Paul L. Caron
Dean
Pepperdine Caruso
School of Law
New Cases
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Tax Court Denies Theft Loss Deduction for Shoddy Construction on Custom Home
In Davis v. Commissioner, T.C. Memo. 2005-160, the Tax Court held yesterday that an Annapolis, Maryland taxpayer could not take a 250k theft loss deduction for substandard construction and overcharges on a custom-built home because he didn’t prove when he discovered the loss, the amount of the loss, or that he had no reasonable prospect…
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National Law Journal on Kanter/Ballard Case
Follwing up on the Chicago Tribune article on the Kanter/Ballard case (blogged here): this week’s National Law Journal has an interesting article, Tax Court Secret Report Stirs Controversy: The conflict between the original report and the Tax Court decision has prompted some to raise ethical questions about Tax Court procedures and to call on Congress…
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NY Times on Tax Protester Case
Interesting NY Times article about the Joe Banister case (blogged here yesterday) by David Cay Johnston, Protesters Win a Case Over I.R.S.: The federal government’s campaign against income tax protesters suffered a major setback yesterday when a federal jury in Sacramento acquitted a former Internal Revenue Service investigator on charges of helping to prepare false…
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Summer of the Tax Protesters?
Tax Protester and former IRS agent Joe Bannister was acquitted yesterday of all charges by a federal district court jury in Sacramento. Tax Analysts reports: A former Criminal Investigation (CI) Division special agent who left the IRS in 1999 over disagreements about the validity of the federal income tax, Banister was exonerated of conspiring to…
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More KPMG Tax Shelter Coverage
Howard E. Abrams (Emory) and Tanina Rostain (New York Law School) were quoted in Tuesday’s New York Times story, KPMG May Dodge One Bullet, Only to Face Another Vic Fleischer’s post, Criminalizing Tax Shelters Joe Kristan’s post, Vic Fleischer to KPMG: Die Larry’s Ribstein’s post, KPMG and Limited Liability of Professional Firms
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SDNY Allows Tax Shelter Suit v. Sidley Austin To Proceed
Interesting article in today’s National Law Journal, Judge: Tax Shelter Suit Against Sidley Austin, Deutsche Bank May Proceed: A federal judge has declined to dismiss a civil suit brought by a husband and wife who claim that Sidley Austin Brown & Wood and Deutsche Bank Securities Inc., offered a tax shelter the firms knew would…
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2d Circuit Sides with Publisher in Royalty Dispute Over Postlewaite & Pennell’s Partnership Taxation Treatise
The Second Circuit on Thursday held, in Postlewaite v. McGraw-Hill, Inc., No. 04-2095 (2d Cir. June 9, 2005), that the district court properly dismissed a breach of contract claim by Philip F. Postlewaite (Northwestern) and the late John S. Pennell, which alleged that Shepards/McGraw-Hill failed to pay them royalties under a software agreement after it…
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Son of Boss Case Reveals Identities of Tax Shelter Investors
Interesting article in yesterday’s New York Times, Court Case Gives Rare Look at Tax Shelter Clients: Promoters of tax shelters zealously guard the names of their wealthy clients. But in mounting an unusual court challenge against an IRS ruling that branded a certain tax shelter abusive and illegal, a promoter of the shelter has had…
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8th Circuit Clarifies Order Inviting Amicus Briefs on Tax Court’s Jurisdiction in Innocent Spouse Case
Adam Chodorow (Arizona State) provides an update of our post last Friday on the Eighth Circuit’s order in Bartman v. Commissioner (No. 04-2771) inviting "members of the academic community or organizations" to file amicus briefs in the case on appeal from the Tax Court (Bartman v. Commissioner, T.C. Memo. 2004-93 (April 6, 2004)): The 8th…
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Pat Robertson 3, Tax Analysts 0
The D.C. Circuit yesterday affirmed a district court decision in favor of the government in a lawsuit brought by Tax Analysts seeking to obtain a closing agreement and other documents pertaining to the exempt status of Pat Robertson’s Christian Broadcasting Network (CBN). The decision in Tax Analysts v. Internal Revenue Service and Christian Broadcasting Network,…
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IRS Announces Growing Fines Against Taxpayers Making Frivolous Claims
The IRS on Thursday announced (IR-2005-64) that courts are imposing stiff fines on taxpayers who make frivolous claims in trying to avoid their tax obligations: the Tax Court has imposed over 100k of penalties since 2004 (and over 375k since 2001), and the Second, Ninth, and Tenth Circuits have upheld six earlier Tax Court decisions…
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Crane & Johnson Elaborate on Check-the-Box Decision
Our post Tuesday on Littriello v. United States, No. 3:04CV-143-H (W.D. KY, May 18, 2005), which upheld the Check-the-Box Regs, sparked a spirited discussion on the TaxProf Discussion Group. Two of the participants have graciously agreed to share their observations here with the broader tax community: Charlotte Crane, Professor of Law, Northwestern: The case is…
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8th Circuit Invites Amicus Briefs on Application of Statute of Limitations in Innocent Spouse Case
