Articles Posted in US Court of Appeals for the Eleventh Circuit

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The Eleventh Circuit affirmed the decisions of the tax court upholding the Commissioner's transferee liability assessment against petitioners. Terry and Sandra Shockley sold their company, SCC, and reported their gains from this sale on timely federal income tax returns for calendar year 2001. The Commissioner assessed additional tax liabilities against SCC and thus asserted transferee liability under I.R.C. 6901 against each of eight of the largest selling shareholders of SCC. The court held that the tax court appropriately used substance over form and its related judicial doctrines to determine the true nature of the transaction at issue. The court agreed with the Commissioner, the tax court, and the Seventh Circuit that substance-over-form analysis was appropriate in context of the Wisconsin Uniform Fraudulent Transfer Act. Under the circumstances, the Commissioner was permitted to assess transferee liability for unpaid taxes against petitioners by applying the procedural device supplied by I.R.C. 6901. View "Shockley v. Commissioner of Internal Revenue" on Justia Law

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The money that a homosexual man paid to father children through in vitro fertilization—and in particular, to identify, retain, compensate, and care for the women who served as an egg donor and a gestational surrogate—was not spent "for the purpose of affecting" his body's reproductive "function" within the meaning of I.R.C. 213. In this case, the Eleventh Circuit held that it was constrained by I.R.C. 213's plain language where taxpayer's own function within the human reproductive process was to produce and provide healthy sperm, and because taxpayer was and remained capable of performing that function without the aid of IVF-related treatments, those treatments did not affect any function of his body and did not qualify as deductible "medical care" within the meaning of Section 213(a). The court also held that the IRS's disallowance of taxpayer's claimed deduction neither violated any fundamental right nor discriminated on the basis of any suspect (or quasi-suspect) characteristic. View "Morrissey v. United States" on Justia Law

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The Eleventh Circuit affirmed the Tax Court's determination that petitioner was liable as a transferee under 26 U.S.C. 6901 for his former employer's unpaid taxes. Because the state substantive law in this case does not require exhaustion for liability to exist, the court held that the Commissioner was not required to exhaust remedies against the company before proceeding against petitioner as a transferee. In this case, applying Florida law, the court held that petitioner could not definitively prove that the Dividend Payments were a part of his employment with FECP and because he did not raise any other argument for why FECP might have received reasonably equivalent value even if the dividends were not compensation, the court must conclude that they were dividends for which FECP did not receive reasonably equivalent value. As such, the court affirmed the Tax Court's determination that the reasonable-value element of constructive fraud under the Florida Uniform Fraudulent Transfer Act was satisfied for all of the Dividend Payments. When considered together, those dividend payments were substantial enough for the Tax Court to conclude that they led to the insolvency of FECP. View "Kardash v. Commissioner of IRS" on Justia Law