United States Tax Court Decision for the Week – You be the Judge

IRS Fails to Prove Fraudulent Intent; Fraud Penalties Inapplicable

The United States Tax Court held that the IRS failed to prove a couple’s fraudulent intent in underpaying their taxes, and they are not liable for fraud penalties; the court sustained an accuracy-related penalty for negligence, finding that they understated their tax liability for one year by failing to report income and claiming unsubstantiated deductions.

A recent Tax Court decision was reported that may be of interest to individuals potentially dealing with tax litigation. J. Frank Best, Certified Public Accountant and United States Tax Court Practitioner, works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients.

JAMES A. ERICSON AND REBECCA A. ERICSON,
Petitioners v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

T.C. Memo. 2016-107

 

United States Tax Court Decision for the Week – You be the Judge

Accountant’s Law School Tuition Was Not a Deductible Expense

The United States Tax Court, declining to reconsider the validity of reg.section 1.162-5(b)(1), held that an accountant who prepared returns and provided other financial services for clients couldn’t deduct his tuition and fees for law school, finding that law school qualified him for a new trade or business as described in the regulation.

A recent Tax Court decision was reported that may be of interest to individuals potentially dealing with tax litigation. J. Frank Best, Certified Public Accountant and United States Tax Court Practitioner, works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients.

EMMANUEL A. SANTOS,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

T.C. Memo. 2016-100