Paul L. Caron
Dean
Pepperdine Caruso
School of Law
New Cases
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L.L. Bean Wins Class Action Lawsuit Over Alleged 27-Cent Sales Tax Overcharge
On Friday, the Maine Supreme Court held that L.L. Bean properly charged Maine sales tax on the gross retail price and rejected the class action plaintiffs’ contention that the tax should have been applied to the net price after subtracting the value of coupons. Flippo v. L.L. Bean, 2006 ME 62 (5/26/06). The lead plaintiff…
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WSJ: Judge Orders Government to Repay $36 Million to Airline Pilots in Tax Shelter Cases Because of IRS Misconduct
Interesting article in today’s Wall Street Journal: Judge Orders IRS To Repay Millions In Tax-Shelter Case, by Robert Guy Matthews: A U.S. Tax Court judge ordered the Internal Revenue Service to repay nearly $36 million in taxes, penalties and fees to a group of mostly airline pilots who participated in a decades-old tax shelter. In…
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Tax Court Denies Conservation Easement Deduction
The full Tax Court decided an important conservation easement case on Tuesday, Turner v. Commissioner, 126 T.C. No. 16 (5/16/06): P, a real estate investor, purchased 29.3 acres of unimproved land in a historical overlay district, 15.04 acres of which were located within a designated floodplain. Property development was subject to county regulations that were…
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British Taxman Beats André Agassi in Final Set
We previously have blogged (here) André Agassi’s tax claim against British tax authoriities. The case has broad implications for athletes and entertainers performing in the UK. The House of Lords (the UK’s highest court) has ruled in Agassi v. Robinson, 2006 UKHL 23 (5/17/06), that foreign athletes and other entertainers working in the UK are…
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Supreme Court Unanimously Holds That Taxpayers Lacked Standing in DaimlerChrysler v. Cuno to Challenge Ohio’s Investment Tax Credit
The Supreme Court this morning issued its opinion in DaimlerChrysler, Inc. v. Cuno (Nos. 04-1704 & 04-1724). The unanimous (9-0) Court, speaking through Chief Justice Roberts, did not reach the constitutionality of Ohio’s investment tax credit and instead ruled that the taxpayers who had challenged the credit did not have standing: State taxpayers have no…
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Aprill on Effect of Moloney on Law School Public Interest Loan Forgiveness Programs
We previously blogged the Tax Court’s summary opinion in Moloney v. Commissioner, T.C. Summ. Op. 2006-53 (4/17/06), which held that a law school graduate working in a public interest job must report income on the receipt of funds to help repay her student loans, as well as commentary by Tax Prof and Associate Dean Ellen…
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NYLJ: Judge Slams US Attorney in KPMG Tax Shelter Case
Interesting article in today’s National Law Journal: Judge: Evidence Shows Government Influenced KPMG’s Defense Fees Policy, by Mark Hamblett: Southern District of New York Judge Lewis Kaplan had some strong words for a prosecutor on Wednesday as he wrapped up a hearing on whether the government coerced KPMG into threatening to cut off legal fees…
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10th Circuit: Sale of Future Lottery Payments Produces Ordinary Income, Not Capital Gain
The Tenth Circuit joined the Third (Lattera v. Commissioner, 437 F.3d 399 (3rd Cir. 2/14/06) and Ninth (United States v. Maginnis, 356 F.3d 1179 (9th Cir. 2004)) Circuits yesterday in holding that the sale of future lottery payments produces ordinary income, not capital gain. Watkins v. Commissioner, No. 04-9016 (10th Cir. 5/10/06).
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NYLJ on KPMG’s Legal Defense Fee Policy
Following up on Tuesday’s post on the latest KPMG tax shelter wrinkle: the New York Law Journal has published Lawyers Spar Over KPMG Legal Defense Fee Policy, by Mark Hamblett : On March 11, 2004, defense lawyers say KPMG’s attorneys from Skadden presented the government with a prototype they used as a model letter that…
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Fifth Circuit Imposes Sanctions in Attorney’s Tax Protestor Case
Interesting decision yesterday out of the Fifth Circuit involving tax protestor-attorney Leonard John Gittinger III and his wife. In 1996, Gittinger refused to pay taxes on the ground that wages are not income, and lost in the Tax Court and the Fifth Circuit (which characterized Gittinger’s argument as "completely and utterly frivolous"). Gittinger then refused…
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Did Government Pressure KPMG to Cut Off Attorneys’ Fee Spigot?
Press coverage of yesterday’s hearing in the KPMG tax shelter case: NY Times: Prosecutor Denies Pressure on KPMG to Cut Off Legal Fees, by Lynnley Browning WSJ: Attorneys Spar Over KPMG Payment of Legal Fees, by Paul Davies WSJ’s Law Blog: KPMG Lawyers & Government Spar On Defendants’ Legal Fees, by Peter Lattman
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Tax Court OK’s Like-Kind Exchange of Gold Mine for Coal Mine
In Peabody Natural Resources Co. v. Commissioner, 126 T.C. No. 14 (5/8/06), the Tax Court held yesterday that an exchange of a gold mine for a coal mine subject to supply contracts is an exchange of like- kind properties because the supply contracts were not separable property, but rather were incident to owning the mines:…
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NYLJ: 2nd Circuit Reinstates Conviction of IRS Employee Who Threatened Cops with Audit
Following up on last week’s post (IRS Employee from Hell): Interesting article in today’s New York Law Journal: Conviction Reinstated of IRS Analyst Who Threatened Arresting Officers With Audits; Though Audit Threats Lacked Authority, 2nd Circuit Says IRS Employee Acted Under Color of Law, by Mark Hamblett: An IRS employee who threatened police detectives with…
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Who Owns Kirby Puckett’s Ashes?
