ChJE (Chief Judge Elect) Kathleen (watch this space) Kerrigan denies both ACRIS depreciation (Section 168(a)) and bonus depreciation (Section 168(k)) to John D. Lord and Belinda Lord, T. C. Memo. 2022-14, filed 3/1/22. Congress remains obdurate: marijuana is a controlled substance, wherefore “(I)n the absence of new legislation from Congress, the legislative intent of section 280E remains unchanged; shifts in public sentiment and legalization of marijuana do not change the purpose or applicability of section 280E.” T. C. Memo. 2022-14, at p. 8.

John was a member of an LLC and shareholder in a Sub S, both of which were CO med potters. Both took ACRIS and bonus for year at issue. Neither LLC nor Sub S kept books per GAAP. Though not required to keep books per GAAP, even under the Section 471 “clearly reflect income” standard, John has no evidence to show that the method used conforms to the best practices in the medicinal herbage trade or business.

And Section 263A(2)(a) bars deducting any cost related to a 280E prohibited trade or business.

Of course, John’s Constitutional arguments are nonstarters.

So John is stuck with basic Section 471, as refined by IRS. But IRS has given him a thwacking great deficiency and chops at no extra charge.

My sources tell me that medical pot is legal in 38 (count ’em, 38) States and Our Nation’s Capital. If the Senators and Representatives of all those States wished to change the present law, they could. But this is a nonpolitical blog.