Annotations - Last 30 Days

The petitioner was a recreational gambler who incurred substantial gambling losses.  The court sustained the denial of gambling-related deductions, and even denied more gambling loss-related deductions than IRS asserted, because the petitioner failed to substantiate the losses.  While the petitioner submitted "cash submitted" and "cash recycled" documents as evidence of losses, the petitioner's documents and other evidence did not show how much money she left with daily.  Burrell v. Comr., T.C. Memo. 2014-217.

For deaths in 2010, the federal estate tax was inapplicable.  That also meant that a carryover basis applied to estate assets in the hands of an heir.  However, the Congress retroactively reinstated the estate tax, but an executor could elect to not have the estate tax apply with a modified carryover basis then applying to estate assets.  The election was to be made via Form 8939 on or before Nov. 15, 2011.  IRS later granted limited relief from that deadline in accordance with Notice 2011-66.  Here, a late Form 8939 was filed and the estate sought an extension of time to refile Form 8939 to make the election and allocate basis to eligible estate property.  The IRS granted the estate a 120-day extension of time to refille From 8939.  Priv. Ltr. Rul. 201442019 (Jul. 7, 2014).  In separate guidance, the IRS denied an estate's request for an extension of time to make the I.R.C. 1022 election to allocate basis.  The executor claimed that the U.S. Postal Service lost the mailed Form 8939.  The IRS noted that the estate couldn't prove that the Form was mailed by either registered or certified mail, so the "mailbox rule" didn't apply.  Priv. Ltr. Rul. 201442015 (Jul. 15, 2014). 

While married, the decedent (who was an Arizona resident) engaged in planned sexual relations with a woman who was not his wife for the express purpose of allowing the woman to conceive a child. The woman gave birth to the child in 1994. The decedent maintained infrequent phone contact with the mother of the child throughout the remainder of his life. He died in Arizona in 2011, owning a one-half interest in an Iowa farm. The decedent’s wife (who had also only maintained infrequent phone contact with the decedent from 1996 until his death) filed a petition in the ancillary Iowa action seeking a declaration that the child born in 1994 was not an heir of the decedent. The child filed a motion for summary judgment based upon an Arizona paternity order declaring that the decedent was his father. The district court denied summary judgment to the son, finding that he had to prove both paternity and recognition by his father. After a trial, the district court denied the spouse’s petition and ultimately found the son to be an heir. On appeal, the court affirmed. Iowa Code §633.222 states that a child can inherit from his biological father if (1) the evidence proving paternity is available during the father’s lifetime OR (2) the child has been recognized by the father as his child. Nonetheless, the court ruled that Iowa case law, including a 1989 Iowa Supreme Court case, In re Estate of Evjen, 448 N.W.2d 23 (Iowa 1989), “deviates from the plain language of the statute in interpreting the ‘or’ to mean ‘and’” and that it was “bound by this long-standing supreme court precedent.” As such, the court found that both paternity and recognition had to be established for the son to be an heir. Even so, the court found that the spouse had failed to carry her burden to show that the decedent had not recognized the child to be his son. Mohr v. Mohr, No. 13-1422 (Iowa Ct. App. Oct. 15, 2014).

The petitioner worked full-time as a quality assurance engineer and also had an activity in which he sold sports memorabilia.  On his return for the year in issue, he filed separate Schedule Cs for his engineering business and his sports memorabilia activity.   For the sports activity, he showed no income, no costs of good sold and about $20,000 of expenses.  He had no separate bank account, no inventory system or accounting system or any books and records for the sports memorabilia activity.  The IRS disallowed the losses from the sports memorabilia activity.  The court upheld the disallowance based on the nine-factor analysis contained in Treas. Regs. Sec. 1.183-2(b).  Akey v. Comr., T.C. Memo. 2014-211

Here, the decedent's estate wanted to make an alternate valuation election pursuant to I.R.C. Sec. 2032.  However, the estate didn't file the estate tax return within a year of the due date for the return.  Thus, I.R.C. Sec. 2032(d)(2) was not satisfied and the estate was not eligible for an extension of time to file.  Priv. Ltr. Rul. 201441001 (Jun. 6, 2014). 

