Case Summaries

RP Golf, LLC, et al. v. Comr., T.C. Memo. 2012-282

(petitioner, operator of private golf club, deeded permanent conservation easement to qualified charity “to protect, preserve and defend the property from any development”;  grant of easement made standard recitals and stated that the instrument was the entire agreement of the parties with respect to the easement and that transfer was for “other good and valuable consideration”; petitioner claimed a $16.4 million charitable contribution for the value of the easement donation and attached a signed Form 8283 reporting the easement’s value and basis and statement of appraiser supporting the value; five years after contribution, donee issued letter to petitioner expressing thanks for the gift and stating that it did not provide any goods or services in exchange for the easement; IRS disallowed entire deduction on basis that petitioner did not receive contemporaneous statement indicating that no goods or services received in exchange for easement (as required by I.R.C. §170(f)(8)(B)) even though IRS and petitioner stipulated that petitioner received nothing in return from charity; petitioner argued that easement grant language in deed substantiated contemporaneous requirement; court held for petitioner based on similar facts in Averyt v. Comr, T.C. Memo. 2012-198; court noted that deed language stated that grant was for good and valuable consideration (but that such language was merely boilerplate and had no legal effect for purposes of I.R.C. §170(f)(8)), described the conservation value of the grant, and stated that grant was the entire agreement between the parties (i.e., no goods or services were received in exchange for contribution) court’s opinion reaches different conclusion than the court had earlier reached in case involving similar facts –Schrimsher v. Comr., T.C. Memo. 2011-71 where boilerplate deed language indicated “TEN DOLLARS, plus other good and valuable consideration”; however, grant did not qualify for stated purpose under state (MO) law; taxpayer must prove satisfaction of a permitted purpose of conservation easement grant under I.R.C. §170).

Park v. Comr., T.C. Memo. 2012-279

(petitioner, computer engineer, claimed I.R.C. §179 depreciation on vehicle used in daily commute to work; IRS denied deduction; petitioner failed to substantiate deduction as required by I.R.C. §274(d)).

Comr. v. Driscoll, 669 F.3d 1309 (11th Cir. 2012), rev’g., 135 T.C. 557 (2010), cert. den., 2012 U.S. LEXIS 6408 (U.S. Sup. Ct. Oct. 1, 2012)

(I.R.C. §107 allowance for parsonages applies to only a one principal residence; court held that statutory use of word “home” cannot reasonably be construed to mean multiple homes; petitioner had previously been convicted of tax evasion and conspiracy and sentenced to a year in federal prison on those charges).

Gigliobianco v. Comr., T.C. Memo. 2012-276

(petitioner, flight instructor, worked as independent contractor bought and maintained an airplane to maintain proficiency with maneuvers and controls; petitioner failed to show that buying and maintaining plane necessary to maintain proficiency; FAA requirement is that every two years a two-hour flight examination must be taken or training course must be completed; expenses disallowed for maintaining plane).

Labus v. United States, No. 5:11-cv-01856-JRA, 2012 U.S. Dist. LEXIS 139226 (E.D. Ohio Sept. 27, 2012)

(plaintiff invested in unsecured interest-bearing notes that were sold by American Business Financial Services (ABFS); plaintiff initially received monthly interest checks and continued to invest until ABFS started to default on various obligations; plaintiff tried to recover funds, but failed and claimed a theft loss deduction for unrecovered amounts; IRS denied deduction on basis that theft by deception required plaintiff to prove that ABFS engaged in deceptive act with intent to deprive plaintiff of possession of property or services and such misrepresentation caused the plaintiff to invest; court upheld IRS determination because plaintiff failed to prove that ABFS had criminal intent to deprive plaintiff of funds without a plan of making plaintiff whole; payment of interest tended to establish that ABFS lacked criminal intent; no evidence of misrepresentation).

