Peter Panuthos

The case involved taxpayer Edmund Ha disputing an IRS Notice of Deficiency for tax year 2021 that disallowed Schedule C deductions for travel and meals ($59,866.14 claimed), car and truck expenses ($16,325), and home office expenses ($13,328.05), while also imposing a section 6662(a) accuracy-related penalty of $2,192.80. After IRS concessions and review of evidence including a post-year mileage log and partial records, the Tax Court allowed limited portions of the deductions that met substantiation rules but denied the rest for failure to adequately document business purpose and amounts under sections 162, 274(d), and 280A. The court upheld the penalty, holding that the taxpayer did not show reasonable cause or good faith given his failure to maintain contemporaneous records despite his sophistication as a real estate agent who used a paid preparer.

taxes

The case involved Ingrid Maria Persson challenging a $11,436 federal income tax deficiency for 2019 determined by the IRS, which arose from her receipt of advance premium tax credits for health insurance through Covered California that she was later found ineligible for. Persson argued that an installment agreement entered into with the IRS in September 2021 for multiple tax years, including 2019, precluded the deficiency determination. The Tax Court ruled in favor of the Commissioner, holding that the installment agreement covered only preexisting liabilities known at the time and did not encompass the APTC-related deficiency, which was determined subsequently. The court further reasoned that any oral representations by IRS employees did not bind the agency or prevent the deficiency determination under applicable tax law.

taxeshealthcare

The case involved Abdul Khaliq Mustafa Muhammad, an IRS employee, disputing civil fraud penalties assessed by the Commissioner of Internal Revenue for tax years 2017 and 2018 after prior rulings established unreported income and disallowed various Schedule A and C deductions and expenses. The U.S. Tax Court held that the petitioner was liable for the fraud penalties under section 6663. The court based its decision on clear and convincing evidence of multiple badges of fraud, including repeated underreporting of income, claiming deductions far exceeding reported receipts without records, failure to maintain business books despite the taxpayer's advanced tax education and government experience, and noncooperation with the IRS examination such as not responding to document requests.

taxes

The case concerned a taxpayer's challenge to IRS determinations of federal income tax deficiencies and accuracy-related penalties under section 6662(a) for tax years 2020 and 2021, specifically disputing the disallowance of additional gambling loss deductions beyond those already allowed and the imposition of the penalty. After concessions by the taxpayer on certain other claimed deductions, the Tax Court addressed whether she could substantiate further gambling losses and whether she had reasonable cause to avoid the penalty. The court held that the taxpayer failed to meet her burden of proving entitlement to additional deductions, as her gambling activities were not adequately documented or logged, and that the penalty was properly approved by a supervisor with no showing of reasonable cause or good faith reliance on her tax preparer. The decision was to be entered under Rule 155 based on these determinations.

taxesprocedure

The case involved Jonathan and Wei-Lin Chang challenging IRS determinations for tax year 2019, including the disallowance of deductions for over $365,000 in legal and professional expenses reported on Schedule C and the inclusion of $410 in unreported income. The Tax Court held that the petitioners were entitled to deduct the legal fees, which arose from defending criminal charges of wire fraud and money laundering connected to transactions involving their for-profit LLC (HOCA LLC), but sustained the IRS determination on the unreported income. The court applied the origin-of-the-claim test from United States v. Gilmore, concluding that the expenses originated in profit-seeking business activities of the LLC rather than personal or non-deductible matters, and noted that legal fees tied to criminal activity can still qualify as ordinary and necessary business expenses under Commissioner v. Tellier. Petitioners resided in California and had previously been involved with related tax-exempt and for-profit entities tied to church activities.