The petitioner, a real estate agent, that didn't customarily make loans and didn't hold himself out as a lender.  Over a 30-year period, the petitioner made loans on less than ten occasions.  The petitioner did not advertise lending services, did not have a separate office for lending services, or maintain separate books and records for loans that he made.  The petitioner made an unsecured loan, made no background check of the borrower and did not seek financial information from the borrower.  Ultimately, the borrower ceased paying on the loan.  The petitioner merely asked for payment and did not take any further action.  The borrower filed bankruptcy, but the petitioner did not file a proof of claim with the court   On his return, the petitioner claimed a deduction for a business bad debt (i.e., ordinary deduction that offsets ordinary income).  IRS disallowed the deduction because they claimed it wasn't incurred in connection with the petitioner's business as a real estate agent.  The court agreed with the IRS, noting that the petitioner was not in the business of lending money and the debt was not a worthless debt incurred in the petitioner's trade or business.  Thus, debt was a nonbusiness bad debt deductible only as a capital loss that is subject to the limitation of $3,000 annually as an offset to ordinary income).  Langert v. Comr., T.C. Memo. 2014-210.

The petitioner was into banking and real estate development. He then joined forces with another person, remediated a chemical plant, and began importing ammonia and other chemicals.  The business structure for this venture was a C corporation.  The petitioner ultimately wanted to sell the business, but had large gains trapped inside the C corporation.  The petitioner sold the assets of the business and placed $1 million of the proceeds in his personal bank account.  The corporate stock was sold to an intermediary that was a shell company of the buyer, without any reduction for the BIG tax.  The shell company then sold the stock to a legitimate buyer and transferred the net proceeds of the sale to the petitioner.  The shell company offset the gain on the stock sale with the end result that the tax liability was the petitioner's.  The court noted that the transaction was a listed transaction and that petitioner was fully liable for the tax on sale of the assets and stock.  The petitioner was also found to have violated the state (TX) fraudulent transfer statute.  The court noted that other parties may also be liable for the tax liabilities of the transaction via joint and several liability and that the petitioner could seek contribution from them.  Cullifer v. Comr., T.C. Memo. 2014 T.C. Memo. 208. 

The petitioner installed a swimming pool in his backyard allegedly for medical purposes because his doctors told him he needed to lose weight.  The petitioner deducted the cost of the pool to the extent it increased the value of his home.  The IRS disallowed the deduction and the court agreed.  The court noted that the only substantiation of the medical purpose of the pool was the taxpayer's self-serving testimony that his doctors told him to lose weight.  As such, the pool was not medically required and was not primarily for the treatment of the petitioner's medical ailments.  Le Beau v. Comr., T.C. Memo. 2014-198.

The petitioner claimed deductions for cost of goods sold.  The petitioner installed flooring by using his own materials and with materials that his customers supplied.  Some receipts had been lost in a flood, and others were simply missing. The IRS disallowed deductions that couldn't be substantiated and the court agreed with the IRS position.  Nguyen v. Comr., T.C. Memo. 2014-199. 

The petitioner's son died and the petitioner received $75,000 on account of the son's death.  The petitioner (and wife) used the insurance proceeds to establish a scholarship fund in honor of the son.  The fund was set up as in irrevocable trust, except that the petitioner reserved the right to amend the trust if funds would be distributed to students solely for educational purposes.  The trust was not a tax-exempt charity.  The trust made payments to three high school students from its investment income.  The petitioners did not include the investment income in their gross income, but claimed the payments to the students as charitable deductions.  The IRS disallowed the charitable deduction attributable to the amounts that originated in the trust.  The court denied the charitable deduction because the trust was irrevocable.  The petitioner did not need to report the trust income nor was the petitioner entitled to any charitable deduction attributable to payments the trust made.  In any event, no charitable deduction would be allowed because the payments did not qualify as charitable contributions.  The amounts were paid directly to the students who were not charitable donees.  In addition, there was not contemporaneous written acknowledgement of the "charitiable" contributions.  Kalapodis v. Comr., T.C. Memo. 2014-205. 