Iowa Department of Revenue Policy Letter (Doc. No. 12201044, Sept. 26, 2012)

(policy letter provides illustration of how the "10 and 10" requirement of the capital gain exclusion functions when taxpayer owns business real estate in one entity and operates the business in another entity; IDOR says that taxpayers can exclude gain on sale of the business real estate (or entire business) that is held for 10 years and is used in the business in which the taxpayer materially participates for 10 years; letter notes that IA follows I.R.C. Sec. 469 rules for determining material participation; letter notes that exclusion applies to taxpayer who is a non-resident and (in second scenario) owns real estate in different entity that in which material participation occurs; letter notes that I.R.C. Sec. 469 would deem net income from self-rental as non-passive).

IRS Notice 2012-36, 2012-42 IRB

(for post-Sept. 30, 2012 travel, per diem rates to be used in substantiating business expenses incurred for travel away from the taxpayer's home specified; for taxpayers in transportation industry paying (or deducting) a per diem only for meals and incidental expenses can treat $59 as the meals and incidental expense rate for all localities within continental U.S. $65 for all locations outside the continental U.S. (this is the same as the previous rates)). 

Chandler v. Comr., No. 10-72317, 2012 U.S. App. LEXIS 20085 (9th Cir. Sept. 25, 2012), aff'g, T.C. Memo. 2010-92

(thoroughbred horse racing and breeding activity not engaged in for profit under multi-factor test; accuracy-related penalty imposed).

Au v. Comr., T.C. Memo. 2010-247, aff'd., No. 11-70270, 2012 U.S. App. LEXIS 19914 (9th Cir. Sept. 21, 2012)

(petitioners had no gambling winnings and, therefore, could not deduct gambling losses of $40,488; "Turbo Tax Tim Geithner" defense not allowed - taxpayers had prepared return utilizing H&R Block's "Taxcut" software which allowed deduction without gambling winnings; taxpayers did not consult Code and simply relied on the fact that "Taxcut" had been approved by IRS; no reasonable cause shown for the underpayment).

Wallach v. Comr., T.C. Sum. Op. 2012-94

(petitioner, airline pilot with side business as real estate broker, reported large loss from side business on Schedule C; as for trip to Hawaii, petitioner claimed business expense deduction for cost of airline ticket for unidentified third party; alleged purpose of trip was to scout potential properties for unnamed client; claimed expenses to Yosemite National Park also undocumented, along with unsubstantiated expenses for trips to other places; all expenses denied and court upheld denial for lack of substantiation).

Wanat v. Comr., T.C. Sum. Op. 2012-92

(case involved deductibility of business deductions for personal “businesses” run by airline pilot; plaintiff was sole proprietor of dog bed manufacturing company from 2000-2002; from 2002-2004, plaintiff purchased several undeveloped parcels of land; plaintiff traveled to these properties throughout time period but had little development or rental activity on any property; court allowed deductions in 2002 for business expenses for dog bed manufacturing except vehicle or depreciation expenses due to lack of substantiation and allocation between personal and business use; expenses were disallowed for “real property business” in 2003 and 2004 under I.R.C. §162 because activities in acquiring unimproved parcels did not constitute trade or business; under I.R.C. §212, however, court allowed deductions for advertising, interest, and utilities; plaintiff not entitled to depreciation on any properties or other deductions due to failure to establish expense related to real estate activity, lack of substantiation on amount, expense capital in nature, or expenses actually related to acquisition of personal vehicle).

Rev. Rul. 2012-25, I.R.B. 2012-37

(IRS provides guidance concerning how to recharacterize taxable wages as non-taxable reimbursements; four scenarios provided including one scenario that satisfies the requirements for an accountable plan).

IRS News Release (Sept. 11, 2012)

(IRS informed Congress that its agents would not play any role in enforcing the health insurance mandate contained in the government health care legislation; IRS stated that there would be no audits; statement made to House Ways and Means subcommittee).

