To adopt the title of Erich Maria Remarque’s 1928 classic war novel, there are two Tax Court cases today, 5/24/12, but they both tell the same story–no substantiation means no deductions. Oh yes, and you should file tax returns timely and report all income. So all quiet on the tax front.

Or, It’s Not a Lease, It’s An Employee Expense Plan

Well, she was in California, and didn’t work for the County, but the old Jimmy Webb song that Glen Campbell made a hit in 1968 ran through my head as I read about the plight of Kathleen Murray, a/k/a Kathy the Cable Girl, 2012 T.C.Sum. Op. 49, filed 5/23/12. It’s another Section 7463 “so what?” case, but the unreimbursed employee business deduction angle makes it interesting.

Kathy started as a horse trainer, complete with a Sundowner Stampede horse trailer and a Dodge 3500 to pull it, but then met up with the Cable Guy (no, not Larry; Ernie Helm, known as Ernie the Cable Guy, hereinafter ETCG). ETCG convinces Kathy to stop training ponies and splice up with him (no, not that kind of splicing–splicing telephone wires).

They both worked for Prime West, an entity that connects things to other things, specifically telephone lines to add telephone and data services to people and businesses. ETCG and Kathy were employees of Prime West, and usually worked the same district. ETCG taught Kathy the trade.

Prime West supposedly leased Kathy’s trucks, and a van she owned, and certain tools she needed (not all cable can be spliced the same way with the same tools), and paid Kathy a flat hourly lease rent for all of them. But, says STJ Lew Carluzzo: “Prime West did not require petitioner to substantiate the actual expenses incurred for the use of her vehicles or tools, and she was not required to return to Prime West payments made pursuant to the equipment lease that exceeded her costs.” 2012 T.C.Sum. Op. 49, at p. 7.

Sound like a non-accountable employee expense reimbursement plan to you? It did to Judge Lew, lease notwithstanding. Also notwithstanding that Kathy reported her lease rent and expenses on a Schedule C. Also notwithstanding that she got a 1099-MISC for her lease rent.

Judge Lew disposes of the employee-independent contractor issue in four sentences (and it really doesn’t need more on these facts): “Petitioner was not engaged in an equipment rental trade or business independent of her employment with Prime West during any of the years in issue. Furthermore, there is nothing in the record that remotely connects the rental fee agreed upon in the equipment leases to the fair rental value of the equipment subject to those leases…. The form of the equipment leases notwithstanding, in substance the equipment leases represent Prime West’s program to reimburse its cable splicer/employees for expenses incurred in connection with their employment. For Federal tax purposes, the substance of a transaction takes precedence over the form of the transaction.” 2012 T.C. Sum. Op. 49, at p. 22.

Section 274 exactitude puts paid to most of Kathy’s vehicle expenses; she has no log, her oral testimony is inexact (she claims fuel and similar expenses for a month when she agrees she wasn’t working) and so she’s disconnected from strict substantiation. While a van she used might be exempt from Section 274 strictures, as it is a non-personal use vehicle, Kathy has insufficient substantiation even for the Cohan standard.

Now if whatever expenses she is allowed (and there isn’t too much, a GPS device and a digital camera she used to photograph her splices, which Prime West needed her to provide, utilities for a garage she used part of one tax year, some tools she bought and a storage unit she rented) were in fact deductible as unreimbursed employee business expenses, Kathy took the standard deduction and never itemized, so those expenses are lost.

But Judge Lew follows in the footsteps of The Great Dissenter, Judge Holmes (see my blogpost “The Busted Stipulation”, 1/27/12), and deftly ducks the issue. Judge Lew goes The Great Dissenter one better, and ducks in a footnote: “As noted, petitioner did not elect to itemize deductions for 2004 and 2005. Following the parties’ lead, we ignore the requirement that unreimbursed employee business expenses, if otherwise deductible, must be deducted as a miscellaneous itemized deduction pursuant to an election made on the taxpayer’s return. See sec. 63(e); see also Jahn v. Commissioner, T.C. Memo. 2008-141, aff’d, 392 Fed. Appx. 949 (3d Cir. 2010). Of course, itemized deductions allowed in this proceeding would be in lieu of, rather than in addition to, the standard deductions claimed on petitioner’s 2004 and 2005 Federal income tax returns.” 2012 T.C.Sum. Op. 49, at p. 11, Footnote 2.

