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Wednesday, October 5, 2011
DOJ Wins Three Tax Shelter Cases on Same Day
Three federal courts have issued decisions in favor of the United States in three separate cases involving abusive tax shelters, the Justice Department announced today. All of the court opinions were issued on Sept. 30, 2011.
- In Southgate Master Fund LLC v. United States, the U.S. Court of Appeals for the Fifth Circuit, based in New Orleans, affirmed a lower court ruling that a company formed by billionaire Dallas banker D. Andrew Beal and others was a sham partnership that must be disregarded for federal income tax purposes. ...
- In Pritired 1 LLC v. United States, Judge John A. Jarvey of the U.S. District Court for the Southern District of Iowa prohibited Principal Life Insurance Co. from claiming more than $20 million in foreign tax credits that the company had sought based on a complex transaction involving a $300 million payment to two French banks. ...
- Finally, in WFC Holdings Corporation v. United States, Judge John R. Tunheim of the U.S. District Court for the District of Minnesota disallowed a tax refund claim for more than $80 million filed by a subsidiary of Wells Fargo & Co.
October 5, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (1)
Tuesday, October 4, 2011
Forbes: 5th Circuit Nixes Billionaire Beal's $1.1 Billion Tax Shelter
The 5th Circuit Federal Court of Appeals Friday nixed billionaire Texas banker Andrew Beal's attempt to claim $1.1 billion in tax losses based on an investment of just $19 million in distressed Chinese debt. But in unanimously upholding a 2009 district court decision disallowing the losses, the three-member appeals panel agreed with the lower court that Beal isn't liable for penalties since he had "good cause" to believe his ploy might work. The appeals decision described the penalty issue as a "close one."
Friday's decision is the first from an appeals court involving what the government calls the "distressed asset debt" or "DAD" shelter. The government has asserted in court papers that Beal, who is worth an estimated $7 billion, used DAD multiple times to "stockpile over $4 billion in artificial losses to shelter future income." Beal's lawyers did not respond Sunday to a request for comment, but he has consistently contended his tax moves were proper. (The full decision, Southgate Master Fund Limited, is available here through TaxProf blog, which first reported it yesterday.) ...
Last month, U.S. Tax Court Judge Robert A. Wherry Jr. gave thumbs down to another group of DAD tax shelters—these marketed by Harvard trained tax lawyer John E. Rogers to less wealthy investors (primarily small businessmen and doctors) in 2003 and 2004. In a ruling here deciding 15 cases, the judge also upheld the IRS' imposition of penalties on those taxpayers. ...
Son-of-BOSS has been consistently disallowed by the courts. In his recent decision giving thumbs down to the DAD deals Rogers had structured, U.S. Tax Court Judge Wherry put the relationship of Son-of-BOSS and DAD in some perspective. He wrote:
"It seems only fitting that after devoting countless hours in the last decade to adjudicating Son-of-BOSS transactions, we have now progressed to deciding the fate of DAD deals. And true to the poet's sentiment that `The Child is father of the Man', the DAD deal seems to be considerably more attenuated in its scope, and far less brazen in its reach, than the Son-of-BOSS transaction."
Less brazen, perhaps. But Wherry still imposed penalties on those who bought into DAD.
October 4, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Friday, September 30, 2011
5th Circuit Rejects $1.1b Tax Losses Claimed by Andrew Beal in DAD Tax Shelter
We affirm in all respects the district court's judgment disposing of this petition for a readjustment of partnership tax items under § 6226. The plaintiff, Southgate Master Fund, L.L.C., was formed for the purpose of facilitating the acquisition of a portfolio of Chinese nonperforming loans ("NPLs"). A partnership for tax purposes, Southgate's disposition of its portfolio of NPLs generated more than $1 billion in paper losses, about $200 million of which were claimed as a deduction by one of its partners in tax year 2002. The Internal Revenue Service determined that Southgate was a sham partnership that need not be respected for tax purposes and that Southgate's allocation of the $200 million loss to the deducting partner should be disallowed. The district court upheld these determinations. After laying out the pertinent factual background in Part I, we explain in Part II why the district court was correct to do so. The Service further determined that the accuracy-related penalties in §§ 6662(b)(1)–(3) applied to the underpayments of tax resulting from Southgate's treatment of its losses. On this point, the district court disagreed, disallowing the accuracy-related penalties on the ground that Southgate had reasonable cause for, and acted in good faith with respect to, the tax positions that resulted in the underpayments of tax. Although this issue is a close one, we affirm the district court's decision to disallow the penalties.
