In Buffano v. United States, T.C. Memo. 2016-122, the U.S. Tax Court concluded that that the taxpayer was not liable for tax because the IRS failed to properly assess the tax because the IRS did not mail notices of the tax deficiencies to the taxpayer’s last known address. This case is a good example of…
Tax Articles
Stock Sale Triggers Transferee Liability for Buyer’s Tax Liability
In Marshall v. Commissioner, T.C. Memo. 2016-119, the U.S. Tax Court concluded that business owners who sold their stock was liable for the buyer’s Federal income taxes that arose after the sale. Facts & Procedural History The taxpayers owned Marshall Associated Contractors, Inc. (MAC), which was subject to tax as a Subchapter C corporation. MAC…
Court Affirms that Tax Prepearer Fraud Holds Open Assessment Statute
In Finnegan v. Commissioner, T.C. Memo. 2016-118, the U.S. Tax Court refused to reconsider its previous decision that a tax return preparers fraud keeps the statute of limitations open on the taxpayer’s Federal income tax return. Facts & Procedural History On February 7, 2013, the IRS issued a notice of deficiency for tax years 1994-2001.…
Unperfected Loan Trumped IRS Lien
The IRS has broad collection powers. But its collection powers are not unlimited. The recent U.S. v. Heptner, Case No. 8:15-cv-1125-T-33MAP (Dist. Fla. 2016) case provides an example. Contents1 Facts & Procedural History2 The Purchase Money Mortgage3 The IRS’s Lien Priority4 Which Lien Has Priority? Facts & Procedural History Heptner practiced law from 1984-2001. After…
New Evidence Not In Record Can Be Considered by Court
Cases before the U.S. Tax Court are often won or lost by whether evidence is or is not admitted in the record. Lunnon v. Commissioner, No. 15-9007 (10th Cir.), provides an example of how this works in a tax collections case. Facts & Procedural History Mr. Lunnon failed to pay employment and unemployment taxes for…
Asset Sale Did Not Trigger Transferee Liability for Buyers Taxes
In Sloan v. Commissioner, T.C. Memo. 2016-115, the U.S. Tax Court refused to apply transferee liability under Section 6901 to make a taxpayer who sold company assets to a third party liable for the third party’s tax liability. The court reached this conclusion even though there was some indication that the taxpayers’ advisers knew that…
Delayed Sale to Former Spouse Not Taxable
You didn’t realize it at the time, but growing up, you didn’t take full advantage of opportunities. With time, you realize that you not only failed to take advantage of opportunities, but the actions you took actually made life even more difficult. It’s more than failure by neglect. It’s also failure by action. That is…
IRS Tax Lien Did Not Attach to Trust Property
If someone sets up a trust for a third party and the third party owes the IRS back taxes, can the IRS reach the trust assets to satisfy the back taxes? This is a common question that we get from those with trusts or those seeking to set up trusts. This is also a question…
NOL Triggers Refund for Earlier Year Adjustments
The tax loss carryback can result in some interesting math. The difficulties come in when one thinks about how to take one number, a loss, from a latter year, and apply that loss back to a former year. This may sound simple enough. It is one number that is being carried back. That part is…
Can the IRS Raise New Issues on the Eve of Trial?
Life isn’t like a Hollywood movie. The good guy doesn’t always win. The underdog does not overcome insurmountable odds to prevail. The events do not culminate in a struggle that results in justice being done. And, worse yet, with time, it isn’t even clear who the good guy is or what justice really means. With…