Brown v. Comr., 693 F.3d 765 (7th Cir. 2012)

(court upholds Tax Court determination that taxpayer had taxable income of $29,093.30 upon cancellation of whole life insurance policy; taxpayer paid $44,205 in premiums and had received $35,933.24 from surrender of additional insurance and from the use of dividends from the policy to pay premiums; net cost to taxpayer was $8,227.76 of policy with cash value of $37,356.06 resulting in gross income of $29,093.30; taxpayer did not receive any cash upon cancellation did not require different result due to fact that taxpayer had used cash value in prior years to pay off loans from insurance company).

Foster v. Comr., T.C. Sum. Op. 2012-90

(petitioner acquired 12 percent interest as tenant in common with two others in rowhouse in historic district; building subject to local ordinances restricting changes to structure; each co-tenant contributed façade easement to land trust; appraiser determined that property value declined 11 percent post-grant; co-tenant’s later reallocated interests such that petitioner’s interest had full burden of easement, and petitioner claimed deduction for full amount of contribution; upon later sale of property, petitioner received 1 percent of proceeds; IRS gave no value to easement; Tax Court agreed with IRS because petitioner’s appraiser did not compare sales of similarly encumbered properties and made no attempt to determine impact of easement on sale price, relying instead only on IRS memo prepared in 2000 (known as “Primoli memorandum”); in addition, property already subject to substantial restrictions).

Priv. Ltr. Rul. 201250009 (Sept. 11, 2012)

(taxpayer, a cooperative makes grain payments to members and participating patrons; such payments constitute PURPIMs and taxpayer will be treated as having qualified production activities with respect to grain purchased from members and patrons under Master Marketing Agreements and Sale/Purchase contracts; taxpayer's DPAD to be computed without regard to any deduction for taxpayer's grain payments to members and participating patrons). 

Gaughf Properties LP, et al. v. Comr., 139 T.C. No. 7

(non-precedential order in which court applies six-year statute of limitations under I.R.C. Sec. 6501 to omission from gross income caused by basis overstatement; case appealable to D.C. Circuit which has reversed Tax Court and held that basis overstatement is an omission from gross income and that statute does not necessarily bar application of 6-year statute of limitations). 

In re Quality Stores, Inc., et al. v. Quality Stores, Inc., 693 F.3d 605 (6th Cir. 2012)

(severance payments from debtor to employees due to business cessation deemed to be supplemental unemployment compensation benefits rather than taxable wages under FICA).

Priv. Ltr. Rul. 201249013 (Sept. 6, 2012)

(portion of purchase price paid by electric cooperative attributable to purchase power agreement is to be allocated to purchase power agreement and not to wind energy facilities; revoking in part PLR 201214007). 

Schilling v. Comr., T.C. Memo. 2012-256

(petitioner (wife) and spouse divorced after 24 years and five children; separation agreement specified for reductions in alimony as each child reached age 18, with alimony terminating six years after beginning; for tax year in issue, three children over age 18 and three years remained before automatic termination of alimony; while separation agreement didn't specify termination of alimony upon death, state law so specified; IRS determined the per-child amount of alimony for remaining two children with balance taxable to petitioner; court determined that automatic six-year termination not a reduction in alimony related to a child or a contingency referable to a child under I.R.C. Sec. 71(c)(2) for remaining years; Treas. Reg. 1.71-1T (Q and A 18) inapplicable because petitioner did not have child whose 18th birthday within 6 months of automatic termination date; because neither the separation agreement, divorce decree nor shared parenting plan specifically designated any portion of the spousal support payments for support of children, entire amount included in petitioner's income as alimony).

McPartland v. Comr., T.C. Sum. Op. 2012-88

(during retirement, petitioner bought rental property and claimed to intend to buy additional rental properties; two years after purchase, renovations of property completed and property rented; while expenses substantiated, but not deductible due to petitioner not in real estate trade or business for year at issue; expenses to be capitalized as start-up expenses).

