But they do give rise to some interesting, if unanswered, questions. Here’s a reprise of the second iteration of the First Time Home Buyer Tax Credit, known to the initiate as FTHBTC2, the $8000 actual credit, as distinct from FTHBTC1, which was a fifteen-year interest-free loan disguised as a credit.

Case in point is Robert Perez Morales, 2012 T. C. Memo. 341, filed 12/6/12, with its companion case Ronda Kay Morales. Apparently the Moraleses filed separate returns for separate principal residences on the same tax lot (nice move, guys; see my blogpost “Old Tax Credits Never Die”, 11/6/12, showing similar fancy, but more successful, footwork by Bob Packard and wife Marianna). Each claims the $8K credit, of course.

Unfortunately, neither Morales checks the calendar. They sold their last principal residence 4/27/06, according to the 1099-S they got from the settlement company. They bought the new principal residences 3/17/09.

What’s wrong with this picture?

No prize for the correct answer, so I’ll let Judge Kroupa provide it: “A first-time homebuyer is any individual who has had no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the principal residence in question. Sec. 36(c)(1); Foster v. Commissioner, 138 T.C. 51, 53 (2012). Petitioners purchased the new principal residences on March 17, 2009. Accordingly, petitioners are eligible as first-time homebuyers only if they had no present ownership interest in a principal residence between March 16, 2006, and March 17, 2009. Petitioners sold their prior principal residence on April 27, 2006 and therefore had a present ownership interest in a principal residence during the relevant period. Petitioners are therefore not entitled to the claimed first-time homebuyer credit.” 2012 T. C. Memo. 341, at pp.3-4.

And see my blogpost “This Old House”, 1/30/12, for the story of Francis T. and Maureen P. Foster, the parties alluded to in the case cited in Judge Kroupa’s decision.

So the Moraleses should have looked at the calendar and adjourned the closings. Nothing novel here; the statute is plain, three years means three years, and the Moraleses’ defenses are futile. So what’s interesting?

The question Judge Kroupa decides not to answer. The Moraleses claim the shrink-wrapped guru, in this case TurboTax, led them astray. But they don’t say how. See my blogpost “The Shrink-Wrapped Guru”, 9/14/12.

Judge Kroupa:  “The TurboTax instructions and the specific information petitioners entered into TurboTax is not in the record. Moreover, petitioners failed to introduce other evidence that demonstrates their improperly claiming the first-time homebuyer credit was the result of a TurboTax programming flaw or instructional error. We note we find it unlikely that TurboTax would allow a result inconsistent with the Code if its instructions were properly followed. Petitioners may have acted in good faith but likely made a mistake. We find that petitioners’ use of TurboTax is not a defense to the accuracy-related penalty.” 2012 T. C. Memo. 341, at pp. 6-7. (Citations and footnote omitted.)

But the interesting part is the omitted footnote: “We leave for another day whether reliance on tax preparation software such as TurboTax is sufficient to avoid the accuracy-related penalty where the taxpayer has provided evidence demonstrating a programming flaw or an instructional error.” 2012 T. C. Memo. 341, at p. 7,  footnote 2.

Of course, as I said in my cited blogpost “The Shrink-Wrapped Guru”, “I’m sure the software developers’ counsel have festooned box and contents with disclaimers and exculpatory exhortations worthy of the medieval indulgence mongers.” So perhaps the hypothetical software glitch will not spare the taxpayer.

However,  Special Trial Judge Armen, the Judge with a Heart, who spared poor Kurt E. Olsen in 2011 T. C. Sum. Op. 131, filed 11/23/11, might be willing to do so. See my blogpost “Basis for Dummies”, 11/24/11, a Judge Mark V. Holmes and STJ Armen doubleheader.