Case Summaries

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). 

The decedent executed a will almost a decade before he died without amending it after executing it.  The will provided that the decedent's residuary estate would pass to his first wife with her children named as alternate beneficiaries.  The decedent's wife pre-deceased him and he remarried and then died before his second wife.  The surviving spouse claimed an intestate share of the estate under the state (AL) omitted-spouse statute (Ala. Code Sec. 43-8-90).  While the trial court held that a beneficiary failed to prove that the decedent had provided for the spouse other than under the will, the state Supreme Court reversed.  The Supreme Court determined that the evidence showed that the second spouse was provided for outside of the will by virtue of the decedent changing the beneficiary designations on life insurance and retirement accounts to the second spouse.  The Supreme Court also noted that the decedent had considered changing his will but did not do so apparently because he believed that the second spouse was sufficiently provided for. Ferguson v. Critopoulos, No. 1130486, 2014 Ala. LEXIS 136 (Ala. Sup. Ct. Sept. 19, 2014).   

The parties entered into a contract for the sale of approximately 50 acres which stated that the "seller to convey 1/2 interest in all mineral rights owned and 100% of the surface rights."  While the seller owned a 50 percent interest in the mineral interests and intended to convey a 25 percent interest to the buyer, but the warranty deed (which neither party reviewed) did not reserve any mineral interests to the seller.  The sale closed on September 19, 2005.  The seller discovered the omission in December of 2009 when friends and neighbors told the seller that they had leased their land for drilling operations.  The seller was told by an oil company "landman" the company "goes by the deed" regarding royalty payments.  The buyer refused to sign a corrected deed, and the seller sued to reform the deed.  The buyer raised the applicable four-year statute of limitations as an affirmative defense.  The trial court granted summary judgment for the buyer.  On appeal, the court reversed on the basis that fact issues remained as to whether the seller should have known by the exercise of reasonable diligence that the deed contained a mistake such that the statute of limitations would bar the seller's suit.  Wigley v. Willems, No. 07-13-00028-CV, 2014 Tex. App. LEXIS 10541 (Tex. Ct. App. Sept. 19, 2014). 

The petitioner and his wife were married in 1975 and divorced in 2006. They agreed to a stipulation of settlement which required the petitioner to make monthly maintenance payments of $1,250 to the ex-wife that would continue until her death or remarriage.  The settlement stated that the payments would be taxable to the ex-wife and deductible to the petitioner.  The stipulation of settlement was incorporated by reference into the divorce decree.  The ex-wife did not receive approximately $39,000 that she should have upon equal division of the couple's retirement accounts, ultimately resulting in a lawsuit with a judgment rendered in 2009 which, in part, resulted in a payment of approximately $50,000 from petitioner's non-IRA accounts.  On his 2009 return, the petitioner deducted over $63,000 for payments to his ex-wife.  The IRS concede that $15,000 was deductible as alimony, but not the balance.  The court agreed with the IRS because the judgment would have to be paid even if the ex-wife had died before payment had been made.  The court noted that the petitioner should have satisfied the judgment via a QDRO by a tax-free transfer from his IRA.  Laremore v. Comr., T.C. Sum. Op. 2014-94.

In a recent Notice, the IRS announced the fee that will be imposed under Obamacare on the issuer of a specified health insurance policy for the policy year ending after September 30, 2014 and before October 1, 2015.  The fee will be $2.08 for each life covered by the plan.  The fee is used to fund the executive branch non-physician organizations that will make decisions about the procedures that Medicare will cover - the so-called "death panels."  IRS Notice 2014-56, I.R.B. 2014-41  

This case involved the merger of two corporations, one owned by the parents and one owned by a son.  The parents' S corporation developed and manufactured a machine that the son had invented.  The son did not patent the invention, and the parents' corporation claimed the research and development credits associated with the machine.  The sons' corporation sold the machine (liquid dispenser) to various users, but the intellectual property rights associated with the machine were never formally received.  The two corporations were merged for estate planning purposes, with the parents' receiving less stock value than their asset ownership value.  The lawyers involved in structuring the transaction "postulated" a technology transfer for significant value from the son to the parents that had occurred in 1987.  The transfer was postulated because there were no documents concerning the alleged transaction executed in 1987.  Instead, the lawyers executed the transfer documents in 1995.  The IRS asserted that no technology transfer had occurred and that the merger resulted in a gift from the parents to the son of $29.6 million for which no gift tax return had been filed and no taxes paid.  The Tax Court agreed with the IRS and the resulting gift tax (at 1995 rates) was $14.8 million.  No penalties were imposed on the taxpayers.  Cavallaro v. Comr., T.C. Memo. 2014-189.

