In Uncategorized on 01/30/2012 at 17:33

But Why an Opinion?

Abstract from the Tax Court website. “Generally, a Tax Court Opinion is issued in a regular case when the Tax Court believes it involves a sufficiently important legal issue or principle.” “Generally, a Memorandum Opinion is issued in a regular case that does not involve a novel legal issue. A Memorandum Opinion addresses cases where the law is settled or factually driven.”

So one expects a Tax Court Opinion to have a certain gravitas;  if not an Olympian pronouncement, then at least an oracular quality. But reading the five pages of Francis T. Foster and Maureen P. Foster, 138 T.C. 4, filed 1/30/12, one searches for the “sufficiently important legal issue or principle.” And comes up short (or at least I did).

This is another installment in the Dead Tax Credits series, involving the First Time Home Buyer Credit, Take 2 (the 2008 version, a refundable credit with no payback, unlike Take 1). The facts are simple. Although allegedly moving from the home they purchased in 1974 and listing it for sale, and moving in with Maureen’s parental units, the Fosters never vacated the old house. They “maintained utility services, frequently stayed overnight, hosted family holiday gatherings, kept personal belongings, accessed the Internet, and received bills and correspondence.” 138 T.C. 4, at pp. 2-3.

Maureen’s parents didn’t have an internet connection at their house. That doesn’t help the Fosters, because Maureen renewed her Illinois driver’s license, using the old house’s address; and the Fosters filed one year of their joint income tax returns with the old house address, after they had allegedly quit the old house. The Fosters sold the old house a year after they claimed they had moved out.

Finally, just over three years after the Fosters allegedly moved out, they bought the new house and claimed the FTHBC2.

No, says IRS. The old house was still your principal residence two years before you bought the new, and FTHBC2 applies only if you hadn’t owned a principal residence for three years before you bought a new principal residence.

Judge Foley:  “Whether property is used by a taxpayer as a principal residence depends upon all the facts and circumstances. See sec. 36(c)(2); sec. 1.121-1(b)(2), Income Tax Regs. In addition to the taxpayer’s use of the property, relevant factors include, but are not limited to, the address listed on the taxpayer’s tax returns and driver’s license and the mailing address for bills and correspondence. Sec. 1.121-1(b)(2), Income Tax Regs.

“The old house remained petitioners’ principal residence after July 27, 2006. Petitioners continued to identify the old house as their address when Mrs. Foster renewed her driver’s license and when they filed their Federal income tax returns. Furthermore, petitioners readily acknowledge that, at the old house, they continued to receive bills and correspondence, maintained utilities, kept furniture and other possessions, frequently slept overnight, and hosted family during holidays. Conversely, at the parents’ house, petitioners did not pay rent or contribute towards the cost of utility services.” 138 T.C. 4, at pp. 4-5.

No credit. But did this really merit an Opinion rather than a Memorandum?

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: