One enjoyment we have in following Tax Court cases is getting the chance to chuckle now and again. We thought that we’d share some of the amusing 2017 Tax Court cases.
In Ohde v. Comm’r, T.C. Memo. 2017-137, the Tax Court held that a couple was not entitled to a $145,000 charitable contribution deduction for the alleged donation of more than 20,000 items to Goodwill. The court found the couple’s allegations that they made such contributions implausible. We wonder how many pages the required list of the items was and how much that return must have weighed. That Preparer Practitioner should have been asked to be paid by the pound.
In TC Memo 2017-79 (Bulakites) the Tax Court held that an insurance consultant wasn’t entitled to alimony deductions that exceeded the amount in his separation agreement and sustained the IRS’s disallowance of his unsubstantiated deductions for interest and other expenses; the court sustained accuracy-related penalties, rejecting his attempt to blame Turbo Tax for his mistakes. Interestingly, had he used a Tax Preparing professional he probably wouldn’t have had to pay the accuracy penalty.
In TC Memo 2017-65 (Penley) the Tax Court held that a couple can’t deduct losses from their real estate activities because the husband wasn’t a real estate professional, finding that the couple didn’t sufficiently substantiate their claim that the husband worked more hours in his real estate activities than in his full-time employment. Penley claimed he worked 10-12 hours every Saturday & Sunday, and 4-6 hours every week day on a rental property, in addition to a regular full-time job in another field. Even having a hand-written calendar supporting these hours, the court found it not only unreliable, as his total work hours were 13 hours daily according to the calendar every single day for 365 days. We have trouble understanding why the court did not believe him!
In TC Summ. Op. 2017-2 (SAS) the taxpayer attempted to deduct legal fees related to suing a former employer as “Negative Other Income”. The court determined that the expenses were employment related 2% miscellaneous itemized deductions that should be deducted as itemized deductions, subject to various limitations.
We hope you enjoyed our review of cases from 2017! Whether you are a business, individual, or non-profit – feel free to reach out to us with any follow-up questions. With one call or email we will provide you with professional, complimentary advice – no obligation. Just contact us at firstname.lastname@example.org, or call (212) 397-2970 and we will be happy to help you and answer your questions.