The debtor filed a Chapter 12 bankruptcy petition and his required schedules and statements. During extended confirmation hearings, facts emerged showing that the debtor had concealed his interest in real property and had made other numerous errors. The debtor contended that these errors were oversights. The trustee sought dismissal of the case pursuant to 11 U.S. C. §1208(c)(1). The court agreed, stating, “Considering the facts of this case, it appears to the Court that despite many months under the protections of the Bankruptcy Code, four failed attempts to propose a confirmable plan, and three attempts to file accurate and complete schedules and statements, [the debtor’s] case is getting more convoluted and perplexing with each passing hearing. Meanwhile his creditors are waiting in the wings without payment, as their interests are impaired and collateral is devalued. Accordingly, the Court finds [the debtor’s] repeated delays and failure to propose a confirmable plan unreasonable, without justification, and harmful to his creditors.”  In re Dickenson, No. 13-71283, 2014 Bankr. LEXIS 4067 (Bankr. W.D. Va. Sept. 15, 2014).

The debtor founded a company which supplied computer entertainment software.   The debtor lived a profligate lifestyle and, upon advice of CPAs, got involved in tax shelters which resulted in huge disallowed losses and ultimately resulted in his company's wholly-owned subsidiary filing Chapter 11 bankruptcy which was later converted to Chapter 7.  Ultimately, by 2005, the debtor owed the IRS $25 million, the state of California over $15 million, had limited income and was insolvent.  However, the debtor failed to change his lifestyle in any significant manner.  In 2006, the debtor sold his home for $6.5 million (net) and the state of CA seized the bulk of the funds.  A few days later, the debtor filed bankruptcy and sold a condominium for $3.5 million with the proceeds going to the IRS.  The debtor's confirmed reorganization plan discharged pre-plan confirmation debts and the debtor claimed that the taxes were discharged.  Both IRS and CA claimed that the tax debts were excluded from discharge by virtue of 11 U.S.C. Sec. 523(a)(1)(C) on the basis that the debtor continued to live lavishly in a manner that exceeded their income and that such behavior constituted a willful attempt to evade taxes.  The bankruptcy court agreed that the taxes were not discharged.  The federal district court affirmed.  On appeal, the appellate court reversed on the basis that it could not be shown that the debtor was not shown to have the specific intent to evade the taxes.  The mere fact that expenses exceeded income is insufficient, by itself, to establish a specific intent to evade tax.  The appellate court remanded the case for an application of the specific intent standard to the facts.  Hawkins v. California Franchise Tax Board, et al., No. 11-16276, 2014 U.S. App. LEXIS 17925 (9th Cir. Sept. 15, 2014).

In 2006, the plaintiff sought to have the Environmental Protection Agency (EPA) to require pesticide labels to list 374 inert chemicals that "have been determined to be hazardous under other environmental laws and regulated as such by the EPA."  The EPA didn't respond by 2009, so the plaintiff sued for an unreasonable delay in violation of the Administrative Procedures Act.  Shortly thereafter, the EPA issued an advance notice of proposed rulemaking declaring its intent to address the issue inert ingredients, but that EPA was not committed to any particular outcome for rulemaking.  The EPA then motioned to dismiss the plaintiff's case for mootness.  The case was dismissed.  The EPA then took no action for over four years, and the plaintiff sued for unreasonable delay.  The EPA then informed the plaintiff that it was looking at different approaches to the issue and would not adopt rules requiring the listing of inert ingredients.  The EPA motioned for dismissal, but the plaintiff claimed that the issue of unreasonable delay meant that the case could not be dismissed for mootness.  The court dismissed the case, noting that the EPA never committed to any advance notice of proposed rulemaking.  Thus, all action on the plaintiff's complaint was terminated.  Center for Environmental Health, et al. v. McCarthy, No. 14-cv-01013-WHO, 2014 U.S. Dist. LEXIS 130459 (N.D. Cal. Sept. 15, 2014). 

