Today in Tax Court

Episode 14 - Nwafor v. Commissioner

Midwit meme meets Tax Court.
How a taxpayer used one-sided journal entries to reduce income and inflate expenses to the tune of $200,000+.
bUt ThE wOrK iS wOrTh sO MuCh mOrE! is a common reply when I tell people they can't write off X, Y, or Z as "donations" when they didn't pay tax on the income.

Episode 13 - Cantor Fitzgerald v. Commissioner

After the 9/11 Terror Attacks, millions of dollars in business aid flowed from various government agencies.
This case walks us through some of the more common arguments of what is taxable and not taxable income - even when it was in the form of disaster relief grants.
We also work through some of the other common types of ways people receive cash but don't have to include it in income.

Episode 12 - Hubert Ent. v. Commissioner

Did someone say HoldCo?
What happens when your HoldCo crushes it and now you want money out of it? If it's a C-Corp it's tricky.
Today's case walks through to common issues:
- Getting money out without being double taxed
- Shielding income via accelerated depreciation
Have a listen and enjoy!

Episode 11 - Weston v. Commissioner

The Tax Court refuses to subsidize "poor investment decisions" of the taxpayer.
When Mr. Weston invested $2.1 million of his own life savings into real estate in Indiana that went belly-up, he takes a buckshot approach to try to deduct it.
(1) Business Expense
(2) Business Loss (Worthless)
(3) Theft
All fell on deaf ears of the Court and Mr. Weston got stuck having to delay the deductions as basis or losses in later years.
A great episode on where and how business expenses can and should be deducted. Enjoy!

Episode 10 - Langlois v. Commissioner

2 for the price of 1 - Langlois v. Commissioner and Clark v. Commissioner
Langlois was a power line worker who dabbled in landscaping and a hair salon side hustles. But the IRS disallowed like $100,000 in deductions for essentially bad recordkeeping.
Clark was a movie memorabilia seller who tried to sneak one past the IRS by not paying self employment tax on his income. It didn't work.
Enjoy - and drop a rating for the show!

Episode 9 - Ogden v. Commissioner

One of my favorite topics - Operating Agreement tax allocation language!
Maybe one of the biggest things to get right when talking about partnership tax returns is the allocation of income and loss. It's not as straight forward as many think it is.
In Ogden v. Commissioner (from 1985), the taxpayer had the majority of her loss taken away after the Court saw the operating agreement didn't have the right language.
Enjoy!

Episode 8 - Franklin v. Commissioner

A sheriff in Alabama gets caught "embezzling" from inmate food funds.
But the argument is made that she only made a bad investment (she did) - and she avoids paying tax on the majority of the money taken.
A wild story with few twists and turns - enjoy!

Episode 7 - Sehati v. Commissioner

A desperate LinkedIn accounting job posting + a 40 year old treasure box + mall kiosks = a wild story.
This case highlights how IRS auditors approach auditing small businesses, and what not to tell an IRS agent to get every entity in the org. chart audited.
It winds up with a $3.8 million income hit to the taxpayers.

Episode 6 - Gregory v. Helvering

Our first landmark court case to review: the Business Purpose Doctrine.
Gregory set up a separate company and shifted assets just to avoid tax. This case is commonly referenced in tax court cases dealing with entity and transaction structuring.
We also run through other types of "grey areas" like sale-leasebacks, contingent liability planning, and TICs.

Episode 5 - Hutcheson v. Commissioner

A retirement plan fiduciary embezzles $5 million of other people's retirement assets. 
He wastes it on home renovations, cars, Costco trips, and trying to buy a golf course.
He gets convicted of wire fraud and sentenced to jail - but now has a $3.7 million tax bill he is fighting.
We cover the backstory and what kind of income is taxable and not.