taxescriminal lawbusiness & regulatory

In this U.S. Tax Court case, petitioner Edward George Shlikas challenged a notice of deficiency for tax year 2019 that imposed a $13,702 income tax deficiency and a 10% additional tax under section 72(t) on early distributions totaling $137,024 from retirement accounts, which he used to purchase his brother's share of inherited property after his mother's death. After the IRS conceded the accuracy-related penalty, the sole issue was whether Shlikas qualified for any exception to the additional tax, such as the qualified first-time homebuyer exception under section 72(t)(2)(F). The court held that Shlikas was liable for the 10% additional tax because he failed to prove the distributions came from an individual retirement plan eligible for the homebuyer exception, he was under age 59½, and no other statutory exceptions or equitable relief applied. The decision sustained the IRS determination based on the statutory requirements and the petitioner's burden of proof.

taxesproperty

The case concerned Nowran Gopi's challenge to an IRS notice of deficiency for tax year 2015, which disallowed his claims for dependency exemption deductions for two grandchildren, head of household filing status, the additional child tax credit, and the earned income tax credit. After concessions, the Tax Court ruled that Gopi was not entitled to any of these benefits and sustained the $6,453 deficiency determination. The court reasoned that the grandchildren did not qualify as Gopi's dependents under section 152(c) because they resided with their mother (Gopi's daughter) who had filed a joint return claiming them, and Gopi did not establish he provided more than half their support or met other statutory tests; the same qualifying-child definition barred the credits and filing status under sections 2 and 32. The accuracy-related penalty was not at issue because the IRS conceded it.

taxesfamily law

This case involved petitioners Daniel and Leigh Whoriskey challenging IRS notices of deficiency for their 2015 and 2016 federal income taxes, specifically regarding disallowed deductions for home mortgage interest on Schedule A and a rental real estate loss on Schedule E. The Tax Court ruled for the Commissioner, sustaining the disallowance of both the mortgage interest deductions for lack of substantiation and the $42,596 rental loss deduction. The court reasoned that petitioners failed to show they qualified as real estate professionals under section 469 because Mr. Whoriskey's full-time firefighter job consumed more than half his working time and records documented only about 500 hours on rental activities, below the required 750-hour threshold, rendering the loss passive.

taxesproperty

The case involved petitioners Sam and Oksana Fagenboym challenging a notice of deficiency for their 2015 tax return, where the IRS disallowed a portion of passthrough losses from Alcor Electric, an S corporation in the electrical installation business, due to unsubstantiated expenses claimed as purchases. The Tax Court held that the petitioners were not entitled to deduct the additional claimed losses beyond what the IRS allowed. The court's reasoning centered on the lack of sufficient documentation or reliable evidence to substantiate the expenses, as the petitioners' handwritten estimates based on industry profit margins did not meet the substantiation requirements or qualify for estimation under the Cohan rule.

taxesbusiness & regulatory

The case concerned Maher and Nermine Bassily's challenge to IRS adjustments for their 2016 tax return, including additions for $479 in unreported retirement income and $112 in payments in lieu of dividends, plus disallowance of a claimed $3,550 foreign tax credit for Canadian taxes withheld on income from brokerage accounts jointly owned with their sons. Petitioners had not reported any foreign-source income on their own return (instead reporting it on their son's return) but attempted to claim the credit by adding the foreign taxes to their federal withholding. The court held that petitioners were not entitled to the foreign tax credit because section 904(a) limits the credit to the ratio of foreign taxable income to total taxable income, which was zero here, and upheld the income adjustments after petitioners conceded an additional $9 in dividends.

taxes

This U.S. Tax Court case involved petitioners Abrahan and Carolina Pichardo challenging a notice of deficiency for their 2016 federal income tax return, which disallowed $23,169 in unreimbursed employee business expenses claimed on Schedule A and a $2,250 American Opportunity Tax Credit for education expenses. After respondent conceded the accuracy-related penalty and certain charitable contributions, the court held that petitioners were not entitled to the remaining business expense deductions or the education credit. The core reasoning for the business expenses was that petitioners failed to show the expenses were not reimbursable by the employer or adequately substantiate them beyond vehicle reimbursements already received. For the education credit, the court found two independent grounds for denial: Mr. Pichardo was enrolled less than half-time at UCSD Extension, and petitioners did not prove they personally paid the tuition rather than through a business credit card possibly reimbursed by the employer.

taxes