The petitioner formed an S corporation for his cabinet business and utilized it for over twenty years until its liquidation.  Later, a "pure trust" was formed with the cabinet shop's land, building, equipment and inventory transferred to it.  A series of transactions ensued with the ultimate result that petitioner did not report any tax from the transactions.  The IRS asserted, and the court agreed, that the trust was a sham and that the petitioner was taxable on lease payments.  Wheeler v. Comr., T.C. Memo. 2014-204.

In 2009, President Obama joked about the President having the power to direct IRS audits of particular individuals or groups.  Later, in 2010, a White House Senior advisor told reporters at a press conference that Koch Industries, Inc. paid no taxes.  Based on these developments, various member of the Congress asserted that the advisor's statement was based on illegally obtained confidential tax return information that had been disclosed to the White House.  In response, the Treasury Inspector General for Tax Administration (TIGTA) announced that it was starting an investigation.  Ultimately, TIGTA never released a report and the plaintiff brought a Freedom of Information Act (FOIA) request seeking records relating to any authorized disclosure of tax return information.  However, TIGTA neither confirmed or denied whether they conducted an investigation, asserting certain exemptions from FOIA in a "Glomar" response.  TIGTA claimed that it couldn't acknowledge whether an investigation into the illegal release of taxpayer information to the White House occurred because such acknowledgement would constitute disclosure of tax return information.  The court disagreed, determining that the mere existence of an investigation records of investigations into unlawful disclosures of return information of unnamed parties was not, itself, return information compiled by the IRS in connection with its determination of a taxpayer's liability for a violation of the Internal Revenue Code.  The court also noted that TIGTA had waived reliance on other FOIA exemptions by publicly acknowledging that an investigation existed.  The court remanded the case to TIGTA for a determination of whether the contents of the officially acknowledged records may be protected from disclosure by virtue of a FOIA exemption.  Cause of Action v. Treasury Inspector General for Tax Administration, No. 13-1225 (ABJ), 2014 U.S. Dist. LEXIS 188825 (D. D.C. Sept. 29, 2014).   

One set of defendants owned and maintained  an oil pipeline that carried heavy crude oil from Canada to Indiana. Another defendant was hired by the owners to inspect the pipeline. The inspector reported that there were indications of "crack-like" features that were 12.5% to 25% of the wall thickness depth. Several years later, the inspector discovered that its inspection tool had been underestimating the actual depth of crack fields. It revised its tool to eliminate this problem, but did not reanalyze the data for the pipeline at issue. Five years after the inspection, the pipeline ruptured and began to leak. The leak was not addressed for 17 hours. The accident resulted in the release of over 20,000 barrels of diluted bitumen, or heavy crude oil. The oil flowed into a creek, which ran across the northeast side of property owned by the plaintiff. On motion for summary judgment, the plaintiff alleged that the inspector was negligent in performing the 2005 inspection of the pipeline and that the pipeline owners would have repaired the crack that later caused the rupture if they had been supplied with accurate data at that time. In granting summary judgment for the inspector, the court found that the plaintiff did not show that the inspector owed the plaintiff a duty of care. The inspector had a very limited connection to the plaintiff and the inspector did not undertake the pipeline owners’ duty to maintain the pipeline. There was also no evidence that the pipeline owners chose to forego maintenance activities based on the inspection. The court also found that there was no evidence that the inspector’s actions caused the rupture of the pipeline. Thus, the plaintiff did not show that the inspector’s actions were a but-for cause of its injuries. Fredonia Farms v. Enbridge Energy,  No. 1:12-CV-1005, 2014 U.S. Dist. LEXIS 140623 (W.D. Mich. Oct. 3, 2014).


