Everything Tax Law Blog Archives

No Damages for Emotional Distress for IRS Violations of Bankruptcy Law

When a private party violates the law, there are often consequences. This is especially true for the automatic stay that protects individuals in bankruptcy from collections actions during the bankruptcy proceeding. In Hunsaker v. United States, Case No. 6:16-cv-00386-MC, the Ninth Circuit Court of Appeals concluded that the IRS’s repeated violations of these laws does […]

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Partnership Tax Return Cannot be Corrected by Amended Tax Return

In U.S. v. Stewart, No. 15-20596, the Fifth Circuit Court of Appeals concluded that the taxpayer was not entitled to a tax refund that was based on a corrected Schedule K-1 received from a partnership the taxpayer owned. The question on appeal was whether a partnership tax return can be corrected by filing an amended […]

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Lump Sum Cash Payment Did Not Qualify as Alimony

In Muñiz v. Commissioner, No. 15-14478, the Eleventh Circuit Court of Appeals concluded that lump sum payment made in cash did not qualify as alimony under Florida law. The payment did not qualify because Florida law says that the obligation to pay the lump sum amount does not end with the payee’s death–regardless of whether […]

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How Do You Prove You Mailed a Tax Return to the IRS?

In In Re McGrew, No. 13-00149, the U.S. Bankruptcy Court for the Northern District of Iowa addressed a dispute as to whether the taxpayer had actually filed her tax return with the IRS. The taxpayer said she did; the IRS said she did not. This is a very common and important issue that taxpayers often […]

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IRS Will Not Follow Court’s Holding for Customer Rewards Program

The IRS issued AOD 2016-03 to indicate that it will not follow the Third Circuit Court of Appeals decision in Giant Eagle, Inc. v. Commissioner, 822 F.3d 666 (3rd Cir. 2016), rev’g T.C. Memo 2014-146. The issue is whether costs for a rewards program are deductible in the year the rewards are earned by the […]

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Emotional Distress or Physical Sickness Resulting in Emotional Distress

In Tishkoff v. Commissioner, T.C. Summary Opinion 2016-65, the court considered whether a lawsuit settlement payment was subject to income tax. The question was whether the payment to the taxpayer was for her for emotional distress or for personal physical sickness that resulted in emotional distress. One is taxable, the other is not. The taxpayer […]

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Accuracy Related Penalties Do Not Apply to Full Understatement of Tax

In Hatcher v. Commissioner, T.C. Memo. 2016-188, the court considered a very common error IRS agents make in computing the Section 6662 accuracy related penalty. The IRS applied the penalty to the entire understatement of tax, rather than the portion of the understatement that was not subject to the reasonable cause defense. This is one […]

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How Long Do You Keep Your Tax Records?

Taxpayers often ask how long they have to keep their tax records. Many taxpayers only keep records for three to six years. In Reyonoso v. Commissioner, T.C. Memo. 2016-185, the court considered a case that turned on whether the taxpayer could produce records to support that he had made a mark-to-market election nearly twenty years […]

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The Impact of Filing a CPA Malpractice Case

The YA Global Investments, L.P. v. RSM McGladrey, Inc.Docket No. A-2152-15T3 (2016), case addresses the difficult situation whereby a taxpayer sues their CPA firm in state court for incorrect tax advice, while at the same time arguing that the tax advice and position is correct in the U.S. Tax Court. This situation arises given the […]

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