Attorney-at-Law

IT’S PAYBACK TIME – PART DEUX

In Uncategorized on 01/28/2016 at 23:09

James W. Blackbourn, II and Angel M. Blackbourn, 2016 T. C. Sum. Op. 5, filed 1/28/16, get the bad news from STJ Lewis (“His Name is My Name”) Carluzzo, and it’s bad on two levels.

First, Jim’s and Angie’s home in Canton, GA, isn’t their first home for the First-Time Homebuyer Credit, First Edition (FTHBCFE). Even though the house Jim owned was labeled his “second home,” he couldn’t rent it out (per the terms of the mortgage he took out to buy it), and he did live there, claimed the GA homestead exemption for that house, and worse, filed his tax returns from there, all during the three-year lockout before he bought the Canton cantonment (sorry, guys). And Jim’s trial testimony that he wanted to rent out second home founders on his homesteading and the mortgage prohibition.

So no FTHBCFE.

Nothing new so far.

But this was the payback model of the FTHBC. It wasn’t really a credit, but an interest-free loan, repayable in annual $500 installments over 15 years. And because of the time lag between Jim’s claimed FTHBCFE and the SNOD, Jim and Angie had paid the Feds $2K of the $7500 loan, for which they got no credit in the SNOD.

STJ Lewis: “Separate and apart from the main issue, we note that the deficiency here in dispute does not take into account the repayments that petitioners made with their 2010 through 2014 Federal income tax returns with respect to the FTHBC claimed on their 2008 return. Because the definition of a deficiency as found in section 6211 does not take into account the increases in a taxpayer’s Federal income tax liability for subsequent periods required by section 36(f)(1), we cannot address this apparent inequity other than to point out that petitioners’ remedy may lie in filing claims for refund on account of the overpayment of Federal income tax resulting from the application of section 36(f)(1). We expect that in response to any such claims, respondent will take the necessary action to ensure that petitioners’ claims for refund, if made, will be processed consistent with the disallowance of the FTHBC here in dispute.” 2016 T. C. Sum. Op. 5, at p. 10.

So if it was payback time for Jim and Angie, now it’s payback time for IRS.

Oh yes, STJ Lewis lets Jim and Angie off the accuracy chops.

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