An estate brouhaha has erupted over the ownership of the ashes of Hall of Fame baseball player Kirby Puckett, who died in March at age 45. According to this article in the Minneapolis newspaper, Puckett’s two children from his marriage to his divorced wife Tonya and his fiancée, Jodi Olson, who was living with Puckett…
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8th Circuit Sides with Easterbrook Over Posner: Post-Assessment Returns Are Valid Returns for Bankruptcy Tax Purposes
We recently blogged the case of Payne v. United States, No. 05-1941 (7th Cir. 12/14/05), in which Judge Richard Posner and Judge Frank Easterbrook differed over the validity of a post-assessment tax return in a bankruptcy proceedding. Judge Posner sided with the Fourth (Moroney v. United States, 352 F.3d 902 (4th Cir. 2003)) and Sixth…
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NYLJ: Judge’s Procedural Rulings Draw Ire of Defense Counsel in KPMG Tax Shelter Case
Interesting article in today’s New York Law Journal: KPMG Defense Critical of Judge’s Procedural Restrictions, by Mark Hamblett: A judge’s effort to avoid duplicative testimony and wasted time at the trial of 18 defendants accused in the KPMG illegal tax shelter has drawn the ire of defense attorneys in the case. Lawyers for five of…
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IRS Employee from Hell
Interesting case decided yesterday by the Second Circuit: United States v. Temple, 05-0165 (2d Cir. May 1, 2006), blogged by Robert Loblaw: Eva Temple was a quality analyst at the IRS with a serious anger management problem. After harassing and threatening her landlord, Temple was arrested. She was abusive to the arresting officers and threatened…
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Turnipseed on the Supreme Court’s Anna Nicole Smith Decision
Tax Prof Terry L. Turnipseed (Syracuse) offers his thoughts on the Supreme Court’s decision yesterday in the Anna Nicole Smith case (Marshall v. Marshall, No. 04–1544 (5/1/06)) in this Syracuse press release: Terry L. Turnipseed, an experienced estate planning and tax advisor, attended the Feb. 28 oral argument before the Supreme Court in Marshall v.…
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6th Circuit Splits on Standard of Review to be Applied to Tax Court Determination in Debt v. Equity Case
Indmar Products Co. v. Commissioner, No. 05-1573 (6th Cir. 4/14/06), produced three separate opinions on the appropriate standard of review to be applied to the Tax Court’s holding that a majority shareholder’s advances advances to his corporation should be treated as equity contributions rather than as loans.
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Tax Court Disallows Business Expense Deductions Claimed by Lehigh Prof
In Kanofsky v. Commissioner, T.C. Memo. 2006-79 (4/18/06), the Tax Court sustained the Service’s disallowance of business deductions claimed by Alvin S. Kanofsky, a full-time physics professor at Lehigh University: For each year in issue, petitioner filed a Form 1040, U.S. Individual Income Tax Return, showing zero taxable income and no tax due. On a…
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Aprill on Effect of Moloney on Public Interest Loan Forgiveness Programs
Tax Prof and Associate Dean Ellen P. Aprill (Loyola-L.A.) offers some thoughts on the Tax Court case we blogged yesterday, Moloney v. Commissioner, T.C. Summ. Op. 2006-53 (4/17/06), which held that a law school graduate working in a public interest job must report income on the receipt of funds to help repay her student loans:…
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Tax Court: Law School Graduate Working in Public Interest Has Income on Receipt of Funds to Help Repay Student Loans
The Tax Court decided a case yesterday of interest to law students: Moloney v. Commissioner, T.C. Summ. Op. 2006-53 (4/17/06). Melissa Moloney received $55,000 in Federal Stafford Loans to attend law school in 1996-99. After graduating, she worked for the Baltimore County State’s Attorney’s Office. In 2002, she received $4,372 from the Janet L. Hoffman…
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D.C. Circuit: AMT v. Tax Treaty
Robert Loblaw has this interesting report on Haver v. Commissioner, 05-1269 (D.C. Cir., 4/11/06): In this tax appeal, the D.C. Circuit is called upon to resolve alleged discrepancy between an international tax treaty and the U.S. Tax Code. Peter Haver is a U.S. citizen who lived and worked in Germany for three years. Because the…
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DOJ Launches Nationwide Crackdown on #1 Tax Scam
The Department of Justice has announced that it has launched a nationwide crackdown against the #1 tax-fraud scheme in the country. According to the government complaints, filed in seven lawsuits across the country, the nine people—including [Peter Eric] Hendrickson and his wife Doreen M. Hendrickson—have received a total of nearly $150,000 in erroneous tax refunds…
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10th Circuit Rejects Argument for Mandatory Drug Testing for the IRS
Robert Loblaw has a great summary of Monday’s 10th Circuit tax decision in Kyler v. Everson, 05-5185 (10th Cir., Apr. 3, 2006) Unhappy that the IRS placed two tax liens on his property, Delbert Kyler sued the Commissioner of the IRS in Oklahoma state court for slander of title. He claimed $4.5 million in damages…