Articles

October 1st, 2022

September Federal Tax Update

Posted in: Tax Law    Tagged: David S. De Jong

INDIVIDUALS

In Luna v. Commissioner, TC Summary Opinion 2022-18, the Tax Court denied the Executive Director of a nonprofit a pre-2018 deduction for trips to Brazil which did not tie to his employment but could not be shown as directly beneficial to another organization on which he served on its board of directors. 

In Patitz v. Commissioner, TC Memo 2022-99, the Tax Court denied most pre-2018 employee business expenses and Schedule C expenses claimed by a couple whose substantiation was generally lost in a hurricane but allowed the husband’s automobile expenses as he kept a contemporaneous electronic log. 

In Letter Ruling 202235005, IRS stated that fees deducted by a life insurance company from the cash value of annuity contracts and paid to an investment advisor are an expense of the contract and not a distribution to the owner. 

In Chief Counsel Advice 202236010, IRS advised that a Deed creating a conservation easement that retains any possibility of surface mining to extract subsurface minerals does not give rise to a charitable deduction even if the recipient must approve the mining.

RETIREMENT AND ESTATE PLANNING

In Pinkert v. Schwab Charitable Fund, 130 AFTR2d 2022-5986, the Ninth Circuit Court of Appeals agreed with a California Federal District Court that a contributor to a donor advised fund could not sue for breach of fiduciary duty as he had no legal standing following his contribution.

BUSINESS

In Vorreyer v. Commissioner, TC Memo 2022-97, the Tax Court, proffering that a taxpayer cannot deduct expenses paid on behalf of another party, denied a deduction to stockholders for corporate expenses which they paid individually; under the facts, the Court would have treated the individual payments as capital contributions to the corporation which constructively paid the expenses.

In Chief Counsel Memorandum 202237010, IRS indicated that businesses that have their Paycheck Protection Program (PPP) loan forgiven even though they did not meet the requirements are taxable on the relief from indebtedness. 

PROCEDURE

In Kroner v. Commissioner, 130 AFTR2d 2022-5956, the Eleventh Circuit Court of Appeals reversed the Tax Court and indicated that supervisory approval of penalties may occur at any time before the penalty assessment without a deadline.

In Degourville v. Commissioner, TC Memo 2022- 93, the Tax Court allowed use of the bank deposits method for determining gross income where the taxpayer owned three businesses including a tax preparation business and kept virtually no records.

In Brockman v. United States, 130 AFTR2d 2022-________, a Texas Federal District Court ratified the jeopardy assessment and levy of IRS on a billionaire alleged to have concealed income and assets, the Court finding that he had engaged in sophisticated tax fraud.

In McNeil v. United States, 130 AFTR2d 2022-________, the DC Circuit Court of Appeals agreed with a DC Federal District Court that the failure of IRS to send a “seriously delinquent” notice to a taxpayer does not stop IRS from a certification affecting passport issuance or renewal.

In Franklin v. United States, 130 AFTR2d 2022-6000, the Fifth Circuit Court of Appeals agreed with a Texas Federal District Court, consistent with holdings in other jurisdictions, that the passport restrictions on seriously delinquent tax debtors is constitutional.

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