Author: Parker Durham, J.D., LL.M.

Tax Court Rejects Offer in Compromise Despite Extraordinary Personal Circumstances

Cases, Income Tax, Tax, Tax Court

In Tooke v. Commissioner,[1] the United States Tax Court recently reaffirmed the considerable discretion afforded to the Internal Revenue Service Independent Office of Appeals (“Appeals”) when evaluating collection alternatives. Although the taxpayer presented compelling evidence of significant personal hardship, including a Parkinson’s disease diagnosis, the financial consequences of a contentious divorce, and substantial expenses associated…
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IRS Provides Guidance on Dividing Inherited IRAs Through Trustee-to-Trustee Transfers

Income Tax, Private Letter Rulings, Tax

The administration of inherited qualified retirement accounts can present difficult tax and procedural issues when an estate, rather than an individual, is the beneficiary of the relevant account, which generally occurs by default when an account does not have a designated individual beneficiary. Those issues become particularly important when a decedent’s estate must divide an…
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Fourth Circuit Expands Potential Scope of Innocent Spouse Relief

Cases, Court of Federal Claims, Income Tax, Tax, Tax Controversy

In a significant taxpayer-favorable decision[1], the Fourth Circuit recently held that erroneous refunds of underpayment interest may constitute “unpaid tax” eligible for equitable innocent spouse relief under Section 6015(f) of the Internal Revenue Code (“Code”). Section 6015(f) provides an avenue for relief (at the IRS’s discretion) for unpaid tax or a deficiency when it would…
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Lapsed Life Insurance Policy Generated Taxable Income and Limited Interest Deductions

Income Tax, Tax Controversy, Tax Court

A recent United States Tax Court memorandum[1] opinion provides an important reminder that life insurance policies with outstanding loans can create unexpected income tax consequences when the policy lapses or is surrendered.[2] In Sawyer v. Commissioner, the Tax Court held that a taxpayer realized taxable income when the cash surrender value of his life insurance…
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Beneficiaries and Trustees May Face Personal Liability for Unpaid Estate Taxes

Cases, Estate Administration, Estate and Gift Tax, Tax Controversy, Tax Court

A recent federal district court decision[1] highlights the significant risk that beneficiaries and fiduciaries may face when estate assets are distributed before federal estate tax liabilities have been fully satisfied.[2] In United States v. Karst, the court granted summary judgment in favor of the government and held that the decedent’s sons, who were named as…
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Supervisory Approval and the Assertion of Penalties: Palmwood Holdings, LLC v. Comm’r

Charitable Giving, Income Tax, Tax, Tax Controversy, Tax Court

In Palmwood Holdings, LLC v. Comm’r, the United States Tax Court granted partial summary judgment in favor of the IRS, holding that the Service satisfied the supervisory approval requirement of section 6751(b) with respect to a civil fraud penalty first asserted in the IRS’ answer. The decision reinforces a growing body of Tax Court precedent…
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Undue Influence and the Presumption of a Confidential Relationship

Estate Administration, Estate and Trust Controversy

Undue influence disputes[1] often involve no allegations of overt fraud, coercion, or incapacity, instead turning on the fairness of transactions that occur within confidential relationships. A recent Mississippi Court of Appeals’ decision[2] provides a clear illustration of how courts analyze these disputes and why the burden imposed on a beneficiary who occupies a position of…
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A Practical Examination of a Conservation Easement Valuation

Cases, Charitable Giving, Income Tax, Tax, Tax Controversy, Tax Court

A recent Tax Court memorandum opinion[1] presents a thorough illustration of the Court’s approach to valuation disputes in syndicated conservation-easement transactions. As is historically typical in these transactions, the case involved a partnership interest sale shortly before the donation and an associated appraisal asserting a dramatic increase in value when compared to the original purchase…
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Recent Appellate Case Addresses Undue Influence

Estate Administration, Estate and Trust Controversy, Estate Planning

Estate disputes often rest on a fragile balance between testamentary intent and certain legal safeguards that protect vulnerable testators from improper third-party influence[1]. A recent decision[2] by the Mississippi Court of Appeals highlights this delicate balance and provides commentary on Mississippi’s treatment of undue influence, the role of witness credibility, and the evidentiary burdens faced…
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Prenuptial Agreements in Mississippi: Legal Technicalities and Practical Considerations

Estate Administration, Estate Planning

Prenuptial agreements, having long been viewed between a frame of practicality and social hesitation, have steadily gained traction as couples seek to define their financial rights and obligations before entering marriage. In Mississippi, these agreements carry significant practical and legal weight, but unlike many states, Mississippi has not adopted the Uniform Premarital Agreement Act. Instead,…
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