Justia Tax Law Opinion Summaries

Appellant, a software engineer, filed no federal individual income tax return for 2007. The Commissioner issued a notice of deficiency alleging unpaid taxes, penalties, and interest of more than $250,000 based on a substitute return prepared by the IRS. On appeal, appellant challenged the Tax Court's IRA rollover and business bad debt rulings. The court concluded that appellant's April 30, 2007 contribution was a qualifying partial rollover contribution under I.R.C. 408(d)(3)(D) and appellant was entitled to reduce his taxable IRA distributions by $120,000. Accordingly, the court reversed the Tax Court's decision as to this issue. The court concluded that the Tax Court did not clearly err in finding that appellant failed to prove that his dominant motivation for making the four loans in question made them deductible bad debts when they became worthless in December 2007. The court remanded for a redetermination of the deficiency. View "Haury v. CIR" on Justia Law

Appellants, two couples, challenged the Tax Court's decisions disallowing their claims of dependency exemption deductions and child tax credits for a child of each husband's prior marriage. For each couple, the only tax year at issue, a year in which the ex-wife, the custodial parent, failed to sign a document stating that she "will not claim such child as a dependent" that year, even though she had agreed to provide that document if her ex-husband paid all required child support. The court reviewed the Tax Court's interpretation of the governing statute de novo and concluded that its decisions were consistent with the plain language of 26 U.S.C. 152(e)(2). Accordingly, the court affirmed the judgment of the district court. View "Armstrong, et al. v. C.I.R." on Justia Law

The County filed a putative class action on behalf of similarly situated Minnesota counties seeking a declaratory judgment that Fannie Mae, Freddie Mac, and the FHFA violated state laws by failing to pay a tax on transfers of deeds to real property. The district court granted the federal agencies' motion to dismiss for failure to state a claim. Since Congress exempted the federal agencies from all state taxation except on real property, and Minnesota's deed transfer fell within the broad exemption, the court affirmed the judgment of the district court. View "Hennepin County v. Federal National Mortgage, et al." on Justia Law

Debtor appealed the bankruptcy court's order sustaining the trustee's objection to debtor's claimed exemption. Debtor had filed a petition for relief under Chapter 13 of the Bankruptcy Code and had claimed exempt, as a public assistance benefit under MO.REV.STAT. 513.430.1(10)(a), the portion of her 2012 federal income tax refund that was attributable to a child tax credit allowed under 26 U.S.C. 24. The court affirmed the bankruptcy court's order sustaining the trustee's objection to debtor's claimed exemption, concluding that the refundable portion of the child tax credit was not a public assistance benefit within the meaning of the statute and could not be claimed exempt under the statute. View "Hardy v. Fink" on Justia Law

Appellant formed RJT Investments X, LLC and began acting as RJT's tax matters partner. Thompson, later that year, entered into an illegal "Son-of-BOSS" tax shelter transaction using RJT in order to offset capital gains of approximately $21.5 million. On appeal, appellant and his wife challenged the Tax Court's order dismissing their petition challenging a notice of deficiency issued by the IRS. The court agreed with its sister circuits that outside basis was an affected item that must be determined at the partner level. Because the Tax Court did not determine appellant's outside basis in RJT, the IRS properly issued a notice of deficiency under I.R.S. Code 6230(a)(2)(A)(i). Accordingly, the Tax Court had jurisdiction over appellants' petition challenging the notice. View "Thompson, et al. v. CIR" on Justia Law

WFC challenged the district court's holding that WFC was not entitled to a tax refund for a capital loss it claimed as a result of a complex transaction involving the transfer of leases and the sale of stock. WFC argued that the district court erred in finding that the lease restructuring transaction (LRT)/stock transfer constituted a sham transaction. The court concluded that the district court did not err in finding that the LRT/stock transaction lacked objective economic substance; in finding that WFC failed to meet its burden of proving by a preponderance of the evidence that avoiding the Office of the Comptroller of the Currency (OCC) regulations was its business purpose for the LRT/stock transfer; and in finding that WFC failed to prove by a preponderance of the evidence that the LRT/stock transfer was motivated by a purpose to strengthen its hand with good bank customers or to create management efficiencies. Accordingly, the court affirmed the judgment of the district court. View "WFC Holdings Corp. v. United States" on Justia Law

This case arose when the IRS gave Fred Bame an erroneous tax refund of over $500,000. After Fred died and the government was unable to collect from his estate, the government filed suit against his ex-wife and two corporations she owned to recover the money. On appeal, the ex-wife and the corporate defendants challenged the district court's award based on unjust enrichment to the government. The court concluded that the district court erred in granting summary judgment to the government where there was a genuine issue of material fact as to the ex-wife's good faith defense. Further, there was a genuine issue of material fact as to the ex-wife's entitlement to the money Fred transferred to her. Accordingly, the court reversed and remanded for further proceedings. View "United States v. Bames, et al." on Justia Law

Defendant pleaded guilty to conspiracy to defraud the government by unlawfully evading tax obligations. On appeal, defendant challenged the district court's restitution order. The court concluded that the district court did not err in adopting an IRS agent's restitution calculations; the district court's oral and written findings were sufficiently thorough to support its restitution order; the district court did not clearly err by relying on the agent's testimony that the boating-related expenses were personal expenses that were unlawfully deducted as business expenses; and the court rejected defendant's arguments regarding the restitution payment schedule and defendant's complexity exception argument under 18 U.S.C. 3663A(c)(3)(B). Accordingly, the court affirmed the judgment. View "United States v. Wirth" on Justia Law

Plaintiff, president and owner of WestCorp, sued the government for a refund of an IRS tax penalty that he paid. At issue was the treatment of admittedly incomplete payments WestCorp made from 2000-2001. To maximize its recovery, the IRS applied those payments first toward WestCorp's non-trust fund taxes rather than dividing the payments proportionally between WestCorp's trust fund and non-trust fund taxes. The court agreed with the district court that the undisputed facts show, as a matter of law, that plaintiff willfully failed to pay the trust fund taxes at issue; the court also agreed with the district court that the IRS properly allocated the undesignated payments at issue; and the court rejected plaintiff's contention that the IRS should nonetheless have applied at least part of the undesignated payments toward WestCorp's trust fund obligations. Accordingly, the court affirmed the judgment. View "Westerman v. United States" on Justia Law

Defendant, a manager at the Ford Motor Company, was convicted of four counts of willful income tax evasion in violation of 26 U.S.C. 7201 for failing to report and then concealing kickbacks received from Ford vendors during each of the 2001 through 2004 tax years. The court concluded that there was more than sufficient evidence for a reasonable jury to find beyond a reasonable doubt, with respect to each count, that defendant committed an act of tax evasion within six years of the indictment; the district court did not err in not suppressing defendant's involuntary statements made during an agent's interview; the district court did not abuse its discretion in denying defendant's motion for a Franks v. Delaware hearing; the district court's tax loss findings were not clearly erroneous; in any event, the court need not consider the tax loss findings issues because defendant made no showing that the items in question - individually or in combination - would have lowered his base offense level by reducing the net tax loss; defendant's sentence was reasonable where the district court did not abuse its considerable discretion in fashioning an appropriate sentence; and the court rejected defendant's restitution claims. Accordingly, the court affirmed the judgment. View "United States v. Perry" on Justia Law