Paul L. Caron
Dean
Pepperdine Caruso
School of Law
New Cases
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Blue J Predicts With 74% Confidence That 8th Circuit Will Find Customary/Usual Management Fees Are Deductible Under § 162
Benjamin Alarie & Christopher Yan (Blue J Legal), Would Management Fees by Any Other Name Still Be Deductible?, 173 Tax Notes Fed. 499 (Oct. 25, 2021): In this article, Alarie and Yan examine Aspro [T.C. Memo. 2021-8 (Jan. 21, 2021)] and use machine-learning models to evaluate the strength of the appellant’s arguments in its appeal…
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Lesson From The Tax Court: Whistleblower Died, But His Claim Survived
The IRS has long been authorized to award informants a fee for information. Informants unhappy with their awards, however, have not always had easy access to judicial review. That changed in 2006 when Congress modified §7623 to permit taxpayers to ask the Tax Court to review “any determination regarding an award.” §7623(b)(4). Tax Reform and…
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Lesson From The Tax Court: Of Distributive Shares And The CDP Mashup
Sometimes our biggest problems are self-created. In Taryn L. Dodd v. Commissioner, T.C. Memo. 2021-118 (Oct. 5, 2021) (Judge Lauber), the taxpayer was attempting to repudiate a tax liability she had self-reported but had not paid. Her multi-year slog through Collection Due Process (CDP) involved three trips to the Tax Court. Only in the third trip do…
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Lesson From The Tax Court #200: The Great Divide
Today's Lesson is an appropriate one for my 200th post. While the line separating my 199th from my 201st post is not big—not a great divide—the line does make visible a degree of effort and consistency that might otherwise be obscure. So, yeah, I'm kinda proud about crossing this line. The concept of Adjusted Gross…
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2d Circuit Rejects States’ Challenge To $10,000 Cap On State & Local Tax Deduction
New York v. Yellen, No. 19-3962 (2d Cir. Oct. 5, 2021): New York, Connecticut, Maryland, and New Jersey (the “Plaintiff States”) appeal from a judgment of the United States District Court for the Southern District of New York (Oetken, J.) granting the defendants’ motion to dismiss for failure to state a claim and denying the…
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Lesson From The Tax Court: The Many Rooms Of Tax Court Power
All federal courts (except the Supreme Court) are created by Congress. Congress defines the extent to which each federal court can invoke the power of the federal government to coerce the parties before them. The fancy legal term for that power is “jurisdiction.” Like all other federal courts, the Tax Court is a court of…
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Texas Heirs Bring Estate Planning Malpractice Action
Texas Lawyer: Oilman's Family Sues Lawyers, Firms, Accountants: The beneficiaries of a multimillion-dollar trust have sued an estate-planning attorney, his firm and an accounting firm, alleging professional malpractice related to a tax plan that led to litigation with the IRS. But in an unusual twist, the beneficiaries also sued the firm and lawyers to whom…
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IRS Suspends Regulation of Tax Return Preparers After Friday’s Court Defeat
Following up on my post, Court Says IRS Lacks Authority to Regulate Tax Preparers: IRS Statement on Court Ruling Related to Return Preparers: As of Friday, Jan. 18, 2013, the U.S. District Court for the District of Columbia has enjoined the IRS from enforcing the regulatory requirements for registered tax return preparers. In accordance with…
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Supreme Court Grants Cert to Decide Whether Estate Tax Marital Deduction Applies to Same-Sex Couple
The Supreme Court yesterday granted certiorari to decide whether the denial of an estate tax marital deduction to the surviving spouse of a lesbian couple under the Defense of Marriage Act violates the equal protection clause.
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2d Circuit Reverses Tax Shelter Convictions of Two Former Ernst & Young Partners
United States v. Coplan, No. 10-583 (2d Cir. Nov. 29, 2012): We consider here the fate of four partners and employees of Ernst & Young, LLP (“E&Y”), one of the largest accounting firms in the world, who appeal their convictions in connection with the development and defense of five “tax shelters” that were sold or…
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Gerzog: Another Turn with Turner
Wendy C. Gerzog (Baltimore), Another Turn with Turner, 136 Tax Notes 1613 (Sept. 24, 2012): In its latest Estate of Turner opinion [138 T.C. No. 14 (Mar. 29, 2012)], the Tax Court decided whether a pecuniary formula marital deduction clause could shield the inclusion of family limited partnership assets in the decedent’s estate. All Tax…
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Forbes: Judge Shoots Down Another Forbes 400 Member’s Tax Shelter
Forbes: Judge Shoots Down Another Forbes 400 Member's Tax Shelter, by Janet Novack: A California federal district court judge on Friday rejected, on summary judgment, a bid by billionaire Broadcom co-founder Henry Nicholas, III, to claim hundreds of millions in tax losses from a shelter marketed more than a decade ago by myCFO, Inc. the …
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Federal Circuit Denies Patent Protection for § 1031 Like-Kind Exchange Strategy
Fort Properties, Inc. v. American Master Lease, LLC (No. 2009-1242) (Fed. Cir. Feb. 27, 2012): The investment tool disclosed in the '788 patent is designed to invoke the benefits of § 1031. In particular, the claims require the aggregation of a number of properties into a "real estate portfolio." The property interests in this portfolio…
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8th Circuit Denies Accountant’s Use of ‘John Edwards Sub S Tax Shelter’ — Is Warren Buffett Next?