And the parties can sort out whether to take the standard, or itemize and take the miscellaneous itemized above the 2% AGI floor, in the Rule 155 which will follow.

Kathy had a CPA do her taxes and told the CPA the whole story, so “gude faith, he maunna’ fa’ that”, as Scotland’s greatest remarked, and Section 6664(a) rescues Kathy from the Section 6662(a) penalty IRS wanted to splice onto Kathy’s bill.

I was asked by a reader for the particulars of the treatise I mentioned in my earlier blogpost this date (5/22/12), “A Book and a Modest Proposal”. The book is entitled “Practice and Procedure in the U.S. Tax Court”, by Prof. Danshera Cords, published by Civic Research Institute, Inc., Kingston, NJ 08528, copyright 2012. Note that I have not read this work, so I can neither review nor recommend it. Nor do I receive any compensation for mentioning it on this blog.

And so the Biblical encomium of Genesis 32:28 is bestowed upon Michael J. Dale, in the eponymous T. C. Mem. 2012-146, filed 5/22/12. Except for $71, that is; he loses that one.

Mike said he was an innocent spouse. His loved-once, Big Ellen, invested in a cattle shelter run by one Hoyt. IRS blew up the shelter, and SNODs rained on the heads of the non-cowboys caught in Hoyt’s stampede. IRS said Mike was no innocent, but on the eve of trial IRS conceded Mike satisfied Section 6015(c)’s version of blamelessness.

Mike wanted a Section 7430 prevailing-party expense allowance of $4998.50; IRS agreed to $4927.50, but objects to $71 for “secretarial and clerical work performed by a secretary ($37.50), an assistant ($23) and a ‘staff’ member ($10.50).” 2012 T. C. Mem. 146, at p. 3.

So Mike goes to Tax Court for the $71. You gotta like a guy that fights as a matter of principle. And his counsel: one has to ask if she was getting paid.

But Mike loses. Section 7430(c)(1) reimburses for lawyer’s work, and the cost of secretarial and like services (lawyer’s overhead) is usually built into the lawyer’s fee.

Judge Kroupa: “Here, the titles of the persons who performed the services are immaterial. Rather, the nature of the services performed is relevant. The fees at issue relate to routine administrative tasks (e.g., editing or scheduling) and not to the performance of legal services (e.g., drafting legal documents). Petitioner did not demonstrate that the fees at issue were for work akin to that of an attorney. Accordingly, petitioner is not entitled to recover the fees at issue.” 2012 T.C. Mem. 146, at pp. 4-5.

But fighting for $71 definitely puts Mike in the premier litigants’ division.

A new treatise on Tax Court law and practice has been written by Prof. Danshera Cords, of Albany Law School. I haven’t read the book, so I can neither review it nor recommend it, but I am glad that someone has written about the minefield that is Tax Court practice. Too many litigants and practitioners, even those with decades of litigation experience and a list of high-profile successes (cf. F. Lee Bailey, Esq., 2012 T.C. Mem. 96, filed 4/2/12), have taken some nasty falls there.

Now I’ve said more than once, this is not a political blog; I grind no axes here. But on a non-partisan note, I must say that the Tax Court system is broken and needs repair. Prof. Cords has taken a step, but there is much more ground to cover.

Far too often practitioners are unaware of the Byzantine, not to say labyrinthine, limitations on Tax Court jurisdiction, scattered in various IRC sections in a masterpiece of counterintuitive logic. Even employees of IRS misinform taxpayers, mistakenly sending them to Court of Federal Claims or United States District Court, where they encounter a Sargasso Sea of procedural doldrums until the SOL runs on their meritorious claims (cf. Murray S. Friedland, 2011 T.C. Mem. 90, filed 4/25/11).

Finally, and most importantly, any attorney who has been “admitted to practice before and is a member in good standing of the Bar of the Supreme Court of the United States, or of the highest or appropriate court of any State or of the District of Columbia, or any commonwealth, territory, or possession of the United States”, (Tax Court Rule 200(a)(2)) is eligible to be automatically admitted to practice before Tax Court. The attorney need show no proficiency in Federal practice (to say nothing of Tax Court practice), or even the vaguest acquaintance with the IRC.