The plaintiff, a minor, sued the state of Alaska violations of the state's alleged duty to protect the atmosphere under the "public trust" doctrine.  While the court held that the plaintiff had standing, the court, in affirming the lower court, dismissed the plaintiff's claim that asked the court to establish specific standards for carbon dioxide emissions and implement reductions to meet those standards.  Those, claims, the court noted, involved political questions fit for the legislative functions of elected representatives and were not proper claims for the court to consider.  Kanuk v. Alaska, No. S-14776, 2014 Alas. LEXIS 192 (Alas. Sup. Ct. Sept. 12, 2014).       

The petitioner and his wife were divorced in 2010 and, as part of the settlement, the petitioner's former wife quitclaimed her 50 percent interest in the former marital home to the petitioner.  The petitioner claimed a long-term homeowner credit on his 2010 return and the IRS denied the credit because he had not "purchased" the home as defined by I.R.C. Sec. 36(c)(3).  The court agreed.  The transfer of the interest in the home was incident to a divorce and the petitioner received a carry-over basis in the home as to that interest which is a prohibited manner in which a home can be acquired and qualify for the credit.  Sullivan v. Comr., T.C. Sum. Op. 2014-89.

Before filing Chapter 12, the debtor allowed the insurance on his combine and header to lapse.  After filing bankruptcy the combine remained uninsured, with a creditor later obtaining forced-place insurance on the combine and header.  Inadvertently, the creditor allowed its lien on all of its collateral to be released without being reimbursed for insurance expenses.  The creditor sought reimbursement of administrative expenses and the court allowed it, with modification, because the cost of insuring the equipment postpetition is among "the actual, necessary costs and expenses of preserving the estate" within the meaning of 11 U.S.C. Sec. 503(b)(1)(A).  In re Jarriel, No. 13-60070-EJC, 2014 Bankr. LEXIS 3938 (S.D. Ga. Sept. 11, 2014). 

The taxpayer was an architect that used a bonus that he received from his architectural firm in 1975 to buy 420 acres of farmland and an old run-down farmhouse.  The taxpayer continued to live in town until 2010.  From time-to-time, he farmed the tillable ground and rented the pasture ground to neighboring farmers for cash rent.  For the tax years at issue, the taxpayer reported substantial losses as a result of deducting expenses related to the farmhouse in addition to expenses related to the farm ground.  The IRS denied the deductions related to the farmhouse.  The farmhouse had never been rented out for cash and family members occasionally lived in the house over the years in exchange for improvements made to the house.  The Tax Court, ruling for the IRS held that the farmhouse-related deductions were not allowed either under I.R.C. Sec. 212 or Sec. 162 because the taxpayer failed to present evidence that he incurred claimed expenses and because  the taxpayer failed to establish the existence of a real estate rental business.  In addition, the Tax Court determined that the taxpayer had failed to establish that the farmhouse was held for the production of income.  On appeal, the court affirmed. The appellate court noted that the taxpayer had not established a profit motive for any alleged farmhouse rental business and did not establish that he ever treated the farmhouse as part of the farm ground (which did involve a business activity).  The appellate court also held that the farmhouse was not property held for the production of income.  Meinhardt v. Comr., No. 13-2924, 2014 U.S. App. LEXIS 17455 (8th Cir. Sept. 10, 2014), aff'g., T.C. Memo. 2013-85

The defendant owned a three-acre property that used to be a quarry but was presently used to convert tree stumps, yard waste and logs into mulch.  The plaintiff township notified the defendant that the mulching activity violated a township ordinance for operating non-permitted mill, warehouse and wholesale uses on the property.  After notice and a hearing, the zoning board determined that the mulching activity violated the ordinance as a manufacturing use.  The trial court affirmed the board's decision on the basis that the raw materials used in making the mulch did not originate on the property and none of the resulting mulch was used on the property.  On further appeal, the appellate court affirmed.  The court determined that the activity was not protected under state (PA) Municipalities Planning Code (MPC) or the right-to-farm act.  The activity failed to meet the definition of "forestry" or "silviculture" under the MPC and did not involve  the production of agricultural crops and commodities.  Likewise, the appellate court determined that the mulching activity was not protected by the right-to-farm law because it didn't fit within that statute's definition of "agricultural activity."  Tinicum Township v. Nowicki, et al., No. 2176 C.D. 2012, 2014 Pa. Commw. LEXIS 440 (Comw. Ct. Pa. Sept. 9, 2014). 