Benson v. Comr., T.C. Sum. Op. 2012-87

(petitioner, nurse, won $10 million in the lottery and bought a building in Denver to honor her deceased mother and also to use to provide mortgage loan services; petitioner never brokered any mortgages and did not charge for reflexology treatments that were also provided; petitioner formed S corporation in 2002 for business ventures but never filed a corporate return, instead reporting losses from each activity on Schedule C; losses denied in 2009 on basis that that they were hobby losses; court did not engage in nine-factor analysis because petitioner had litigated precisely the same issue in the Tax Court concerning petitioner’s 2002 and 2003 returns where court concluded that activities were hobbies; activities deemed to subject to hobby loss limitations).

Bartlett v. Comr., T.C. Memo. 2012-254

(upon retirement, petitioner reported only one-half of accumulated funds in pension and did not report $2,000 in other income and some wages; IRS asserted $44,000 in unpaid tax plus penalties; petitioner blamed mistakes on TurboTax; court ruled for IRS because petitioner entered incorrect information into TurboTax program).

Priv. Ltr. Rul. 201248006 (Aug. 30, 2012)

(taxpayer proposed to modify installment sale contract by deferring maturity date and substituting new obligor; also proposed was change in interest rate; such alterations would not cause disposition (or satisfaction) of installment obligation that would trigger gain or loss).

Diaz v. Comr., T.C. Memo. 2012-241

(petitioner could not increase basis in two rental properties for purposes of computing gain on sale beyond amount IRS determined due to lack of evidence of improvements to property). 

In re Azevedo, No. 11-41561-JDP, 2012 Bankr. LEXIS 3951 (D. Idaho Aug. 27, 2012)

(Chapter 7 case; after petition filed, debtor purchased cattle feed from creditor to feed cattle used in debtor's dairy business and such expense satisfied 11 U.S.C. Sec. 503(b)(1)(A) as an actual and necessary expense; creditor claimed that purchase amounts still owing were delivered during pendency of Chapter 12 case and involved transactions entered into in the ordinary course of business that qualified as an administrative expense; trustee objected; question of fact remained as to whether amount and extent of payment was consistent with past practice of parties; question of fact also existed concerning the large size of debtor's outstanding feed cost balance was consistent with ordinary course in the industry; as such, evidentiary hearing required on ordinary course of business requirement). 

Historic Boardwalk Hall, LLC, et al. v. Comr., 694 F.3d 425 (2012), rev'g., 136 T.C. 1 (2011)

(case involves federal historic rehabilitation tax credit (HRTC) as continued in the Tax Reform Act of 1986 that is available to owners of building; plaintiff owned building in question and Pitney Bowes Corporation was partner of plaintiff (C corporations are not subject to at-risk and passive activity loss rules); IRS took position that plaintiff merely vehicle to transfer HRTC to Pitney Bowes and that all HRTCs should be reallocated to New Jersey Sports and Exposition Authority; Tax Court ruled for plaintiff and allocated HRTCs to Pitney Bowes; on appeal, court reversed because Pitney Bowes did not have "meaningful stake" in plaintiff's success or failure and, as such, was not a bona fide partner in plaintiff).

Flood v. Comr., T.C. Memo. 2012-243

(petitioner, day-trader in stocks, also operated real estate activity with wife involved in buying and selling vacant lots; over seven-year period, couple purchased over 250 lots but sold only approximately 50 lots and gave some to a church; petitioners determined to be dealers in real estate with profits subject to tax at ordinary rates and reported on Schedule C; under multi-factor analysis, sale of lots generated large gains; charitable donation reduced because taxpayer was dealer and, as such, charitable donation deduction measured by cost of property rather than market value at time of donation). 

Neff v. Comr., T.C. Memo. 2012-244

(corporate executives entered into split-dollar life insurance policies with company in 2002; policies terminated in 2003 upon change in IRS tables at time when company had paid $842,345 in premiums and policies turned over to executives; executives paid back present value of premium recovery value based on their life expectancies resulting in payment of $131,969; IRS asserted that full $842,345 should have been reported in income; court agreed with IRS essentially viewing matter as debt forgiveness  - executives wealth increased by full amount of additional premiums paid rather than just present value of premium recovery). 

