Author: Bryan Camp
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Lesson From The Tax Court: The Sharp Corners Of The §170 Substantiation Requirements
The sainted Justice Holmes once wrote: “Men must turn square corners when they deal with the Government.” It is no accident that Justice Holmes wrote that in a tax case. Rock Island R.R. v. United States, 254 U.S. 141, 143 (1920). Of all the corners in all the laws governing citizen interaction with government, tax…
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Texas Tax Faculty Workshop
Tax faculty from all Texas Law Schools were invited to gather yesterday for an informal workshop at Texas A&M. As is our tradition, lunch doubled as a half-baked idea brainstorming session for all participants to share ideas and seek input on projects in very early stages. Below the fold is the list of who presented…
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Lesson From The Tax Court: Only One Exclusion For Military Retiree Disability Payments
My dad served as a doctor in the military for 30 years, 23 days. Starting this week, he will have been retired for longer than he served. When he first retired, he received a monthly pension check from the Defense Finance and Accounting Service (DFAS) and that was all. A few years later he learned…
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Lesson From The Tax Court: Avoiding The 2-Year Lookback Period In Bankruptcy
Today’s lesson is about how to maximize the discharge of tax liabilities through bankruptcy. It's a lesson on timing. Last year I blogged two cases showing how a bankruptcy tolls both the collection and assessment limitation periods in the Tax Code. See Lesson From The Tax Court: For Whom The Bankruptcy Tolls, TaxProf Blog (July…
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Lesson From The Tax Court: Distinguishing Employees From Independent Contractors
Pro Publica has proudly proclaimed that “If You’re Getting a W-2, You’re a Sucker.” I know lots of workers who would strongly disagree. For them, being a W-2 worker (a/k/a “employee”) is far more beneficial than their realistic alternative, which is being a 1099 worker (a/k/a “independent contractor”). The Pro-Publica story was channeling this Brookings…
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Lesson From The Tax Court: The Unforeseen Circumstances Rule For §121 Home Sale Exclusions
The Tax Code gives homeowners many tax breaks. Chief among them is the ability to exclude up to $500k of gain from the sale of a principal residence (for married taxpayers filing jointly). Taxpayers seeking this exclusion must meet some basic requirements, set out in §121. Taxpayers who fail the requirements, however, may still qualify…
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The Top 15 Law Schools For Jobs Contain Some Surprises
The ABA recently released data on job placement 10 months after graduation. In These Law Schools Crushed the Job Market in 2021, Reuters uncovered expected and unexpected results. At the top was Columbia University. Expected. But also among the Top 15 schools were University of Montana and Texas Tech University. Here’s the complete list of…
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Lesson From The Tax Court: What’s Excluded From The §132 Exclusion?
Tax Day is here! And what better way to observe the day than a lesson on §132, a lesson that evokes the ghost of Dan Rostenkowski, whose curmudgeonly visage appears to the right. For those who don’t know, Rostenkowski was the chairman of the House Ways and Means Committee from 1981 until 1994 when, in…
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Lesson From The Tax Court: 50 Ways To Lose Your Interest Abatement Request
Obtaining an abatement of interest reminds me of Paul Simon’s song 50 Ways to Leave Your Lover. Sure, the “50 ways” in the song title is misleading. By my count, Simon gives us only four. And some are singularly unhelpful for real life advice. I mean, “make a new plan, Stan”? Really? But the hyperbole…
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Lesson From The Tax Court: Penalty Approval In Conservation Easement Cases
The §6751(b) supervisory approval requirement for penalties has been a thorn in the side of both the IRS and the Tax Court. Today’s lesson shows us how the IRS penalty approval process in conservation easement audits has forced taxpayers to reach for wilder and less credible attacks in their attempts to avoid penalties by finding…
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Lesson From The Tax Court: Take The Administrative Appeal
Taxpayers famously focus on trying to get their “day in court” against the evil IRS. The Independent Office of Appeals (Appeals) is no court. It is not surprising, then, that taxpayers’ myopia often leads them down the dangerously wrong path of ignoring their opportunity to go to Appeals. Today’s lesson teaches us one reason that…
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Lesson From The Tax Court: What Constitutes A CDP ‘Hearing’?
