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TIFD III-E, Inc. v. United States: Second Circuit Rejects Debt Holder as Partner, Enforces § 6662 Penalties

The Second Circuit recently found that partners whose interests are bound by overwhelmingly debt-like features are not partners for tax purposes. In TIFD III-E, Inc. v. United States, 666 F.3d 836 (2d. Cir. 2012), the Second Circuit rejected taxpayer’s argument that I.R.C. § 704(e)(1) broadened existing law to include debt… More...

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Tax Court Finds No Abuse in IRS' Denial of Offer in Compromise

Leslie B. Bennett v. Commissioner | No. 22699-05L | United States Tax Court | 10/6/2008

Holding: The U.S. Tax Court ruled that the Internal revenue Service ("IRS") did not abuse its discretion in rejecting a taxpayer's offer in compromise and placing her account in "currently not collectible" status. According to the Tax Court, the record showed that the IRS, through the Commissioner, based its determination in… More...

Couple Should Pay Self-Employment Taxes for Income Received through Trusts, Tax Court Holds

Olsen v. Commissioner | .C. Memo 2008-275 | 12/11/2008

Holding: The U.S. Tax Court has affirmed the deficiency determination made by the Internal Revenue Service (“IRS”) against a couple, and held them liable for self-employment taxes. The issue here was whether petitioners were liable for self-employment tax on funds that were distributed from their law firm to their PLCs to… More...

Tax Court Allows Levy to Proceed for Failure of Taxpayer to Prove Financial Disability

Richard A. Perkins v. Commissioner | No. 14587-06L | U.S. Tax Court | 11/20/2008

Holding: The U.S. Tax Court has ruled the Internal Revenue Service ("IRS") may proceed with a levy action to collect petitioner Rickard Perkins' unpaid taxes, disregarding the latter's application for a refund that he sought to offset his outstanding tax liabilities. According to the Tax Court, petitioner failed to prove that… More...

Taxpayer Not Liable for Self-Employment Tax, But Will Have to Pay Filing and Payment Penalties, Tax Court Rules

Michael Neil McWhorter v. Commissioner | No. 1365-07 | United States Tax Court | 11/24/2008

Holding: The U.S. Tax Court has sustained a taxpayer's claim that he was an employee of Boyle Energy and not an independent contractor liable for self-employment taxes. The Tax Court found that respondent Commissioner of the Internal Revenue Service ("IRS") did not challenge the credibility of petitioner’s testimony and acknowledged that… More...

Tax Court Affirms IRS's Action to Proceed with Levy for Unpaid Taxes

David Cavazos v. Commissioner | No. 28664-07L | United States Tax Court | 11/17/2008

Holding: The U.S. Tax Court has upheld a determination of the Internal Revenue Service ("IRS") to proceed with a levy against a taxpayer ("petitioner") for his unpaid federal income tax for 2002. The Tax Court gave three reasons why the IRS's motion for summary judgment should be granted. First, the IRS… More...

Payment of Ex-Wife's Legal Fees Not Deductible As Alimony, Tax Court Rules

Stedman v. Commissioner of Internal Revenue | No. 108002-05 | U.S. Tax Court | 10/27/2008

Holding: The U.S. Tax Court ruled that a court-ordered payment of attorney's fees arising from divorce proceedings were not deductible as alimony. The Tax Court determined that due to lack of evidence to support a contrary finding, it concluded that petitioner Jack Stedman's obligation to make the payments would not terminate… More...

Fifth Circuit Upholds Tax Court's Denial of Taxpayers' Plea for Legal Costs

Hennessey v. Commissioner of Internal Revenue | No. 07-60647 | U.S. Court of Appeals for the Fifth Circuit | 10/22/2008

Holding: The U.S. Court of Appeals for the Fifth Circuit affirmed the Tax Court's decision denying a couple's request for litigation costs. This case arose after a finding by the Internal Revenue Service ("IRS") that numerous deductions in the Hennessey couple's tax returns were not adequately substantiated. The couple eventually settled… More...

Dismissal of Wrongful Collection and Refund Claims Proper, Third Circuit Finds

Wanda P. Chocallo v. United States | Nos. 08-1660, 08-1661 | United States Court of Appeals for the Third Circuit | 11/6/2008

Holding: The U.S. Court of Appeals for the Third Circuit found that the District Court for the Eastern District of Pennsylvania did not commit abuse of discretion in dismissing a taxpayer's wrongful collection and refund claims. The Third Circuit reasoned that the taxpayer (Wanda P. Chocsllo) failed to exhaust administrative remedies… More...

Third Circuit Upholds IRS' New Timely Filing Regulation

Swallows Holding, Ltd v Commissioner of Internal Revenue | No. 06-3388 | U.S. Court of Appeals for the Third Circuit | 2/15/2008

Holding: In the Swallows case, the U.S. Court of Appeals for the Third Circuit issued a major decision that strengthens the discretion of administrative agencies to interpret ambiguous provisions of their enabling statutes. Specifically, the Third Circuit upheld the validity of a treasury regulation issued by the Internal Revenue Service ("IRS"),… More...