All other applicants for admission (and IRC Section 7452 permits anyone to apply for admission) must take an immensely complex examination, the pass rate for which is well below that of any State’s bar examination. Its complexity and scope, as to the years for which questions were available, certainly outdid the Special Enrollment Examination, which I passed.

But when I applied to take the Tax Court admissions examination, after months of study, my application was rejected, Judge Whelan informing me that as an attorney I could not take the examination, but for payment of a modest fee I could be admitted.

Hence the number of pro se litigants before Tax Court. Attorneys are expensive; there is no meaningful competition, as all but the infinitesimally chosen few are precluded from appearing, notwithstanding the brave language of IRC Section 7452: “No qualified person shall be denied admission to practice before the Tax Court because of his failure to be a member of any profession or calling.” Yeah, right.

So Congress and Tax Court, I have no doubt that between the two of you there lies a solution to providing less expensive and more competent representation to Tax Court litigants.

Or, Last Known Address

I wouldn’t waste my time, or my readers’ time (both of them), on a case like Sean Devlin, 2012 T. C. Mem. 145, filed 5/21/12. It’s the usual tax protester’s cocktail of frivolity, but Sean gets a boost from IRS’ failure to build a good trial record.

Sean didn’t bother to file five years’ worth of returns. IRS prepared SFRs and sent Sean a SNOD for the first of the five years, by certified mail, to a Long Island, New York address. This was returned as undeliverable. Two years later, IRS sent SNODs for the other four years to an address in Reno, Nevada, by certified mail, and those were not returned.

Sean never petitions Tax Court to contest his liabilities as stated in the five SNODs, so IRS sends Sean Letter 3172, a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320. Apparently this got to Sean’s current address, and Sean seeks a face-to-face.

The usual charade follows. Sean makes frivolous arguments, Appeals demands Form 433-A, Sean doesn’t send it but repeats his frivolous arguments after claiming he’s withdrawing them, and Appeals issues a NOD denying Sean’s appeal and sustaining the lien.

Sean petitions Tax Court, claiming he never had a chance to contest liability. He’s right as to Year One, as IRS concedes the Long Island, New York address was not Sean’s last known address, but the Reno, Nevada letters were duly mailed (and IRS has Forms 3877 to prove it), and Sean never petitioned or appealed.

Ordinarily, the presumption of regularity would sink Sean despite his protestations of non-receipt. But the trial record is not of the best. Judge Vasquez: “We find nothing in the record that connects petitioner with 6110 Plumas [Reno]. As late as December 6, 2004, the IRS was mailing correspondence to petitioner at 3 Huskel Lane, Smith Town, New York[Long Island]. Although it is possible that after that date and before February 2, 2005, the date the IRS mailed the notices of deficiency for 2000 and 2002, the IRS received an information return or other document showing petitioner’s address to be 6110 Plumas, there is no evidence of this. Additionally, nowhere in Settlement Officer X’s declaration, respondent’s pretrial memorandum, or respondent’s posttrial brief is there anything to show that 6110 Plumas was petitioner’s correct address during 2005 and 2007. Accordingly, the presumption of proper mailing is not raised, and there is insufficient evidence to show that petitioner received the notices of deficiency for 2000, 2001, 2002, and 2004. We therefore allow petitioner to challenge his underlying tax liabilities for the years at issue.” 2102 T. C. Mem. 145, at pp. 8-9 (Footnotes and name omitted).

If IRS prepared the SFRs from 1099s or W-2s or K-1s, and had put those in evidence, then the address shown on those would substantiate the “last known address” of the elusive Sean. But none of those are in evidence.

Likewise, “In a number of recent cases the Court has found a taxpayer to have received a notice of deficiency despite a claim to the contrary. In these cases, however, the taxpayer either did not argue that the notice of deficiency was mailed to an improper address or did not unequivocally deny under oath receiving a notice of deficiency, or the evidence showed that the notice of deficiency was mailed to the correct address. See, e.g.,  Diamond v. Commissioner, T.C. Memo. 2012-90 (properly completed Form 3877 showing taxpayer’s correct address raised the presumption of proper mailing and allowed the Court to find that the taxpayer received the notice of deficiency after he refused to deny receipt under oath); Kamps v. Commissioner, T.C. Memo. 2011-287 (taxpayer argued only that he did not receive the notice of deficiency, not that it was mailed to the improper address); Clark v. Commissioner, T.C. Memo. 2008-155 (taxpayer presented no evidence that he did not receive the notices of deficiency and did not contest that the notices of deficiency were mailed to his correct address); Bailey v. Commissioner, T.C. Memo. 2005-241 (‘[p]etitioner does not dispute that the notice of deficiency was mailed to his last known address, and he does not unequivocally deny that he received it’). None of these scenarios is present in the matter before us.” 2012 T. C. Mem. 145, at p. 9, footnote 8.