Before the IRS can start collecting unpaid tax liabilities by levy, §6330(b)(1) requires it to give taxpayers an opportunity for a Collection Due Process (CDP) hearing with the IRS Independent Office of Appeals. Many taxpayers do not fully understand how CDP hearings work. First, they erroneously expect that a CDP hearing is a discrete and…
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Lesson From The Tax Court: The Finality Rule For §7430 Qualified Offers
When you litigate against the IRS you may win but not prevail. That is, even though §7430(a) promises that a “prevailing party” can recover costs and attorneys fees, it’s hard to be a "prevailing party" within the meaning of the statute. If the government's ultimately losing position was substantially justified at the relevant time, the…
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Lesson From The Tax Court: Generally Is Not Always—Or—That’s The Way The Ball Bounces
We law professors are often accused of hiding the ball of legal analysis. Teaching the basic tax law course presents a particular challenge because of the multiplicity of statutory rules that the ball bounces against. We try to teach students the general rules of what constitutes income, what gets allowed as deductions, when both must…
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Lesson From The Tax Court: A New Twist On Travel Away From Home Deductions?
When I teach the §162 travel away from home deductions I tell my students to distinguish between transportation costs (on the one hand) and meals/lodging costs (on the other hand). Transportation costs are covered by Rev. Rul. 99-7. Their deductibility turns on job site location. To deduct meals and lodging expenses, however, the taxpayer must…
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Lesson From The Tax Court: The Tax Liabilities You Leave Behind
We all know you can’t take it with you. But what happens to the “it” after you die? Ideally, you will have paid all your debts, and your Estate will distribute your “it” to the objects of your affection. The IRS will probably not be one of the objects of your affection. However, few of…
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Lesson From The Tax Court: The Proper Baseline For Offers In Compromise
Paying taxes can be painful. When money is tight and other needs are pressing, sending money to the federal government understandably sinks on the taxpayer’s priority list. But not the government’s! Congress wants to make sure that paying taxes remains at the top of every taxpayer’s priority list. That is why it gives the IRS…
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Lesson From The Tax Court: The Innocence Requirement In § 6015(c) Proportional Relief
Section 6015 allows taxpayers to obtain relief from an otherwise joint and several liability. The statute contains three related provisions allowing relief. Siblings. First is the eldest child, traditional innocent spouse relief. It was formerly in §6013(e) and is now found in §6055(b). Second is the quite middle child, a proportionate relief provision that basically…
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Lesson From The Tax Court: The Presumption Of Regularity
No, today’s lesson has nothing to do with your gastrointestinal system. But it does relate to what comes out of the bureaucratic process. The presumption of regularity affects a broad range of IRS work product, such as Notices of Deficiencies, Certificates of Assessments and, in today’s case, Penalty Approval forms. In Long Branch Land LLC…
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A Year Of Lessons From The Tax Court (2021)
Here is a chronological listing of all the Lessons From The Tax Court I posted in 2021, with links to, the Lesson, the primary case discussed and its author. I have also listed the primary Code sections mentioned or discussed in the Lesson. At the end of the chronological listing, you will find a table…
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Lesson From The Tax Court: Taxpayers Behaving Badly (2021)
This will be my last new post until January. I will be spending my days (except for Christmas Day) grading exams. Grades are due Monday, January 3th and then I resume teaching on January 11th, so you will likely see my next Lesson From The Tax Court on January 18th (the day after MLK holiday).…
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Lesson From The Tax Court: Taxpayer ‘Filed’ Return Even Though IRS Could Not Process It
Case law gets made when things go wrong. When things go right, a taxpayer will file a return, the IRS will process the return, and the taxpayer will receive any claimed overpayment as a refund. Today's lesson arises from a breakdown between filing and processing. It teaches us the difference between those concepts. In James…