In Uncategorized on 10/30/2014 at 16:43

No, I’m not auditioning for the role of Valentin in Faust, or critiquing someone’s performance.  It’s just that before I depart for the Bayou City (or the Magnolia City, if you prefer), I was going to blog whatever was really interesting out of Tax Court today.

But there wasn’t. The two T. C. Memos today had nothing new.

One was a capitalized qualified residential mortgage interest case, of the kind I dealt with in my blogpost “Nice Try”, 2/21/13, specifically Philip C. Smoker, 2103 T. C. Memo. 56, filed 2/21/13.

Cash basis individuals can’t deduct capitalized interest until paid in cash or equivalent.

Second one is the story of a taxpayer who, confronted with a multimillion-dollar buyout, had his tax professionals (CPA and attorneys) try to negotiate a deal, and when they had, signed something else (that the buyerout prepared), which he never had his professionals review. Then when the buyerout characterized the buyout as ordinary, tried to convert it to capital gains by filing Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

Needless to say, this goes nowhere with Judge Cohen. Taxpayer signed documents he never showed his professionals, didn’t give them the numbers on his position in the boughtout entity, and rather than sue when they suggested it, sent a letter to the buyerout that was completely ignored. Then he made up his own documents to recharacterize the transaction. Reliance on experts? Not hardly.

No need for “somber reasoning and copious citation of precedents” today.


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