The Eighth Circuit has issued an order in Bartman v. Commissioner (No. 04-2771) inviting "members of the academic community or organizations" to file amicus briefs. The case is on appeal from the Tax Court (Bartman v. Commissioner, T.C. Memo. 2004-93 (April 6, 2004). The TP timely filed her 1995 return jointly with her husband, but…
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U.S. District Court Upholds Check-the-Box Regs
In a case of first impression, the U.S. District Court has upheld the validity of the check-the-box regulations (Reg. § 301.7701-1 through 3) in Littriello v. United States, No. 3:04CV-143-H (W.D. KY, May 18, 2005). The court in Littriello noted that it could find "no appellate or district court opinions considering the validity of the…
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Maule on Circuit Split Over Definition of Alimony
Jim Maule has a typically thoughtful discussion of the split in the circuits over the definition of alimony for § 71 purposes: Kean v. Commissioner, Nos. 04-2931 & 04-3018 (3d Cir., 5/10/05) (payments made by husband pursuant to support order issued during divorce proceeding constitute alimony and thus were deductible by husband and income to…
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New York Telecommuter Tax (Continued)
Regular readers of this blog know that we have extensively covered the twists and turns concerning the controversy over New York’s telecommuter tax (here, here, here, and here). Here are this week’s developments: The National Law Journal published an article on the subject, New York Loses Bid to Assess Tax on Telecommuter From Connecticut (5/18). …
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3rd Circuit Treats Unallocated Support Payments During Divorce as Alimony, Contrary to Tenth Circuit
Law.com has an interesting article on this week’s Third Circuit decision, Kean v. Commissioner, Nos. 04-2931 & 04-3018 (3rd Cir. May 10, 2005), holding that unallocated support payments during divorce should be treated as alimony (and hence as income to the payee spouse). Where support payments are unallocated, as in this case, the entire amount…
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Update on NY Telecommuter Tax
We previously blogged the controversy surrounding the NY telecommuter tax (here, here, and here). Recent developments this week: Sen. Christopher Dodd & Congressman Christopher Shays to Introduce Telecommunications tax Fairness Act (5/6) N.Y. Telecommuter Tax Under Fire; Lawmakers’ Bill Would Block Double Taxation of Workers (Greenwich Time) (5/7) Telework Coalition web site (Thanks to reader…
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Carr & Griffith on Litigation and Tax Incentives After the Downfall of Ohio’s ITC
Jennifer Carr & Cara Griffith have published Litigation and Tax Incentives After the Downfall of Ohio’s ITC, also available on the Tax Analysts web site as Doc 2005-8428, 2005 STT 83-5. The article considers the state economic development implications of the Sixth Circuit’s decision in Cuno v. DaimlerChrsyler, which held that Ohio’s investment tax credits…
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ABA Posts Commentary About 2 New FLP Cases
The ABA Real Property, Probate & Trust Section has posted commentary about two new family limited partnership cases: Bigelow v. Commissioner, T.C. Memo. 2005-65 (3/30/05) Summary and Observations Bongard v. Commissioner, 124 T.C. No. 8 (3/15/05) Overview Analysis
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TRAC Files FOIA Lawsuit Against IRS Seeking Disclosure of
The Transactional Records Access Clearinghouse (TRAC) of Syracuse University, through their counsel the Public Citizen Litigation Group, has filed a FOIA lawsuit claiming that the IRS is illegally withholding information about its operations, claiming without substantiation that some of the unclassified information would compromise homeland security if released to the public. According to the press…
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Tax Court Refuses To Let TP Increase Basis in S Corp Shares by Loan to Corp
In Maloof v. Commissioner, T.C. Memo 2005-75, the Tax Court this week held that the taxpayer could not increase his adjusted basis in an S corp by a $4 million bank loan to the S corp. The Tax & Business Law Commentary Blog picks up the story: In Maloof, the taxpayer was a sole shareholder…
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Another Tax Shelter Lawsuit Filed Against Sidley Austin
The National Law Journal reports today that another unhappy former client has sued Sidley Austin Brown & Wood and tax lawyer R.J. Ruble over complaints about the use of dubious tax shelters: Doll contends in his suit that he paid financial advisors and lawyers $1.2 million to use a tax strategy that Ruble, Sidley Austin…
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Baker Botts Hit with $71 Million Judgment for Estate Planning Malpractice
Law.com this morning has an interesting article about a recent Texas case (Cailloux v. Baker Botts) ordering Baker Botts and Wells Fargo Bank Texas to pay $71 million in damages to estate planning client Kathleen C. Cailloux, a wealthy widow. A jury had found that the defendants breached their fiduciary duty for failing to disclose…
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Tax Court Sides with IRS in § 2036 Retained Interest Case
In Estate of Bigelow v. Commissioner, T.C. Memo. 2005-65, the Tax Court yesterday found for the Government in a § 2036 retained interest case: [D]ecedent and her children had an implied agreement that decedent could continue during her lifetime to enjoy the economic benefits of, and retain the right to the income from, the []…