Abarca v. Comr., T.C. Memo. 2012-245

(petitioner entered into partnerships with other persons with design to buy rental properties; petitioner not named on mortgages for purchased properties; petitioner deducted mortgage interest on properties; evidence not clear as to whether titles to properties contributed to partnerships, but evidence showed that petitioner did not hold title to any properties; partnership formalities not followed; petitioner did not account for partnership existence on either 2007 or 2008 returns, but filed returns as personal owner; interest deduction not allowed’ property tax deduction not allowed; accuracy-related penalty imposed).

Funk v. Comr., T.C. Sum. Op. 2012-82

(petitioner entered into installment land contract in 2007 and gets deed to property, including home, in 2008 when petitioner took out conventional mortgage and paid off seller; petitioner claimed first-time homebuyer tax credit; IRS denies credit because purchase occurred in 2007 pre-dating existence of credit; petitioner had only had equitable title in 2007 under state (IA) law and was in possession of home and bore benefits and burdens of ownership; petitioner deducted mortgage interest and real estate taxes in 2007, again before advent of credit; IRS position upheld).

Diaz v. Comr., T.C. Memo. 2012-241

(petitioner could not increase basis in two rental properties for purposes of computing gain on sale beyond amount IRS determined due to lack of evidence of improvements to property). 

Chapman v. A.S.U.I. Healthcare of Texas, Inc., et al., No. H-11-3025, 2012 U.S. Dist. LEXIS 117969 (S.D. Tex. Aug. 21, 2012)

(defendant, health care provider, utilized persons as "direct care specialists" that cared for disabled persons in group residences that the employer owned; court held, on motion for summary judgment, that such persons properly classified such persons as employees rather than independent contractors under the "economic reality" test; long-term nature of relationship noted along with large degree of control exercised over workers by employer).

Todd II v. Comr., No. 11-60845, 2012 U.S. App. LEXIS 17213 (5th Cir. Aug. 16, 2012), aff’g., T.C. Memo. 2011-123

(petitioner, neurosurgeon, was sole shareholder of corporation associated with petitioner’s medical practice; corporation became union member and participated in death-benefit-only plan via trust; trust took out life insurance policies equal to death benefit for corporate employees and annually paid premiums to trust; trust issued petitioner $400,000 check denoted “loan”; purported loan not repaid; loan not bona fide, but was taxable distribution from corporation; no reasonable cause present to avoid underpayment penalty even though accountant’s advice relied on).

Perry v. Comr., T.C. Memo. 2012-237

(petitioner claimed home office deduction; court did not take into consideration I.R.C. Sec. 280A which bars deduction for expenses incurred with respect to residence because petitioner did not satisfy depreciation requirement of I.R.C. Sec. 167 by failing to prove adjusted basis for portion of home on which depreciation claimed - no evidence of cost of home, or portion of home attributable to real estate or improvement cost; no evidence that portion of home used by petitioner's business or when home and improvements placed in service).

Trout Ranch LLC v. Comr., No. 11-9006, 2012 U.S. App. LEXIS 17198 (10th Cir. Aug. 16, 2012), aff’g., T.C. Memo. 2010-283

(petitioner, partnership, bought land for home development purposes and donated permanent conservation easement on substantial portion of property and claimed a $2.2 million charitable deduction; IRS denied deduction on basis that there was no difference in property value before and after donation; Tax Court valued easement at $560,000; IRS valuation method upheld on appeal as using an accepted method in absence of comparable sales (discounted cash-flow method); Tax Court’s approach (difference between property value before and after donation) not clearly erroneous; Tax Court decision affirmed and petitioner’s  comparable sale valuation method approach rejected). 