The defendant owned cattle in Wyoming. His brother owned land adjacent to Bureau of Land Management (BLM) property. The defendant did not lease land from his brother, nor did he or his brother have a grazing permit from the BLM. Nonetheless, the defendant's cattle grazed on the BLM property after a BLM cattle guard in a road was worked on but not completed and the fence on each side was left down.  Wyoming is a "fence-out" state and, thus, BLM bore initial responsibility for keeping the defendant's cattle out.  The defendant paid the initial $200 fine, but was later accused of additional grazing trespass violations.  After issuing numerous administrative trespass notices and levying fines against the defendant, the BLM asked the United States Attorney to file criminal charges.  The defendant represented himself, and after a jury trial, the defendant was convicted of one count of unlawful use or occupation of public lands, in violation of 43 C.F.R. § 2920.1-2(a) and (e) and two counts of allowing his livestock to graze without authorization on public lands, in violation of 43 C.F.R. § 4140.1(b)(1)(i). The district court sentenced him to two years of supervised probation for each count, to be served concurrently, together with a $3,000 fine. On appeal, the court affirmed, finding that the government presented overwhelming evidence to support the convictions. Lumber, farm equipment, vehicles, and fencing material were left on the public property, as was a vehicle with license plates registered to the defendant. The defendant failed to remove the property even after multiple warnings. The defendant’s due process rights were not violated. He had an opportunity to represent himself and to be heard at trial.  United States v. Jones, No. 13-8093, 2014 U.S. App. LEXIS 18928 (10th Cir. Wyo. Oct. 3, 2014).

Before 2005, the state did not tax transfers at death.  In 2005, however, the legislature enacted a "stand-alone" estate tax on a prospective only basis that mirrored the federal estate tax (where QTIP property is subject to tax in the surviving spouse's estate).  The state then adopted a regulation that taxed QTIP assets when the surviving spouse after the legislative change but where the first spouse had died before the effective date of the 2005 legislative change.  The Washington Supreme Court later invalidated the regulation by interpreting "transfer" narrowly and holding that the only "transfer" subject to tax occurred at the time the QTIP trusts at issue in the case were created.  In re Estate of Bracken, 175 Wash.2d 549, 290 P.3d 99 (2012).  The state of Washington amended its Estate and Transfer Tax Act in 2013 to provide that the tax on QTIP trust assets upon the death of the surviving spouse applies prospectively and retroactively to all estates of decedents dying on or after May 17, 2005.  In the case at issue, the question was whether the 2013 law's retroactive application was permissible insomuch that retroactive application taxed interests that had previously not been taxable.  The court upheld the constitutionality of the law, finding that it did not violate either the separation of powers doctrine, due process clause or the impairment of contracts clause.  In re Estate of Hambleton, No. 89419-1, 2014 Wash. LEXIS 773 (Wash. Sup. Ct. Oct. 2, 2014).        

The petitioner, as described by the court, was a well-renown, successful artist that lost money.  The IRS denied the deductibility of her losses on the basis that she was not engaged in the art activity with a profit intent and, alternatively, if she was found to have a profit intent, that the claimed deductions should be disallowed because they weren't necessary business expenses.  However, the court determined that the petitioner was engaged in the art activity with a profit intent based on the nine factors set forth in the I.R.C. Sec. 183 regulations.  The petitioner conducted the activity in a business-like manner, was an expert artist that understood the economics of her business, devoted substantial time to the activity, had some reasonable expectation of appreciation in value of the artwork, had success in a substantially related field that could positively impact her activity, had many years of losses but this factor alone did not outweigh her honest profit intent, had only very occasional profits, but this factor did not weigh much in the favor of the IRS, and did not use her activity to shield income from a primary business or occupation.  Crile v. Comr., T.C. Memo. 2014-202.

