determinations based on the existing record and applicable notice requirements.
taxes