A recent Tax Court opinion[1] highlights one of the risks of serving as executor or administrator of an estate, potential liability for a decedent’s tax obligations. The case involves application of the federal priority statute[2] applicable to fiduciaries.[3] That statute provides, in relevant part, that “a representative of a person or an estate (except a…
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Last week, Charles Allen wrote about Blossom Day Care Centers, Inc. (“Blossom”) and its owners regarding their employment tax case.[1] Frequently, we write articles intending to remind readers of the importance of substantiation, especially in the income tax world. In reviewing Charles Allen’s article, I kept finding myself wondering about the income tax implications of…
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In a recent Tax Court case, the Court determined that corporate officers were indeed employees of the corporation entitled to reasonable compensation, and as such, the corporation is liable for employment taxes on reasonable compensation imputed to the corporate officers.[1] Mr. and Mrs. Hacker, who owned 51% and 49% of Blossom Day Care Centers (“Blossom”)…
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It is no secret. Everyone likes reading and writing about syndicated conservation easements. In December 2019, the Tax Court ruled in the case of TOT Property Holdings LLC v. Comm’r.[1] The result was an unfavorable one for the taxpayer. The transaction in question was more-or-less a run of the mill syndicated conservation easement, albeit ending…
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Owners of legal entities typically establish those entities to achieve certain planning goals, be them tax, asset protection, contract management, or other reasons. Key to accomplishing those goals is that courts respect the entity planning structure that is established. In the recent Tax Court opinion of Berry v. Commissioner[1], we see a taxpayer who intended…
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In the recent Complex Media[1] case, the Tax Court addressed a taxpayer’s ability to recast the form of a transaction under the “substance over form” doctrine. Since taxpayers typically control the form their transactions take, tax decisions routinely stick taxpayers with the consequences of that form. Some courts have precluded taxpayers from even raising substance…
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As it turns out, fashion design will not usually constitute qualified research for the purposes of qualifying for the research credit under Section 41 of the Internal Revenue Code. In a recent case from the Tax Court, taxpayer, Leon Max, failed to convince a sympathetic court that expenses related to his fashion design process should…
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In a recent decision, the Tax Court held that the taxpayer failed to qualify for an exception from the 10% additional tax applicable to an early withdrawal from a retirement account.[1] Generally, any distribution from a retirement account to the original plan participant who established the retirement account prior to the date when such plan…
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In a recent opinion, the Tax Court held that business expenses of a medical marijuana dispensary in California were not deductible for federal income tax purposes. Richmond Patients Group (“Richmond”) sought to deduct its business expenses including compensation to officers, wages, rent, taxes and licenses, and other business related expenses, but the Tax Court denied the…
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