The Eighth Circuit yesterday affirmed the district court's denial of an accountant's attempted use of the 'John Edwards Sub S tax shelter' and required him to treat $91,044 per year as his compensation (and thus subject to the 15.3% Social Security and Medicare taxes), rather than the $24,000 he claimed as wages. (During the years…
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Tax Prof Amicus Brief in Affordable Care Act Litigation
Jordan Barry (San Diego), Patricia Cain (Santa Clara), Bryan Camp (Texas Tech) & Keith Fogg (Villanova) have filed Amicus Curiae Brief in Health and Human Services v. Florida (Affordable Care Act Litigation) on Behalf of Tax Law Professors in Support of Vacatur: This amicus brief, filed in HHS v. Florida (the Affordable Care Act litigation),…
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DOJ Indicts Swiss Bank for Hiding $1.2 Billion from the IRS
The Justice Department yesterday indicted Swiss bank Wegelin on tax charges: DOJ Press Release Bloomberg Financial Times New York Times Reuters Wall Street Journal
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Hickman: Impressions From the Home Concrete Oral Argument
Kristin E. Hickman (Minnesota), Home Concrete: Impressions From the Oral Argument. 134 Tax Notes 579 (Jan. 30, 2012): In this article, Hickman, who filed an amicus brief in Home Concrete, discusses the case, the history of litigation leading up to it, and the oral argument; she believes the case is too close to call for…
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2d Circuit Rejects GE’s $62 Million Castle Harbour Tax Shelter
TIFD III-E Inc. v. United States, No. 10-70-CV (S.D.N.Y. Jan. 24, 2012): The United States appeals from a judgment of the United States District Court for the District of Connecticut (Underhill, J.) invalidating two notices of Final Partnership Administrative Adjustments issued by the Internal Revenue Service. The district court so ruled because it concluded that…
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Tax Court Rejects Buy.com Founder’s $45 Million OPIS Tax Shelter
Blum v. Commissioner, T.C. Memo. 2012-16 (Jan. 17, 2012): This Court has not previously considered an Offshore Portfolio Investment Strategy (OPIS) transaction. The question before us is whether petitioners are entitled to deduct certain capital losses claimed from their participation in the OPIS transaction. We hold that they are not because the transaction lacks economic…
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Three Swiss Bankers Indicted for Helping U.S. Taxpayers Hide $1.2 Billion From the IRS in Offshore Accounts
The U.S. Attorney for the Southern District of New York yesterday announced the indictment of three Swiss bankers with Wegelin & Co. for conspiring with U.S. taxpayers to hide more than $1.2 billion in assets from the IRS. U.S. Attorney press release Bloomberg CNN Financial Times New York Post (headline: "Swiss Bankers Had Fondue For…
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DOJ Sues Hal Steinbrenner for Return of ‘Erroneous’ $670k Tax Refund
Bloomberg, Yankees Co-Owner Harold Steinbrenner Target of U.S. Suit Over Tax Refund: New York Yankees co-owner and managing partner Harold Steinbrenner was sued by the U.S. Justice Department over an “erroneous” $670,494 tax refund he received in 2009. The complaint, filed Dec. 27 in Tampa, Florida federal court, seeks to reclaim the funds issued to…
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10th Circuit Rejects Billionaire Philip Anschutz’s Tax Shelter
The Tenth Circuit yesterday affirmed the Tax Court's disallowance of billionaire Philip Anschutz's use of variable prepaid forward contracts with Donaldson, Lufkin & Jenrette to avoid $144 million in capital gains taxes. Anschutz Co. v. Commissioner, No 11-9001 (Dec, 27, 2011). Denver Business Journal Denver Post L.A. Times Prior TaxProf Blog coverage: WSJ: IRS Targets Billionaire's…
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Supreme Court Briefing in Home Concrete (6-Year SOL and Overstatement of Basis)
The briefing is now completed in United States v. Home Concrete & Supply, LLC, No. 11-139, which is scheduled for oral argument in the U.S. Supreme Court on Jan. 17, 2012. Opinion below (4th Cir. Feb. 7, 2011) Issue: (1) Whether an understatement of gross income attributable to an overstatement of basis in sold property…
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Federal Judge Allows IRS to Troll Through State Records for Unreported Gifts of Real Estate
Forbes, Federal Judge Green Lights IRS Search For California Gift Tax Cheats, by Janet Novack: A federal district court judge has given the IRS permission to serve a “John Doe” summons on the California State Board of Equalization demanding the names of residents who transferred property to their children or grandchildren for little or no…
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Western Union, IRS Settle $2 Billion Transfer Pricing Case
Western Union has settled a $2 billion transfer pricing case with the IRS for $220 million (in addition to a $250 million tax deposit made with the IRS in 2010 connected to the potential liability). Western Union Press Release Bloomberg Tax Trials Wall Street Journal