The petitioner's mother died and his father asked the petitioner to get all of the personal effects out of the house.  The petitioner did so and donated the items to charity along with some clothing items belonging to himself and his children.  He also donated various electronic equipment to the same charity.  The charity (a qualified charity) gave the petitioner blank tax receipts signed by "Jose" and "Amado."  The taxpayer filled in the amount of the donations and claimed $27,767 in non-cash charitable contributions on his return for the year at issue.  The petitioner claimed that he used Salvation Army guidelines for valuing the donated items, but many of the items he actually valued at amounts exceeding the high-end range of the guidelines for that property.  The court noted that the tax receipts did not contain a description of any of the property and were actually signed before the property was donated.  The court determined that the substantiation requirements had not been satisfied.  The petitioner also never showed his spreadsheet calculations of value to the charity for review.  The court determined that the petitioner had failed the "contemporaneous written acknowledgement" requirement for gifts over $250.00.  The court also imposed a 20 percent accuracy-related penalty.  Smith v. Comr.,  T.C. Memo. 2014-203.

The debtor operated a small dairy farm in New York. In an attempt to keep the struggling farm operational, the debtor obtained three loans from the Farm Service Agency (FSA), granting the FSA a security interest in the debtor's real and personal property, including cattle. During a period in which FSA held first lienholder position and had an outstanding loan valued at $160,530.52, the debtor (without informing FSA) sold cattle and distributed the proceeds to other creditors.  He also purchased $40,000 in cattle and gave the seller a lien on the cattle. When the debtor sought to obtain another loan from FSA, the agency discovered that over a two-year period, the debtor had sold 113 cattle, resulting in total sale proceeds of $84,605.66. FSA alleged that the debtor’s conduct constituted a conversion that was “willful and malicious.” It thus sought to have $64,325.35 of the debtor’s debt excepted from discharge pursuant to 11 U.S.C. § 523(a)(6). The debtor argued that the FSA had impliedly consented to the sales because of the nature of the supervised credit relationship between the debtor and FSA. The court sustained FSA’s request, finding that the debtor’s actions were deliberate and intentional. The court also found that the injurious acts were done "in knowing disregard" of FSA's rights because the loan documents were clear. The court held that although the debtor did not use the proceeds to reap a personal financial gain, he did use the proceeds to favor certain creditors and elevated such creditors' rights above those of FSA. This conduct led the court to infer malice. In re Shelmidine, No. 13-60354, 2014 Bankr. LEXIS 4154 (Bankr. N.D.N.Y. Sept. 30, 2014).


In this technical advice to an IRS agent, the IRS National Office recommended that the taxpayer's exempt status be revoked.  The agent was examining the organization's returns and as part of the examination looked into the conduct of the organization.  The taxpayer was a exempt public charity originally formed to operate a private school.  However, the organization later amended its organizational documents to allow it to own and lease schools in specific parts of the state to non-exempt charter schools.  The IRS agent took the position that the taxpayer's function as a landlord were not exempt purposes under I.R.C. Sec. 501(c)(3) and sought to revoke the taxpayer's exempt status.  The agent sought further review by the IRS National Office.  The National Office suggested revocation of the taxpayer's exempt status.  The National Office noted that the lessees were not exempt entities, and while the rents were below fair market value, they weren't sufficiently low as the taxpayer was able to recover more than costs.  While the taxpayer conducted an educational summer seminar (exempt activity) it was only a minor part of its overall activity.  Tech. Adv. Memo. 201438034 (May 13, 2014).

The taxpayer bought land in 2003 and started a farming operation at that time, later setting up a farm checking account and writing a business plan.  The taxpayer originally started raising cattle, but later switched to growing hay and horse boarding, raising and training.  The taxpayer also used some of the property as a vineyard.  Ultimately, the farming operations generated losses that the defendant disallowed the taxpayer's Schedule F deduction.  Based on the nine-factor analysis of I.R.C. Sec. 183, the court determined that the taxpayer was not engaged in the farming activity with the required profit intent.  The defendant also added the 100 percent penalty for willful attempt to evade tax, but the court determined that the penalty did not apply due to lack of purposeful acts beyond mere negligence.  However, the court did impose the substantial understatement penalty.  Deboer v. Department of Revenue, No. TC-MD 140027N, 2014 Ore. Tax LEXIS 168 (Ore. Tax. Ct. Sept. 25, 2014). 