The petitioner and his company were members of an LLC taxed as a partnership.  The partnership experienced financial issues and the petitioner's company inquired of their attorney whether they could contribute promissory notes to the LLC.  The attorney advised the petitioner that the notes would provide basis to the petitioner equal to the face value of the notes.  Based on that advice, the petitioner contributed unsecured promissory notes without any assumption of the LLC's debt.  The notes contained incorrect dates and incorrect values as to amounts payable. The court held that the petitioner's basis in the notes was zero.  There was no evidence that the petitioner was personally obligated to contribute any fixed amount for a specific, preexisting LLC liability. No accuracy-related penalty was imposed.  VisionMonitor Software, LLC v. Comr., T.C. Memo. 2014-182.

This case involved several homosexual couples living in Louisiana (LA) that were   validly married in another state and one homosexual couple seeking to be married in LA.  The LA constitution defines marriage as between one man and one woman and statutory law bars recognition of homosexual marriages contracted in other states.  The LA Department of Revenue also requires homosexual couples lawfully married in other states to certify on their LA income tax return that they are filing as single persons for state income tax purposes.  The plaintiffs claimed that LA law unconstitutionally violated their constitutional rights to equal protection and due process, and that the LA income tax certification violated their free speech.  On the equal protection issue, the court determined that the LA constitutional ban on homosexual marriage was to be evaluated under rational basis review because the U.S. Supreme Court opinion in United States v. Windsor, 133 S. Ct. 2675 (2013)  did not require heightened scrutiny and the constitutional ban on homosexual marriage was rationally related to the legitimate state interest of achieving marriage's preeminent purpose of linking children to their biological parents.  Plaintiffs did not suffer discrimination based on gender because the ban on homosexual marriage applies to both genders equally irrespective of sexual orientation - neither homosexuals nor heterosexuals can marry someone of the same gender.  The LA constitutional and statutory provisions also had no hateful animus because the law furthered the state's legitimate purpose of linking children to an intact family formed by their biological parents, and the state's legitimate interest in safeguarding fundamental social change through democratic consensus rather than the courts.  On the Due Process claim, the court noted that homosexual marriage is not anchored to history or tradition and that no fundamental right guaranteed to everyone is involved.  The court specifically noted that the plaintiffs could not maintain that state law against cousins marrying or polygamy were invalid and admitted that such marriages would have unacceptable "significant societal harms."  Thus, rational basis review was invoked because no fundamental constitutional right was involved.  Under that analysis the LA constitutional and statutory provisions are constitutional.  The LA Department of Revenue requirement did not involve compelled speech, but prescribes conduct necessary to an essential government function of collecting taxes.  Robicheaux, et al. v. Caldwell, No. 13-5090, 2014 U.S. Dis. LEXIS 122528 (E.D. La. Sept. 3, 2014).  

Plaintiff 1 owns property in a Louisiana parish. Plaintiff 2 has an option to purchase that property in the event that it can be used as a solid-waste landfill. In February 2012, the United States Army Corps of Engineers (COE) issued a jurisdictional determination (JD) stating that the property contains wetlands that are subject to regulation under the Clean Water Act. The plaintiffs sued, alleging that the JD is unlawful and should be set aside. The district court dismissed the suit for lack of subject-matter jurisdiction, concluding that the JD is not "final agency action" and therefore is not reviewable under the Administrative Procedure Act (APA). On appeal, the Fifth Circuit affirmed, finding that the JD did not oblige the plaintiffs to do or refrain from doing anything to the property. The court did find that the JD marked the consummation of the Corps' decision-making process as to the question of jurisdiction. However, because no actual legal consequences would flow from the JD, which merely informed the plaintiffs that the property was subject to regulation, it did not constitute reviewable final agency action under the APA. Belle Co., L.L.C. v. United States Army Corps of Engineers, No. 13-30262, 2014 U.S. App. LEXIS 14544 (5th Cir. Jul. 30, 2014).