So Sean gets a chance to disprove IRS’s asserted liabilities. But Sean just goes frivolous again. So Judge Vasquez sustains IRS, and shows Sean the Section 6673 yellow card. Further frivolity will cause the wrath of Tax Court to descend upon Sean heavily.

But IRS trial counsel, a word to the wise. When you get the SNODs, get the back-ups as well and put it all in at trial.

And an LLC is No Different

So paraphrases Judge Kroupa in Jack Trugman and Joan E. Trugman, 138 T.C. 22, filed 5/21/12; Gertrude Stein would be pleased.

Jack and Joan had a Sub S for their various rental properties, and had filed 1120s for the 19 years of the Sub S’s existence, during which time they dwelt in rented premises. Seeking to avail themselves of Congressional largesse in the form of the Section 36 FTHBTC2, they bought a dwelling in a State with no state income tax, contributing $7500 of their own cash while their Sub S graciously chipped in $319,500 and took title. Jack and Joan claimed the Section 36 credit, and the Sub S did not.

But pass-through entities are not individuals, and even though Jack and Joan might have qualified if they took title themselves, Congress meant for their largesse to be sufficiently guided so as to fall into the laps of individuals only.

Judge Kroupa: “We hold that S corporations are not individuals for purposes of section 36. A corporation, at its core, is a business entity organized under State or Federal law, whether an association, a company or another recognized form. A corporation that satisfies certain criteria may elect small business status for Federal income tax purposes. An S election does not alter the corporation’s corporate status; it merely alters the corporation’s Federal tax implications.  Items of income, deduction, loss and credit generally pass through to the shareholders. S corporations remain freestanding entities ‘independently recognizable’ from their shareholders.” 138 T. C. 22, at p. 4-5 (Citations omitted).

Section 36 mentions “individuals” 36 times, corporations zero times, says Judge Kroupa (huzza for the “global search” function!). Corps do not have principal residences, they have principal places of business. Individuals have their own Title in the IRC, and corps have their own as well. Never the twain shall meet.

Jack and Joan claim an IRS employee told them they could do it. Too bad, says Judge Kroupa, but the law is the law. “Petitioners seek leniency by arguing that IRS representatives indicated that they could claim the tax credit if the property was purchased through the S corporation. It is unfortunate when a taxpayer receives inaccurate information. We have recognized, however, that incorrect legal advice from an IRS employee does not have the force of law and cannot bind the Commissioner or this Court. Ultimately, statutes, regulations and judicial decisions govern a taxpayer’s tax liability. “ 138 T. C. 22, at p. 7 (Citations omitted).

So Jack and Joan are thrown out at home.

And so are Felix Rospond and Loretta Rospond, 2012 T. C. Sum. Op. 47, filed 5/21/12, a “not for nuthin’” Section 7463. Felix and Lorie formed a New Jersey LLC to hold family assets, bought their house in the aforesaid LLC (which had the fetching name of Jacco Associates, LLC) , and claimed the FTHBTC2.

Same result from Judge Wells, who doesn’t cite Judge Kroupa’s decision in Trugman, supra, but has a bushel basket full of cases and rulings wherewith to beat up Felix and Lorie. Pass-through or disregarded, if it isn’t an individual taxpayer’s principal residence, no Section 36 credit.

So holds Judge Gustafson in Bilal Salahuddin and Monique Salahuddin, 2012 T. C. Mem. 141, filed 5/17/12. Bil and Monique owe taxes based on their filed returns, but can’t pay, so when they get the Final Intent letter, they ask for a CDP and proffer a Form 433-A. The SO asks for supporting documents and offers a phonecall CDP hearing; Monique asks for time to gather documents in support of her already-submitted Form 433-A, and this is granted.

Before the due date, Monique calls the Appeals Team Manager (ATM). ATM tells her the file has sufficient information, so Monique need not send any more, and enters the conversation in the case activity file. Monique confirms this phone conversation by letter to the SO, which letter is also in the file.