The petitioner was an abused spouse in a dysfunctional marriage.  The petitioner divorced in 2008 and didn't file a separate return for 2007.  However, for 2007, a join return was e-filed with only the electronic authorization signature of the petitioner's spouse.  The petitioner also received IRA distributions in 2007 before reaching age 59 and one-half for which a separate return was not filed.  The court determined that the petitioner did not intend to file a joint return for 2007 and the return that was filed was not valid.  Thus, the petitioner was not eligible for innocent spouse relief.  Sorrentino v. Comr., T.C. Sum. Op. 2014-99. 

On April 17, 2014, the IRS issued a notice of deficiency to the petitioner for tax years 2011 and 2012.  The petitioner timely sent two separate but identical petitions to the U.S. Tax Court in dispute of the notice.  One petition was sent by FedEx First Overnight and was received by the court on Jul. 17, 2014.  The other petition was sent by certified mail and was mailed on Jul. 16, 2014, and received by the court on Jul. 21, 2014.  While the petition mailed by certified mail satisfied the timely mailing rules of I.R.C. Sec. 7502, FedEx First Overnight is not on the IRS list of designated private delivery services providing protection under the timely mailing rules of I.R.C. Sec. 7502.  The IRS filed a motion to close the case assigned a docket number based on the U.S. mailed petition on the grounds that it was duplicative of the petition mailed by FedEx.  The result, had the motion been granted, would have been to dismiss the entire action for lack of jurisdiction because the FedEx petition was not timely mailed under IRS rules.  The court denied the motion and instead dismissed the petition based on the FedEx filed petition.  The court noted that the petitioner should be granted "the greatest protection under section 7502."  Bulakites v. Comr., No. 16719-14 and 16878-14 (filed Sept. 24, 2014). 

The petitioners, a married couple, incurred a large net operating loss (NOL) that they wanted to carry forward.  However, they didn't timely file the necessary election to do so in accordance with I.R.C. Sec. 172(b)(1) and (3) (forego the two-year carryback to be able to carry forward).  Upon asking IRS what they should do, IRS informed them to amend the return to carryback the NOL and then carry it forward.  The petitioners did so and then wanted the IRS to credit the balance of the NOL forward.  However, the IRS simply refunded the balance of the NOL to the petitioners.  As a result, the petitioners had a tax deficiency for the following year and got assessed interest.  Upon consulting the taxpayer advocate, the petitioners were told that it was their problem and that IRS did not err.  The court noted that taxpayers owe underpayment interest beginning on "the last date prescribed for payment", which is the due date of the return (Apr. 15 of the following year) without regard to whether a return is actually filed.  The court also noted that IRS does not owe interest on an overpayment before the return is filed.  In this case, the court noted that the IRS did not owe interest because the return was deemed untimely filed and the IRS refunded the overpayment within 45 days after the return is filed, citing I.R.C. Sec. 6611(e)(1).  As for the IRS "advice," the court noted that the IRS was not acting in a "ministerial" or "managerial" fashion and, thus, interest abatement was not possible.  Larkin v. Comr., T.C. Memo. 2014-195. 

The petitioner transferred several patents to a corporation of which he owned 24 percent.  The balance was owned by a related party and the petitioner's friend.  The petitioner controlled the corporation and reported the royalty income received from the corporation for the patents as capital gain.  The IRS challenged that characterization and the court agreed with the IRS because the petitioner failed to transfer all of the substantial rights associated with the patents due to his control of the transferee corporation.  Cooper v. Comr., 143 T.C. No. 10 (2014).