Under I.R.C. Sec. 501(c)(7), a club organized substantially for pleasure, recreation or another nonprofitable purpose is tax-exempt if no part of the club's earnings inures to the benefit of a private shareholder.  It's under this provision that social clubs (including sororities and fraternities) are tax-exempt.  However, IRS has ruled that an "online sorority" does not qualify to be tax-exempt under the provision.  The IRS said face-to-face interaction was required to achieve tax exemption under the statute.  The sorority did not have any fixed facility where members could meet, and the lack of spending funds for social or recreational purposes was crucial.  IRS said that the face-to-face annual meeting wasn't enough because is was an organizational meeting rather than a social meeting.  Under Rev. Rul. 58-589, commingling of members must be a material part of the organization for the organization to be tax exempt.  In addition, the social organization must simply provide personal growth or other benefits to members - it must focus on social and recreational activities.  Priv. Ltr. Rul. 201434022 (May 29, 2014).

The plaintiff, a landowner, granted the defendant, a pipeline company, an easement across the plaintiffs property to lay a pipeline.  The easement agreement required that installation was to occur via underground boring so as to preserve the plaintiff's trees.  The defendant hired a construction company to build and lay the pipeline but did not tell the company of the boring requirement.  As a result, the company cut many trees and bulldozed the ground in the easement area.  The plaintiff sued for breach of contract and trespass and the jury held the defendant liable on both claims.  As for trespass, the jury awarded $288,000 to the plaintiff for the intrinsic value of the destroyed trees.  On the breach of contract claim, the plaintiff was awarded $300,000 as restoration damages (the estimated cost to restore the property to the condition that the property would have been in but for the breach).  On appeal, the defendant claimed that restorative damages were inappropriate due to the permanent nature of the damage and, as a result, the proper measure of damages was diminution in the land's value.  The appellate court noted that the parties had agreed that the damages were permanent and that the damages would also be classified as permanent because the restoration costs exceeded the diminution in the property's fair market value by a disproportionate amount.  As such, the contract damages were $3,000 rather than $300,000.  However, the court upheld the damage award of $288,000 for the intrinsic value of the destroyed trees (aesthetic and utilitarian value).  Wheeler v. Enbridge Pipeline (East Texas), L.P., No. 13-0234, 2014 Tex. LEXIS 767 (Tex. Sup. Ct. Aug. 29, 2014).     

The defendants are equine professionals that provided horse training services to the plaintiffs and acted as the plaintiffs' agent and broker in purchase/lease transactions involving horses.  Over an approximately three-year period, the parties engaged in numerous transactions involving the sale/lease of various horses resulting in the plaintiffs claiming that the defendants' representations didn't match reality with respect to the various horses at issue.  The plaintiffs' claims involved 34 alleged acts of negligence and 14 acts of negligent misrepresentation.  The defendants moved for summary judgment.  On the negligent misrepresentation claims, the defendants claimed that the alleged misrepresentations were not statements of fact but merely opinion, and that some were barred by the statute of limitations.  The court agreed as to the negligent misrepresentation claims and granted the defendants' motion for summary judgment.  However, the court denied the defendants' motion as to the claims based strictly in negligence.  Olympic Dreams, LLC v. Clark, et al., No. 3:11CV01103(AWT), 2014 U.S. Dist. LEXIS 120064 (D. Conn. Aug. 28, 2014).   

