Justia Tax Law Opinion Summaries

Under United States v. Boyle, 469 U.S. 241 (1985), an agent's failure to fulfill his duty to his principal to file tax returns and make payments on behalf of the principal does not constitute reasonable cause for the principal's failure to comply with its tax obligations unless that failure actually rendered the principal disabled with regard to its tax obligations. Disability is a high bar that is not satisfied if the errant agent is subject to the control of his principal, whether that principal sufficiently exercised that control or not.The Eighth Circuit affirmed the district court's dismissal with prejudice of Deaton's suit seeking refund, abatement, and recovery of delinquent tax penalties assessed against it. The court held that the facts set forth in the complaint did not support a finding of reasonable cause. In this case, the facts, whether considered singularly or together, did not excuse Deaton's tax law compliance failures. View "Deaton Oil Co., LLC v. United States" on Justia Law

The Eighth Circuit affirmed the district court's dismissal of Thompson's complaint claiming a refund of excise taxes for its diesel particulate filters under Internal Revenue Code 4051(a)(1). The court held that the phrase "part or accessory" in section 4051(a)(1) was not ambiguous and the filters were properly taxed as either parts or accessories, both of which fell within the scope of the statute. View "Thompson Truck & Trailer v. United States" on Justia Law

Offer of compromise is not a reasonable alternative to seizure under 26 C.F.R. sec. 301.6334-1(d)(1), which requires an alternative for collection, not an alternative to collection. The Eighth Circuit affirmed the district court's grant of the government's petition for permission to levy taxpayer's home and to apply the proceeds toward her debt. The court rejected taxpayer's claim that the government must respond to her offer to compromise the debt before the court may levy on her principal residence. View "United States v. Brabant-Scribner" on Justia Law

The Eighth Circuit vacated the tax court's valuation of Medtronic's true income for the 2005 and 2006 tax years. The Commissioner claimed that Medtronic shifted income from its highly profitable U.S. operations and intangibles to an offshore subsidiary operating in a tax haven in Puerto Rico by charging an artificially low rate for the intangibles.The court held that the tax court's factual findings were insufficient to enable the court to conduct an evaluation of the tax court's determination that the Pacesetter agreement was an appropriate comparable uncontrolled transaction (CUT) because it involved similar intangible property and had similar circumstances regarding licensing. In this case, the tax court did not address in sufficient detail whether the circumstances of the settlement between Pacesetter and Medtronic US were comparable to the licensing agreement between Medtronic and Medtronic Puerto Rico; did not analyze the degree of comparability of the Pacesetter agreement's contractual terms and those of the Medtronic Puerto Rico licensing agreement; did not evaluate how the different treatment of intangibles affected the comparability of the Pacesetter agreement and the Medtronic Puerto Rico licensing agreement; and did not decide the amount of risk and product liability expense that should be allocated between Medtronic US and Medtronic Puerto Rico. View "Medtronic, Inc. & Consolidated Subsidiaries v. Comissioner" on Justia Law

The Eighth Circuit affirmed the tax court's dismissal of a petition for relief from a determination that petitioner owed additional employment tax. The court held that there was no actual controversy involving a determination that petitioner was an employee for Federal Insurance Contributions Act (FICA) purposes. Even assuming there was an actual controversy, it did not involve a determination that petitioner was an employee for FICA purposes. In this case, the only issue the Commissioner examined was the amount of remuneration for petitioner's services and this determination did not give the tax court jurisdiction. View "Martin S. Azarian, P.A. v. Commissioner" on Justia Law

In 2007-2010, the Hargises bought and operated nursing homes. Bobby was the sole owner of corporations that operated the homes (Operating Corporations), which were S corporations. Brenda owned interests in companies that bought and leased the homes to the Operating Corporations (Nursing Home LLCs). The Nursing Home LLCs were partnerships under 26 C.F.R. 301.7701-3(a). All the entities had net operating losses, which the Hargises deducted on their joint tax returns for 2009 and 2010. The Commissioner issued the Hargises a notice of deficiency, disallowing their deduction of most of the nursing home losses, due to the Hargises’ insufficient basis in their companies. The Hargises owed $281,766. The Tax Court ruled for the Commissioner. The Eighth Circuit affirmed. The Tax Court correctly denied Bobby any basis in the indebtedness of the Operating Corporations, finding “no convincing evidence that any of the lenders looked to [Bobby] as the primary obligor on the loans.” The Commissioner properly calculated Brenda’s basis from the Nursing Home LLCs’ tax returns (Schedule K-1). Her deduction of their losses is limited to “the adjusted basis of [her] interest in the partnership.” View "Hargis v. Koskinen" on Justia Law

The Eighth Circuit affirmed defendant's conviction of evasion of payment of taxes and corruptly endeavoring to impede enforcement of Internal Revenue laws. The court held that the district court adequately warned defendant of the dangers of self-representation and did not err in finding that he understood them and knowingly waived his right to counsel. The court also held that the district court did nor err giving Eighth Circuit Pattern Jury Instruction No. 2.23, which instructs the jury that where a defendant represents himself, it may only consider his testimony as evidence. View "United States v. Stanley" on Justia Law

The Eighth Circuit affirmed the tax court's order finding that taxpayer owed additional income taxes and penalties. The court held that the person that issued the notice of deficiency was in a supervisory position and thus the notice satisfied the statutory requirement that the deficiency be determined and sent by someone duly authorized by the Secretary of the Treasury. View "Muncy v. CIR" on Justia Law

The Eighth Circuit reversed the district court's grant of summary judgment to the government in a suit by Union Pacific to recover a refund of about $75 million in taxes that it paid the federal government from 1991 to 2007 under the Railroad Retirement Tax Act (RRTA). The court held that the RRTA unambiguously does not require payment of RRTA taxes on remuneration in stock. Furthermore, the RRTA does not require Union Pacific to pay taxes when it made so-called ratification payments to employees when their unions ratified collective bargaining agreements. View "Union Pacific Railroad Co. v. United States" on Justia Law

Petitioner claimed a charitable deduction of $16.4 million for donating an easement, but the Commissioner disallowed the deduction. The Eighth Circuit affirmed the tax court's ruling in favor of the Commissioner because petitioner did not make a qualified contribution easement pursuant to 26 U.S.C. 170(b)(1)(E). In this case, because the banks' mortgages were not subordinated before the charitable conveyance occurred in December 2003, petitioner was not entitled to a deduction on its 2003 tax return for a qualified conservation contribution. View "RP Golf v. Commissioner" on Justia Law