Paul L. Caron
Dean
Pepperdine Caruso
School of Law
New Cases
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Tax Court: Nonprofit Formed to Distribute Donor’s Sperm Is Not a Qualified Charity
The Tax Court yesterday held that a nonprofit formed to provide the donor's sperm free of charge to applicants approved by the donor did not qualify for tax exempt status. Free Fertility Foundation v. Commissioner, 135 T.C. No. 2 (July 7. 2010): William C. Naylor, Jr. (Naylor), is a software engineer who holds more than 10 patents on various inventions. On March 1,…
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CPA Disbarred for Relying on Client’s Data
The IRS has announced (IR-2010-82) that it has disbarred CPA Tim W. Kaskey for practice before the IRS for failing to exercise due diligence to determine the correctness of data supplied to him in preparing tax returns for a corporation and its husband and wife shareholders. Director, Office of Professional Responsibility v. Tim W. Kaskey, No. 2009-26 (OPR…
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IRS Backs Down on Tax Treatment of Retirement Community Entrance Fees
Following up on my prior posts: IRS Seeks to Treat Nursing Home Entrance Fees as Taxable Pre-Paid Rent, Not Tax-Free Interest-Free Loans (June 4, 2010) Tax Court Petition in Nursing Home Entrance Fee Case (June 4, 2010) Amy S. Elliott, IRS Backs Down in Standoff on Retirement Community Fee Taxation, 2010 TNT 129-1 (July 7,…
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Forbes: Was Tax Lawyer the Real MVP of Saints’ Super Bowl?
Forbes, Did Tax Ploy Help Saints Win Super Bowl?: Did the New Orleans Saints have some accounting help as they marched in to their Super Bowl win this year over the Indianapolis Colts? In a just-filed U.S. Tax Court lawsuit [New Orleans Louisiana Saints Master Limited Partnership LLC v. Commissioner, No. 13635-10)], the partnership owning…
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Rapper Method Man Pleads Guilty to Tax Evasion
Following up on my prior post, Rapper Method Man (Clifford Smith) Arrested on Tax Charges: Mr. Smith pleaded guilty on Monday to evading New York state taxes and paid $106,000 in restitution. Associated Press BBC E! Online New York Daily News TMZ (Hat Tip: Justin Axelrod.)
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Aprill: The Impact of Bilski on Tax Strategy Patents
Ellen P. Aprill (Loyola-L.A.) offers her views on the impact of today's Supreme Court decision in Bilski v. Kappos, No. 08-964 (June 28, 2010), on tax strategy patents: Bilski is at best a mixed bag for those who think tax strategies should be patentable. It gives little help and does allow business method patents, albeit…
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Supreme Court: UC-Hastings Can Require Christian Legal Society to Admit Gays/Lesbians to Receive School Recognition
The Supreme Court today ruled, 5-4, that the UC-Hastings could constitutionally require the law school's Christian Legal Society to accept as members students who do not share CLS's religious views on sexual orientation. Christian Legal Society v. Martinez, No. 08-1371 (June 28, 2010). From Justice Ginsburg's majority opinion: In the view of petitioner Christian Legal…
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Law Student Sues North Carolina, Fears She Won’t Get a Job if Her Online Purchase of Obama Zombies Is Disclosed in Sales Tax Dispute
National Law Journal, ACLU Intervenes in Privacy Dispute Between Amazon and State Tax Collector, by Karen Sloan: Two lawyers and a law student were among seven plaintiffs who filed suit on Wednesday to block the North Carolina Department of Revenue from collecting detailed information about purchases state residents made through online retailer Amazon.com Inc. ……
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Tax Court Says Fisherman’s Claimed Losses Were Bass-Ackwards
Dow Jones, Fish Tale Fails To Impress Tax Court, by Arden Dale: The angler called them professional losses. The IRS tossed them back. Now, a U.S. Tax Court judge isn't biting, either. The judge this week upheld an IRS decision that a taxpayer's efforts to write off around $166,000 in losses from bass tournaments was…
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The Tax Court, Tim Geithner, and Jack Webb
Following up on this morning’s post, Tax Court Rejects Geithner/TurboTax Defense: from a reader :
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Tax Court Rejects Geithner/TurboTax Defense
The Tax Court on Monday again rejected the Geithner/TurboTax defense. Parker v. Commissioner, T.C. Summ. Op. 2010-78 (June 21, 2010): It is petitioner's position that the accuracy-related penalties at issue "should be waived." In support of that position, petitioner asserts: During the period under question I worked as a contractual employee with the International Monetary Fund…
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Tax Court Denies Charitable Deduction for $200 Cash Given to Panhandlers & $29k of Stuff Donated to Goodwill
The Tax Court on Thursday denied a taxpayer's claimed charitable deductions for $200 cash given to panhandlers and $28,655 of household items donated to Goodwill. Roberts v. Commissioner, T.C. Summ. Op. 2010-76 (June 17, 2010): For 2005 petitioner claimed, on Schedule A, Itemized Deductions, a $200 cash charitable contribution, which he described as donations to panhandlers and…
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More on Tax Court Decision Permitting Nurse to Deduct Cost of MBA
Following up on my prior posts: Tax Court Allows Nurse to Deduct Cost of University of Phoenix MBA (Dec. 3, 2009) WSJ: Decision May Open Floodgates on Deductibility of M.B.A. Expenses (Jan. 11, 2010) Nurse Wins Favorable Ruling on Deducting MBA Educational Expenses, CPA Journal, June 2010, at 56: Lori Singleton-Clarke, a nursing coordinator in…