Finally, three months later, having never told Monique or Bil anything or held a phone hearing, the SO shoots down the proposed installment agreement, and sends a NOD, which gets the facts wrong, claiming Bil and Monique didn’t submit the supporting documents and dodged a phone hearing. Unhappily, based on their own, ultimately unsupported figures, Bil and Monique’s offer is way low.

IRS moves for summary judgment. And loses.

Judge Gustafson: “The Commissioner argues that because the Salahuddins offered an amount ($900 to $1,000 per month) that was less than their own reckoning of their surplus monthly income (about $5,800 more income than living expenses), it could not be an abuse of discretion for Appeals to reject such an offer. This might be a winning argument, except for two problems that arise under the facts as we are required to assume them for purposes of deciding a motion for summary judgment.” 2012 T. C. Mem. 141, at pp. 14-15.

IRS said that what Bil and Monique had submitted was “sufficient.” So Appeals could not deny Bil and Monique on the ground they had not submitted information, when Appeals told them they didn’t need to. And the NOD didn’t discuss the low-ball with sufficient particularity to constitute an independent ground for the denial.

While IRS might have tossed Bil and Monique based on the low-ball offer (see my blogpost “Give It Your Best Number”, 4/9/12) Judge Gustafson finds IRS didn’t: “We can easily imagine a denial of an installment agreement based on two clear alternative grounds–i.e., (1) that the taxpayer failed to provide documentation to substantiate his financial information, and separately (2) that the amount offered by the taxpayer was inadequate even assuming accurate the taxpayer’s unsupported financial information. If the notice of determination stated such grounds, then the Commissioner could well argue that the first was harmless error, because the second was independent and sufficient. However, our role under section 6330(d) is to review actions that the IRS took, not actions that it could have taken. As the Supreme Court stated in SEC v. Chenery Corp., 318 U.S. 80, 93-95 (1943):

“[The agency’s] action must be measured by what the * * *[agency] did, not by what it might have done. * * * The * * *[agency’s] action cannot be upheld merely because findings might have been made and considerations disclosed which would justify its order as an appropriate safeguard for the interests protected by the Act.

“There must be such a responsible finding. * * *” 2012 T. C. Mem.141, at p. 16.

Judge Gustafson does take pains not to go too far; Bil and Monique don’t get a free pass: “We do not by any means hold that a notice of determination must be error-free in order to be sustained. However, in this circumstance, the error suggesting that the Salahuddins had failed to respond to Appeals’ letter has an unfortunate resonance with the unfair determination that they had failed to provide supporting information; and the error suggesting that a telephone conference had been scheduled raises the question whether the SO was confusing two different cases–the Salahuddins case and another case in which other taxpayers had made a material failure to produce information that was requested. Under Rule 121 we cannot hold that there is no genuine issue as to the reason for Appeals’ determination to deny an installment agreement and the absence of an abuse of discretion in that determination.” 2012 T. C. Mem. 141, at pp. 17-18.

Judge Gustafson goes even further,  warning Bil and Monique to get serious: “We do not hold that these facts constitute offer (by the Salahuddins) and acceptance (by Appeals), giving rise to a contract. Nor do we hold that Appeals was barred in any way from rejecting the proposal and demanding more. We hold rather that there is a genuine issue of material fact as to whether Appeals induced the Salahuddins to believe that their information was “sufficient” and that their proposal would be accepted–i.e., whether Appeals thus misled the Salahuddins by inducing them to leave their proposal pending and unrevised–and whether it was an abuse of discretion for Appeals to terminate the CDP hearing by rejecting that proposal, rather than soliciting a satisfactory substitute proposal.” 2012 T. C. Mem. 141, at p. 18.

In short, as I said in my earlier blogpost, Give It Your Best Number. That goes for both taxpayer and IRS.

Judge Holmes, The Great Dissenter, really rattled the D.C. Circuit’s cage when he dissented in Tigers Eye Trading, LLC, Sentinel Advisors, LLC, Tax Matters Partner, 138 T. C. 6, filed 2/13/12 (see my blogpost “The Great Dissenter – Part Deux,” 2/15/12). DC Circuit remands Petaluma III to Tax Court, asking whether Tax Court overruled Petaluma III and requesting Tax Court to report the current status of Petaluma III, in Petaluma FX Partners, LLC, Ronald Scott Vanderbeek, A Partner Other Than The Tax Matters Partner, 2012 T. C. Mem. 142, filed 5/17/12.

