In Gregory v. Commissioner (2023 WL 3699087, 11th Cir. May 30, 2023), the Eleventh Circuit affirmed the Tax Court’s decision that the taxpayer’s deduction of costs related to a hobby, which were allowable to the extent of gross income from the hobby, are nevertheless subject to disallowance under the Code’s then applicable 2 percent floor…
Category: Taxation
Tax Penalty May Be Communicated to Taxpayer Prior to Required Supervisory Approval
In Kroner v. Commissioner, 2022 U.S. App. LEXIS 25650 (11th Cir. Sept. 13, 2022), the court reversed a U.S. Tax Court decision to hold that the Internal Revenue Service (“IRS”) did not violate section 6751(b) of the Internal Revenue Code when it obtained supervisory approval prior to the assessment of a tax penalty, even though…
Equitable Estoppel Unavailable to Require Reimbursement from Treasury of Taxes Paid Under Protest
In Affordable Bio Feedstock, Inc. v United States, 2022 U.S. App. LEXIS 20577 (11th Cir. July 26, 2022), the Eleventh Circuit held that the taxpayer was not eligible for reimbursement of protest payments made to the Internal Revenue Service (“IRS”) because “payments of money from the Federal Treasury are limited to those authorized by statute.”…
Treasury Department Conservation Easement Regulation Invalidated
In an important development in the ongoing litigation over taxation of conservation easements, Hewitt v. Commissioner, 2021 U.S. App. LEXIS 38555 (11th Cir. Dec. 29, 2021), invalidated a U.S. Treasury Department regulation issued in 1986 for failure to comply with the Administrative Procedure Act. The panel reversed a United States Tax Court’s decision, and remanded…
Conservation Easements with a Limited Reservation of Development Rights Are Potentially Deductible
In Pine Mountain Preserve LLLP v. Commissioner, 2020 WL 6193897 (11th Cir. Oct. 22, 2020), the Eleventh Circuit was asked whether a grantor’s reservation of limited development rights prevents a conservation easement from satisfying the requirements to claim a charitable deduction under the qualified conservation contribution rules of section 170(h) of the Internal Revenue Code….
Existence of a Golf Course Does Not Prevent Tax Deduction for Conservation Easement
In Champions Retreat Golf Founders, LLC v. Commissioner, 2020 WL 2462534 (11th Cir. May 13, 2020), the Eleventh Circuit was asked to review whether the grant of a conservation easement over a golf course was made “exclusively for conservation purposes”—a requirement to receive a charitable contribution deduction. In an opinion by visiting Judge Robert L….
How Accountable Are You for Your Accountant’s Tax Fraud? The Eleventh Circuit Decides Not to Answer.
In Finnegan v. Commissioner, 2019 WL 2428109 (11th Cir. June 11, 2019), the Eleventh Circuit was asked to review whether a taxpayer may be indefinitely held responsible for the fraud of its paid tax return preparer. It is a question of special interest to small business owners that rely on an outside accountant to help…
Eleventh Circuit Avoids Controversial Interpretative Question on S Corporation Taxation
In Meruelo v. Commissioner, 2019 WL 1986618 (11th Cir. May 6, 2019), the Eleventh Circuit was tasked with reviewing a controversial Tax Court decision regarding the basis created by a subchapter S corporation’s indebtedness to its shareholders. Meruelo v. Commissioner, T.C. Memo. 2018-16. In Judge William Pryor’s opinion, the court determined the case on its…
Reinvestment of Tax Shelter Proceeds Is Not a Valid “Business Purpose”
The Eleventh Circuit last week decided a tax case exploring the appropriate scope of factual review for the economic substance and business purpose doctrines. Curtis Investment Co. v. Commissioner, 2018 WL 6380325 (11th Cir. Dec. 6, 2018). These two doctrines allow courts and the IRS to make a substance-over-form review of suspected tax avoidance activities….
Forfeited Deposit Not Capital Gain in Real Estate Deal
In a case of first impression, the Eleventh Circuit affirmed that a taxpayer could not treat as long-term capital gain its retention of a nonrefundable deposit after a would-be buyer defaulted on an agreement to purchase real property used in the taxpayer’s trade or business. CRI-Leslie, LLC v. Comm’r, 882 F.3d 1026 (11th Cir. 2018)….