Atlantic Coast Masonry, Inc. v. Comr., T.C. Memo. 2012-233

(petitioner, S corporation, was masonry contractor that furnished all labor, materials, equipment for masonry jobs; petitioner also supervised work at jobs; S corporation owned by husband and wife on 50/50 basis; S corporation would rent cranes and forklifts as necessary; all contracts noted that material and equipment belonged to S corporation; S corporation retained right to fire; S corporation contracted with others to supervise or serve as job foreman; workers paid on piecework basis every week with most workers working only for S corporation; court determined that most factors for worker tax classification favored employee status; workers held to be employees and S corporation not entitled to Sec. 530 relief; S corporation responsible for FICA, income tax withholding and penalties). 

Beach v. Comr., T.C. Sum. Op. 2012-81

(petitioner owned high-performance Ford Mustang which was damaged in car accident by uninsured motorist; petitioner's adjusted basis in car was $25,482 and car worth $28,500 immediately before accident and $2,250 immediately after accident (difference of $26,250); cost of repair was $18,772.79 and insurance company paid $18,522.79 to body shop; car repaired and returned to petitioner in 2007; petitioner claimed $17,287 casualty loss on 2008 return; loss disallowed initially because petitioner failed to subtract insurance reimbursement and later because loss claimed in incorrect year; 20 percent accuracy-related penalty applied).

I.R.S. Notice 2012-52

(for donors making a charitable contribution single-member LLC that is owned by a charity, the donation is to be treated for tax purposes as if the donor made the donation directly to the charity; the contribution is considered to be a gift to a charity for disclosure requirements for quid pro quo contributions under Sec. 6115; percentage limitations also apply to the contributions; IRS suggests that charities should consider providing some type of notice that the SMLLC is either owned by the charity or treated as a disregarded entity). 

C.C.A. 201246030 (Aug. 9, 2012)

(taxpayer, provider of pharmaceutical packs, repackaged and labeled pills in blister packs and sought to claim domestic production activities deduction (DPAD) with respect to gross receipts from such activities; IRS determined that statutory exception to definition of manufactured, produced, grown, or extracted (MPGE) for repackaging and labeling activities did not apply because taxpayer engaged in other qualifying MPGE activities with respect to same blister packs).

Veriha v. Comr., 139 T.C. No. 3 (2012)

(petitioner was sole owner of C corporation trucking company; petitioner and wife employed by corporation with husband materially participating; corporation leased trucking equipment from two other entities in which petitioner had ownership interests and received pass-through income from; petitioner and spouse treated pass-through income as net passive income on tax return; one of the entities generated net loss which petitioner treated as passive loss on return; IRS recharacterized amounts as non-passive under Treas. Reg. Sec. 1.469-2(f)(6) on basis that tractors and trailers held by the two entities constituted a single item of property because each was leased to the related trucking company in separate agreement at independently determined monthly rate; court agreed with IRS that each individual tractor or trailer was "item of property" based on facts of case; only net income recharacterized as non-passive). 

Colca v. Comr., T.C. Sum. Op. 2012-77

 (upon father’s death on July 18, 2008, petitioner received a vested one-third interest in family trust property which contained parent’s home; in early 2009, trust beneficiaries executed beneficiary agreement which gave petitioner and brother each a 50 percent ownership interest in home; later in 2009, petitioner purchased brother’s 50 percent interest in home and claimed $8,000 first-time homebuyer tax credit on 2009 return; IRS denied credit because petitioner had ownership interest in home in three-year period preceding purchase upon father’s death in 2008; court agreed; court viewed as immaterial fact that petitioner was purchasing interest of brother  in which she had no ownership right within prior three years; to claim credit, taxpayer must not have any present ownership interest in residence during prior three years). 

Gonzalez v. Comr., T.C. Sum. Op. 2012-78

(petitioners, married couple, were recreational gamblers who did not maintain records of gambling activities and did not use casino club cards, but did retain copies of canceled checks; petitioners received Forms W-2G for 2009 but did not report gambling income; petitioners allowed to deduct $15,000 of gambling losses against $20,700 of gambling winnings). 