Apparently D. C. Circuit was concerned that Tax Court exceeded its limited statutory jurisdiction. Oh no no no, says Judge Goeke, and he takes 16 pages to say so.

Judge Goeke declares Tax Court has hewn at all times to the line established by the Supremes 120 years ago for lower courts when they get a remand from on high: “That [lower] court cannot vary it, or examine it for any other purpose than execution; or give any other or further relief; or review it, even for apparent error, upon any matter decided upon appeal; or intermeddle with it, further than to settle so much as has been remanded. [In re Sanford Fork & Tool Co., 160 U.S. 247, 255 (1895).]” 2012 T. C. Mem. 142, at p.11, footnote 9.

Moreover, Judge Goeke raps Judge Holmes’ metaphorical knuckles. “In its remand order, the D.C. Circuit quotes a sentence from a dissent in Tigers Eye. See Petaluma FX Partners, LLC v. Commissioner, 2012 U.S. App. LEXIS 4011 (citing Tigers Eye Trading, LLC v. Commissioner, 138 T.C. at ___, (slip op. at 205) (Holmes, J., dissenting) (‘Our decision today overrules Petaluma III.’)). The cited passage does not represent the position of this Court. No other Judge of the Court agreed with the part of the dissent from which the quoted sentence was taken. As noted supra, no part of any of the opinions by the Judges of this Court in Tigers Eye purported to explicitly alter or overrule the decision in this case or to revise the language of the Court’s Opinion in Petaluma III. To the extent the remand order was intended to provide this Court with the opportunity to alter or amend any aspects of Petaluma III, we respectfully decline to do so.

“In summation, we hold that the Court’s Opinion in Tigers Eye did not overrule or alter Petaluma III and that the current status of Petaluma III is unchanged.” 2012 T. C. Mem. 142, at pp. 15-16.

So there, D. C. Circuit, we’re good kids, really we are. And Great Dissenter Holmes, go stand in the corner.

Equal Opportunity in Tax Court

The $500K/$50K limitations on Section 168(h) largesse (home acquisition indebtedness deduction and home equity indebtedness deduction) receive yet another full dress Tax Court opinion in Faina Bronstein, 138 T.C. 21, filed 5/17/12.

Faina and father-in-law buy a residence. It’s Faina’s principal residence; while  Faina’s husband lived there, he was never in title, never signed either note or mortgage, and never paid a cent of debt service (nor was he ever legally obligated to do so). Faina paid every cent of debt service on the $1.35 million mortgage. Faina files “married filing separately” and tries to take interest on the full $1.1 million that Section 168(h) allows, claiming the $500K/$50K limitation for marrieds filing separately is only there to keep two marrieds from each taking deductions for interest on $1.1 million. Cf. Charles J. Sophy, 138 T. C. 8, filed 3/5/12, and my blogpost “Sophy’s Choice” 3/6/12.

Interestingly, Sophy isn’t cited in Faina. Maybe Judge Goeke doesn’t read Judge Cohen’s decisions. For sure no Tax Court Judges read my blogposts.

Anyway, as with Sophy, the decision goes against Faina on plain language. Judge Goeke: “We believe section 163(h)(3)(B)(ii) clearly states that a married individual filing a separate return is limited to a deduction for interest paid on  $500,000 of home acquisition indebtedness. Similarly, we believe section 163(h)(3)(C)(ii) clearly states that a married individual filing a separate return is limited to a deduction for interest paid on $50,000 of home equity indebtedness.

“Petitioner has not offered any unequivocal evidence of legislative purpose which would allow us to override the plain language of section 163(h)(3)(B)(ii) and (C)(ii).7 As a result, we agree with respondent that petitioner is not entitled to a deduction for the interest paid on the entire $1 million of acquisition indebtedness incurred in purchasing the property. Rather, petitioner is entitled to deduct interest paid on only $550,000 of the mortgage indebtedness.” 138 T.C. 21, at pp. 8-9.

And what’s more, the statutory language is so unambiguous that Faina gets a 20% accuracy-related (understatement) penalty.

That’s Tax Court for you: Equal treatment for both married and unmarried couples, same-sex or opposite-sex; all are $500K/$50K limited.