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Cases of Interest

District Court holds IRS FBAR penalty conduct was capricious, so late payment interest and penalty voided

District Court holds IRS FBAR penalty conduct was capricious, so late payment interest and penalty voided

Moore, (DC VA 7/24/2015) 116 AFTR 2d ¶ 2015-5094 A district court has held that IRS’s conduct in assessing penalties for a taxpayer’s failure to file FBARs (Report of Foreign Bank and Financial Account) with respect to his foreign account was arbitrary and capricious, in violation of the Administrative Procedures Act (APA). As a result, […]

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Supreme Court Holds that Same-Sex Marriage Equality is Constitutional Right

Supreme Court Holds that Same-Sex Marriage Equality is Constitutional Right

Obergefell v. Hodges (Supreme Court 6/26/2015). The Supreme Court, in a 5-4 decision delivered by Justice Kennedy, has held, in a case involving four state-wide bans on same-sex marriage, that the Fourteenth Amendment requires a State to license a marriage between two people of the same sex. And, since same-sex couples may now exercise the […]

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US Supreme Court holds that action for breach of fiduciary duty to monitor 401(k) investments not time-barred

US Supreme Court holds that action for breach of fiduciary duty to monitor 401(k) investments not time-barred

Tibble, Glenn v. Edison International (2015, S Ct) 2015 US No. 13-550 The Supreme Court has held that as long as an alleged breach of the continuing duty to monitor the investments of a 401(k) plan occurred within six years of the time a fiduciary breach suit is brought, the claim is timely. The case […]

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UBS whistelblower Birkenfeld lodges request for return to Europe

UBS whistelblower Birkenfeld lodges request for return to Europe

FORT LAUDERDALE, Fla./ZURICH (Reuters) – Ex-UBS banker Bradley Birkenfeld, a whistleblower in a tax fraud case involving the Swiss bank for which he was awarded $104 million after serving more than two years in prison, has lodged a request to be allowed to return to Europe. I have attached some pleadings recently filed in the […]

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Supreme Court to hear case on federal exchange enrollees’ eligibility for premium credit

Supreme Court to hear case on federal exchange enrollees’ eligibility for premium credit

King v. Burwell, (CA 4 7/22/2014), 114 AFTR 2d 2014-5259114 AFTR 2d 2014-5259 cert granted 11/07/2014 On the same day this past July, two Circuit Courts came to opposite conclusions regarding the validity of the reg that authorizes IRS to provide premium tax credits under the Affordable Care Act (ACA) for insurance purchased on federal […]

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U.S. Supreme Court to hear Obamacare subsidies case

U.S. Supreme Court to hear Obamacare subsidies case

WASHINGTON (Reuters) – The U.S. Supreme Court agreed on Friday to hear a legal challenge to a key part of the Obamacare health law which, if successful, would deprive millions of Americans of tax-credit subsidies to help them afford health insurance coverage. In a one-sentence order, the court said it would take up a case […]

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Court case: Transfer of royalties failed assignment of income and economic substance tests

Court case: Transfer of royalties failed assignment of income and economic substance tests

Salty Brine I, Limited, (CA 5, 7/31/2014) 114 AFTR 2d ¶ 2014-5109 The Court of Appeals for the Fifth Circuit has affirmed a district court’s holding that transfers of royalty interests owned by a partnership, to segregated accounts at an insurance company that were the investment vehicle of life insurance policies owned by companies related […]

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Zwerner case: Jury finds willful FBAR filing failures; penalty could reach 150% of account balance

Zwerner case: Jury finds willful FBAR filing failures; penalty could reach 150% of account balance

Editor’s Note:  I know the attorney representing Mr. Zwerner, and was able to pull and review various pleadings filed in the case. The pleadings which I found interesting are set forth in another blog. Click here for the Justice Department’s release, “Jury Finds Miami Man Owes Civil Penalties For Failing To Report Swiss Bank Account […]

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Third Circuit affirms: Qsub election doesn’t increase shareholder’s basis in S corporation

Third Circuit affirms: Qsub election doesn’t increase shareholder’s basis in S corporation

In R. Ball, etc.,  et al., vs. Commissioner (Court of Appeal 3rd Cir.,2/12/2013) 113 AFTR 2d ¶ 2014-494, the Third Circuit, affirming a Tax Court opinion, has ruled that an election by an S corporation to treat its subsidiary as a qualified Subchapter S subsidiary (QSub) did not increase the basis of the S corporation’s […]

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Tax Court: trust can qualify for real estate professional exception to PAL rules

Tax Court: trust can qualify for real estate professional exception to PAL rules

In Frank Aragona Trust, (2014) 142 TC No. 9142 TC No. 9, the Tax Court has determined that a trust that owned real estate properties and engaged in other real estate activities qualified for the Code Sec. 469(c)(7) exception for real estate professionals and thus wasn’t subject to the passive activity loss (PAL) limitations. In […]

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IRS provides guidance on application of Windsor to qualified retirement plan rules