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Oregon Attorney Convicted of Tax Fraud After Filing $1 Trillion Lien Against IRS
WebCPA, Couple Convicted in Tax Shelter Scheme: A married couple was convicted of running an elaborate tax shelter scheme for over a decade in which they marketed tax trusts to clients, filed lawsuits against IRS employees, and prepared a $108 million tax lien against former Treasury Secretary John Snow. Oregon attorney Micaela Renee Dutson, 48,…
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A Dissenting View on Lantz
Following up on yesterday's post, 7th Cir. Reverses Tax Court, Upholds 2-Year Deadline on Innocent Spouse Claims: A. Lavar Taylor, Adjunct Professor at Chapman and Director of the Center for the Fair Administration of Taxes ("CFAT"), passed along this amicus brief he filed in support of the taxpayer's position: Amicus urges the Court to affirm the ruling…
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7th Cir. Reverses Tax Court, Upholds 2-Year Deadline on Innocent Spouse Claims
The Seventh Circuit today, in a unanimous opinion written by Judge Posner, reversed a divided (11-5) Tax Court (132 T.C. No. 8 (Apr. 7, 2009)) and upheld the requirement in Reg § 1.6015-5(b)(1) that claims for innocent spouse relief (Form 8857) be made with two years of the IRS's commencement of collection action, even though the innocent…
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Tax Court Petition in Nursing Home Entrance Fee Case
Following up on this morning’s post, IRS Seeks to Treat Nursing Home Entrance Fees as Taxable Pre-Paid Rent, Not Tax-Free Interest-Free Loans: the Tax Court case is CC-Development Group, Inc. v. Commissioner, No. 7383-10. The Notice of Deficiency asserts $107.3 million in additional tax and $21.5 million in penalties. Here is the Tax Court petition.
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2d Cir.: Capital Contribution Does Not Increase Shareholder’s Basis in Loan to S Corp
The Second Circuit yesterday affirmed a Tax Court ruling (131 T.C. 262 (2008))that capital contributions made to two S corporations in which the taxpayers owned stock could not be treated as “tax-exempt income” to the corporations for the purpose of increasing their basis in loans they made to the corporations under § 1367(b)(2)(B). Nathel v. Commissioner, No. 09-1955 (2d Cir. June 2,…
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Supreme Court: Challenge to Ohio’s Tax System Must First be Brought in State Court
A unanimous Supreme Court today reversed the Sixth Circuit and held that “[u]nder the comity doctrine, a taxpayer’s complaint of allegedly discriminatory state taxation, even when framed as a request to increase a competitors’s tax burden, must proceed originally in state court.” Levin v. Commerce Energy, Inc., No. 09-223 (U.S. June 1, 2010). From SCOTUSBlog: Opinion below (6th Circuit)…
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Andrew Beal Appeals Denial of $1.1b DAD Tax Shelter Losses
Following up on my prior post, Court Rejects $1.1b Tax Losses Claimed by Andrew Beal in DAD Tax Shelter (Southgate Masters Fund v. United States, No. 3:06-CV-2335-K (N.D. TX Aug. 18, 2009)): here are the opening briefs filed in the appeal to the Fifth Circuit: Taxpayer's Opening Brief (Mar. 31, 2010) U.S. Government's Opening Brief (May 28, 2010) (Hat Tip:…
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GLAD Files Amended Complaint in Lawsuit Challenging Application of DOMA to Tax Code
Following up on my prior post, Lawsuit Challenges Application of DOMA to Tax Code: yesterday, Gay & Lesbian Advocates & Defenders issued a press release, GLAD Files Amended Complaint in DOMA Challenge: GLAD filed an amended complaint this week in our lawsuit challenging Section 3 of the Defense of Marriage Act (DOMA), Gill v. OPM. The…
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Supreme Court Denies Cert in Textron Tax Work Papers Case
The Supreme Court today denied certiorari in United States v. Textron, Inc., No. 07-2631 (1st Cir. Aug. 13, 2009) (en banc), which held that Textron's tax accrual work papers were not protected under the work product doctrine and thus had to be turned over to the IRS in its tax shelter investigation. Bloomberg Journal of Accountancy…
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District Court Allows 1st Amendment Challenge to § 107 Parsonage Allowance to Proceed to Trial
A federal district court in California on Friday denied the Government's motion to dismiss a First Amendment establishment clause challenge to the § 107 parsonage allowance, but granted the Government's motion to dismiss a challenge to the § 265(a)(6) deduction of interest and property taxes paid with § 107 funds. Freedom from Religion Foundation, Inc. v. Geithner, No.…
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Johnson: Intermountain, Interpretive Regulations, and Brand X
Steve Johnson (UNLV) shares his thoughts on Intermountain Insurance Service of Vail, LLC v. Commissioner, 134 T.C. No 11 (May 6, 2010), in Intermountain, Interpretive Regulations, and Brand X. Here is the Introduction: On May 6, the Tax Court unanimously, but on divided rationales, invalidated temporary Treasury regulations retroactively extending the six-year limitations period to income…
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District Court Rejects $327m ‘Son-of-Boss’ Tax Shelters Claimed by Former U.S. Ambassasor Richard Egan
The U.S. District Court in Massachusetts yesterday sided with the IRS in a 357-page opinion and disallowed two tax shelters used by the EMC Corp. founder (and ambassador to Ireland under President George W. Bush) RIchard J. Egan and his wife generating $160 million of ordinary losses and $167 million of capital losses. Fidelity International Currency Advisor A Fund…