Two sons (acting as an LLC) entered into a contract with their parents under which the sons agreed to purchase the parents’ farm, including their home, for $100,000. The contract was apparently drafted to protect the family farm from future Medicaid claims in the event the parents had to go to a nursing home. The sons made a $20,000 down payment, and then used the rental income to make the $5,000 yearly payments due under the contract. They also paid the real estate taxes and maintained the property. The parents continued to live in the house. Three years after the contract was signed (and one year after the father began suffering from dementia), the parents sued the sons, asking the court to declare the contract null and void based upon undue influence. The district court granted relief to the parents (the father was not actively involved in the lawsuit because of his health), finding that the sons had a confidential relationship with the parents and that they had placed undue influence on them. On appeal, the court reversed, finding first that no confidential relationship existed between the sons and their parents. Such a relationship, the appellate court said, did not arise simply because of a blood relationship.  This finding was in spite of the fact that purpose of the confidential relationship rule (providing a presumption of undue influence) is not so much to afford protection to (in this case) the parents against the consequences of undue influence as it is to afford the parents protection against the consequences of voluntary action on their part induced by the existence of the relationship between the parents and their sons.  At the time the contract was signed, the parents were of sound mind and did not rely on their sons for the management of their daily affairs.  There was no evidence that the sons had a dominating influence over their parents so as to find a confidential relationship. Because there was no confidential relationship, the court found that the parents did not receive a presumption that their sons had acted with undue influence. The court then found that the parents failed to prove the four elements of undue influence: (1) grantor was susceptible; (2) opportunity to effect wrongful purpose; (3) disposition to influence unduly; and (4) result clearly appears to be the effect of undue influence. The court found that the evidence failed to prove that the sons induced their parents to sign the contract by undue influence.  The court did reform the contract to grant the parents a life estate in the house and outbuildings, and to require the sons to provide a suitable house in town for them if they were to both leave the farm. Koehn v. Koehn Bros. Farms, LLC, No. 13-1036, 2014 Iowa App. LEXIS 867 (Iowa Ct. App. Aug. 27, 2014).

In Announcement 2002-18, the IRS took the position that frequent flyer miles that an are awarded to a taxpayer in exchange for purchases are only taxable if they are converted to cash, or are changed to compensation paid in the form of travel or other promotional benefits (or in situations where such benefits are used for tax avoidance purposes).  In this case, the Tax Court held that the receipt of points that a bank issued to the petitioner which were then redeemed to buy a plane ticket were includible in income.  The court pointed out that the points were a non-cash award for the petitioner opening a bank account with the bank and were really in the nature of interest or money and that Notice 2002-18 didn't apply.  Shankar, et al. v Comr., 143 T.C. No. 5 (2014).

Plaintiff seed companies filed an action against the County of Kauai, seeking to invalidate and enjoin enforcement of Kauai County Code § 22-22 (2013) (Ordinance 960), relating to pesticides and genetically modified organisms (GMO). Generally, the provision (which was originally set to take effect August 16, 2014, but was delayed until October 1, 2014) required commercial agricultural entities to: issue weekly and annual reports regarding their use of "restricted use" pesticides and their possession of GMOs and to establish pesticide buffer zones between crops to which “restricted use” pesticides were applied and surrounding properties. The plaintiffs argued that the law was preempted by state and federal law and that it imposed burdensome operational restrictions violating their due process and equal protection rights. They also alleged that the buffer zone requirement would result in “takings” without just compensation. On motions for summary judgment, the court ruled that Ordinance 960 was preempted by state law and was, therefore, invalid. The court stated that its decision “in no way diminishes the health and environmental concerns of the people of Kauai… [but] simply recognizes that the State of Hawaii has established a comprehensive framework for addressing the application of restricted use pesticides and the planting of GMO crops, which presently precludes local regulation by the County.” The court did not find that the Ordinance was preempted by federal law. It also did not need to rule on the constitutional claims since state preemption invalidated the law. Syngenta Seeds v. County of Kauai, NO. 14-00014 BMK, 2014 U.S. Dist. LEXIS 117820 (D. Haw. Aug. 23, 2014).

The petitioner had a house built in Wichita, Kansas and moved in to it in November of 2009.  She had previously owned a different home in Wichita, but sold it in 2004 due to job issues and moved in with her daughter.  In 2005, the petitioner resumed employment with her prior employer with her post of duty considered to by in California.  In 2007, the petitioner bought a membership in an R.V. park in California and purchased a fifth-wheel (trailer) that was placed on a lot in the R.V. park.  She lived in the trailer while working in California.  On her 2009 return, the petitioner claimed a first-time homebuyer tax credit and IRS denied the credit due to the petitioner's ownership interest in and use of the trailer.  The IRS also imposed an accuracy-related penalty.  However, the court determined that the trailer did not meet the definition of "principal residence" under I.R.C. Sec. 36(c)(2) because the trailer was not "affixed" to the land under state (CA) law and, thus, did not meet the requirement of being a fixture under local law contained in Treas. Reg. Sec. 1.121-1(b)(1) (which governs for purposes of I.R.C. Sec. 36).  Accordingly, the court allowed the first-time homebuyer tax credit.  Oxford v. Comr., T.C. Sum. Op. 2014-80.