A married couple farmed with their son.  They all banked with the plaintiff, but the parents had their own financial statements and executed their own promissory notes and security agreements.  The parents also had their own checking account separate from the son's checking account.  The parents did not co-sign or guarantee the son's indebtedness to the plaintiff and the son didn't co-sign or guaranty the parents' debt, even though it was the plaintiff's practice to have all parties engaged in an informal partnership to do so.  The parents and the son owned and operated separate farming and livestock operations, but bought and sold livestock, grain and crops together as well as leased grazing pasture together.  The parents had their own operating line of credit with the bank as did the son.  The son filed bankruptcy, and when the parents and son sold cattle the sale proceeds were deposited into the parents' account and then apportioned between them and their son in accordance with the number of livestock sold that were attributable to the son via different colored ear tags.  This was in accordance with past practice when cattle were sold.  The parents then tried to pay off their debt to the plaintiff, but the plaintiff converted the funds into a cashier's check to be deposited into the son's account and applied to the son's debt with the plaintiff.  Ultimately, the $80,000 in dispute was deposited with the court until proper application of the funds was determined.  The trial court ruled that the plaintiff had filed to establish that the parents had failed to show that the parents had breached  their duty  on their promissory notes, and that the parents were not jointly or severally liable for the son's debts because they were not in a partnership or joint venture with the son.  Thus, the $80,000 was to be applied to the parents' indebtedness.  On appeal, the court affirmed.  On the partnership issue, the court noted that the parents and son intended to be treated as separate owners of similar property, obtained separate financing, maintained separate checking accounts, promissory notes and security agreements, and owned separate equipment and livestock, and filed separate tax returns.  The court also held that there was no express or implied agreement establishing a joint venture.  The court noted that the parents and the son held themselves out as engaged in separate businesses.  Merely sharing equipment and labor was insufficient, by itself, to establish a partnership or joint venture.  Even though the parties jointly owned cattle, the cattle were separately branded.  Heritage Bank v. Kasson, 22 Neb. App. 401 (Neb. Ct. App. 2014).   

The taxpayer was involved in an equipment like-kind exchange program, but property that was acquired in an exchange was not like-kind property to the property that had been given up.  The taxpayer, however, had identified other property during the timeframe for identifying property in a delayed exchange (180 days) and the other property (which was like-kind) was timely acquired.  The IRS noted the I.R.C. Sec. 1031 only requires the like-kind property to be acquired during the replacement period and does not contain any requirement that the taxpayer select which properties will be the replacement property.  The transaction at issue satisfied I.R.C. Sec. 1031.  Tech. Adv. Memo. 201437012 (Apr. 18, 2014).

In this administrative ruling, the IRS said that an IRA (including a Coverdell ESA) contribution is treated as timely made for the current year if the contribution is postmarked on or before the unextended due date for filing the return for that year.  The IRS stated that this is also the case if the payment does not arrive in the custodian's hands by the time of the filing date.  In addition, the IRS said that this would also be the outcome if only a verbal request is made to the IRS custodian that funds be transferred from a non-IRA account.  Priv. Ltr. Rul. 201437023 (Jun. 18, 2014). 

In this case, a trust beneficiary claimed that the trustee willfully breached its fiduciary duties by failing to pursue certain development opportunities with respect to real estate contained in the trust.  The trustee motioned to dismiss the case on the grounds that the beneficiary's case is time-barred by the applicable statute of limitations.  The defendant claimed that the breach of fiduciary duty and gross negligence claims were based on events from 1963-2002 and that a five-year statute of limitations applied to the claims.  The court agreed and dismissed the claims on the basis that the claims had to be brought within five years from the time the claims accrued.  The narrow exception from the five-year limitation only applied in the context of "an express trust that is both continuing and subsisting" which did not apply in this case.  However, the court did not grant the trustee's motion to dismiss the beneficiary's claim of a right to an accounting, and that the trustee's claim for unjust enrichment was not appropriate to rule on when the motion was for dismissal.  Watkins v. PNC Bank, N.A., No. 3:13-CV-01113-TBR, 2014 U.S. Dist. LEXIS 132523 (W.D. Ky. Sept. 22, 2014). 

CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.

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