IRS provides guidance on application of Windsor to qualified retirement plan rules

In Notice 2014-19, 2014-17 IRB, IRS has provided guidance on the application (including retroactive application) of the Supreme Court’s Windsor decision and on the application of IRS’s previous holdings in Rev Rul 2013-17, 2013-38 IRB 201, to qualified retirement plans under Code Sec. 401(a). In Windsor,the Court struck down a key provision in the Defense […]

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Tax Court’s take on one-IRA-rollover-per-year rule is at odds with IRS’s Publication

Tax Court’s take on one-IRA-rollover-per-year rule is at odds with IRS’s Publication

In Bobrow v. Commissioner, T.C. Memo. 2014-21, the Tax Court has ruled that Code Sec. 408(d)(3)(B)’s one-rollover-per-year rule applies to all of a taxpayer’s IRAs, not to each of his IRAs separately. IRS’s position in this case, and the Court’s holding, are at odds with IRS Publication 590, Individual Retirement Accounts. Facts. Alvan and Elisa […]

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Case Alert: District of Columbia Circuit Holds IRS Return Preparer Regulations Invalid

Case Alert: District of Columbia Circuit Holds IRS Return Preparer Regulations Invalid

In Loving v. IRS, (CA DC 02/11/2014) 113 AFTR 2d ¶ 2014-476, the Court of Appeals for the District of Columbia, affirming a district court, has held that IRS lacks statutory authority to promulgate or enforce final regs on standards of practice before it (i.e., Circular 230) for “registered tax return preparers.” The regs would […]

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Special Report: How Germany’s taxman used stolen data to squeeze Switzerland

Special Report: How Germany’s taxman used stolen data to squeeze Switzerland

Special Report: How Germany’s taxman used stolen data to squeeze Switzerland. (Reuters) – In the digital age, pen and paper are useful tools for intrigue. In 2007, Sina Lapour, an assistant to a private banker at Credit Suisse, hand-copied the names of potential tax evaders listed on two of the firm’s internal computer systems. By […]

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Supreme Court to decide whether bankruptcy protection applies to inherited IRAs

Supreme Court to decide whether bankruptcy protection applies to inherited IRAs

The Supreme Court has agreed to review In re Brandon Clark, (2013, CA7), 2013 WL 1729600, cert granted 11/26/2013, which held that a debtor’s inherited IRA may not qualify for a bankruptcy exemption under Bankruptcy Code §522(b)(3)(C). As explained below, the Seventh Circuit decision conflicted with decisions of the Fifth and Eighth Circuits. Thus, in […]

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Case Alert: Wife liable for responsible person penalty despite limited involvement in company

Case Alert: Wife liable for responsible person penalty despite limited involvement in company

The Court of Appeals for the Fourth Circuit, in Johnson v. U.S., (CA 4th November 5, 2013) 112 AFTR 2d ¶ 2013-5452, has affirmed a district court ruling that a sole shareholder of a company was liable for the responsible person penalty even though she had minimal involvement in its day-to-day operations and did not […]

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Case Alert: Taxpayer allowed partial Section 104 exclusion for workers’ compensation claim

Case Alert:  Taxpayer allowed partial Section 104 exclusion for workers’ compensation claim

The Tax Court has held in Simpson v. Commissioner, 141 T.C. No. 10, that a payment made from a corporation to a former employee to settle her workers’ compensation claims wasn’t excludible under Code Sec. 104(a)(1) because the settlement agreement failed to satisfy a key element of the state’s workers’ compensation laws. However, the Court […]

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Payment in STARS transaction demonstrated reasonable prospect of profit

Payment in STARS transaction demonstrated reasonable prospect of profit

In Santander Holdings USA, Inc., v. United States (DC MA 10/17/2013) 112 AFTR 2d ¶ 2013-5403, a district court has concluded that payments which a taxpayer received in a Structured Trust Advantaged Repackaged Securities (STARS) transaction were to be taken into account as pre-tax income to the taxpayer, rather than as a tax rebate, in […]

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U.S. Supreme Court declines to hear online retailers tax case

U.S. Supreme Court declines to hear online retailers tax case

U.S. top court declines to hear online retailers tax case, as reported in Reuters. WASHINGTON (Reuters) – Amazon.com Inc and other online retailers with no physical presence in New York State must go on collecting sales tax after the U.S. Supreme Court on Monday declined to hear a legal challenge to the law that requires […]

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Corporation’s designation of tax payments toward its owners and officers’ liability had to be respected

Corporation’s designation of tax payments toward its owners and officers’ liability had to be respected

The Tax Court has concluded, in Dixon v. Commissioner, (2013) 141 T.C. 3, that while individual taxpayers weren’t entitled to a Code Sec. 31 withheld tax credit, the designation of payments made by a corporation (of which they were owners, officers and employees) towards their individual income tax liabilities had to be accepted by IRS. […]

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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Member CA Bar Member Orange County Bar US Tax Court Attorney