Olive v. Comr., 139 T.C. No. 2

(I.R.C. Sec. 280E disallows deduction for amounts incurred in business that traffics in controlled substance; marijuana is a controlled substance and it is irrelevant that 15 states have legalized marijuana sales for medical purposes; accordingly, petitioner who operates a medicinal marijuana facility denied 100 percent of deductions associated with the business; petitioner failed to adequately substantiate revenue and must include all revenue in income that was reflected on business ledgers (which exceeded amount on return); petitioner's COGS reduced by amount of products given away; no operating expenses deductible; such businesses must clearly establish if they have separate lines of businesses). 

Verrett v. Comr., T.C. Memo. 2012-223

(taxpayer's construction activity did not show profit for all 17 years of its operation; activity conducted from home office and was listed in phone book, but had no business plan, dedicated bank account or website; taxpayer not licensed as general contractor; taxpayer did not follow industry practice of charging 20 percent overhead on materials, but directed clients to buy materials direct from suppliers; most activity was for family and church on uncompensated basis; activity losses also offset spouse's wage income; court upheld IRS determination that taxpayer not engaged in activity with profit intent).

Rothman v. Comr., T.C. Memo. 2012-218, vacating in part, T.C. Memo. 2012-163

(petitioners, married couple, contributed permanent conservation easement in historic preservation facade on NYC townhouse that is designated as certified historic structure; appraiser estimated pre-easement value of property at $2.6 million and that easement reduced value by $290,000; IRS disallowed charitable contribution deduction for petitioner's failure to establish easement's value on basis that appraisal not qualified appraisal for lacking a valuation method; market data approach used to determine "before" value, but appraiser could not "properly estimate" resulting loss in value due to lack of data for comparable properties; Tax Court initially upheld IRS disallowance on basis that appraisal did not include specific basis for value under Treas. Reg. Sec. 1.170A-13; petitioners already barred from altering property under NYC law without approval from Landmarks Preservation Commission; after Tax Court's decision Second Circuit (in Scheidelman v. Comr., 682 F.3d 189 (2d Cir. 2012)) reversed Tax Court decision in similar case by holding that regulation at issue only requires that appraiser identify valuation method used and does not require such method to be reliable; on motion for reconsideration and vacation, Tax Court determines that portion of prior opinion based on Tax Court's opinion in case that was later reversed by Second Circuit should be vacated; opinion not vacated in full because taxpayer's appraisal no qualified even under the Second Circuit's view of the qualified appraisal regulation; appraisal defective do not allow IRS sufficient information to evaluate deductions claimed; whether taxpayers acted with reasonable cause to be determined at trial).

Haury v. Comr., T.C. Memo. 2012-215

(petitioner developed software and licensed it to two companies that he had significant ownership interests in; companies developed cash-flow problems and petitioner transferred funds from his IRA to the companies; ultimately, petitioner demanded repayment, but companies could not repay and petitioner reported a bad debt deduction; court held that loan non-business bad debt because petitioner interested in protecting investment in companies rather than protect salary). 

Beech v. Comr., T.C. Sum. Op. 2012-74

(petitioner inherited IRA from her mother and rolled the funds into her own IRS within 60 days; rollover triggers income because petitioner was not spouse of decedent and no trustee-to-trustee transfer occurred; no substantial compliance allowed because I.R.C. Sec. 408(d)(3)(C) expressly denies rollover treatment to inherited IRA).

Bramlett v. Comr., T.C. Sum. Op. 2012-73

(petitioner, Schedule C taxpayer with aerial photography business began selling light aircraft and reported the expenses of that activity also on the Schedule C with a reported combined loss of approximately $90,000 and only $10,000 of income; losses not deductible because light aircraft sale business in start-up phase during tax year in issue - $5,000 deduction with excess costs amortized over 15 years).

Sykes v. Comr., No. 10-72394, 2012 U.S. App. LEXIS 15363 (9th Cir. Jul. 25, 2012), aff'g., T.C. Memo. 2010-84

(taxpayers, married couple, not entitled to casualty loss deduction for water damage to home; taxpayers did not prove amount of damage claimed; penalties applicable because failure taxpayer's negligently failed to maintain records or substantiate claims).