(Hat Tip: Richard Jacobus.)
September 30, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Tuesday, September 27, 2011
Supreme Court Grants Certiorari on 6-Year SOL and Overstatement of Basis
The Court this morning granted certiorari in the Home Concrete case from the Fourth Circuit [Home Concrete & Supply LLC v. United States, No. 09-2353 (4th Cir. Feb. 7, 2011)], thus paving the way for a definitive, nationwide resolution of the issues presented in the Intermountain cases. ... The government's opening brief in Home Concrete is due November 14. The case will likely be argued in January, or possibly February, and the Court will issue its decision before the end of June 2012.
(Hat Tip: Kristin Hickman.)
September 27, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Sunday, September 18, 2011
WSJ: 9th Circuit Approves Charitable Freeze to Hedge Against IRS Valuation Fight
Wealthy taxpayers who want to make large gifts to family members recently got good news: A federal appeals court affirmed a popular technique to sidestep gift taxes.
The decision, Estate of Petter v. Commissioner, was published in August by the Ninth Circuit in San Francisco. It joins earlier rulings on related issues by the Eighth and Fifth circuits. All the cases originated in Tax Court, but appeals go to the federal circuit court in which the taxpayer lives.
"These decisions make it easier for senior family members to transfer hard-to-value assets to heirs and charity with reduced gift-tax risk," says John Porter of Baker Botts in Houston, who argued all the cases. These and other victories have made him a rock star in the staid trust-and-estates bar. ...
[Valuation is] always an issue with large gifts, especially with real estate or a business. What if the IRS challenges an estimate and wants more gift taxes? Many taxpayers are loath to write a check, and some don't have ready cash. Petter offers a solution. ...
Estate planners advised Ms. Petter to transfer all the [$22 million of] UPS stock to a limited-liability company. Then she both gave and sold units of the LLC to two of her children in 2002. Ms. Petter claimed that putting the stock in the LLC entitled her to a 51% discount from its market value on the transfers made to her children. The IRS challenged that, and the two parties ultimately settled on a 36% discount.
The crux of the case: Was gift tax due once the discount dropped to 36% from 51%? ... But she had specified that in such a case they would bounce to her IRS-registered charity—with no gift tax due. The IRS didn't like that one bit, because it meant the penalty for an exaggerated discount was simply a donation to a charity, not a check to Uncle Sam.
"The government said if Ms. Petter prevailed, it had no incentive to audit," says Carlyn McCaffrey, an attorney at McDermott, Will & Emery in New York. The IRS's real fear, says retired tax expert Tom Ochsenschlager, is that without audits, taxpayers could "get away with murder on valuations."
The courts sided with Ms. Petter, giving a lift to taxpayers and charities, if not the IRS.
September 18, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Tuesday, September 6, 2011
11th Circuit Rejects Wesley Snipes' Tax Appeal
September 6, 2011 in New Cases, Tax | Permalink | Comments (1) | TrackBack (0)
Saturday, September 3, 2011
Tax Court Rejects DAT/DAD Tax Shelter
(Hat Tip: Richard Jacobus.) Prior TaxProf Blog coverage:
- Court Rejects $1.1b Tax Losses Claimed by Andrew Beal in DAD Tax Shelter (Aug. 20, 2009)
- Andrew Beal Appeals Denial of $1.1b DAD Tax Shelter Losses (May 31, 2010)
- 5th Circuit to Hear Andrew Beal's Appeal of $1.1b DAD Tax Shelter Loss (Aug. 1, 2010)
- DOJ Sues Former Seyfarth Shaw Partner Over DAT/DAD Tax Shelters (Nov. 4, 2010)
September 3, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Friday, September 2, 2011
More on Adjunct Faculty as Employees, Not Independent Contractors
Whether a person who is performing services ends up characterized as an employee or as an independent contractor affects a variety of tax issues. For example, the payor's withholding responsibilities differ, employees being subject to withholding but most independent contractors not being subject to withholding. As another example, if the person is an independent contractor, the person is subject to self-employment taxes barring the application of an exception, whereas the person's status as an employee means that the social security and Medicare tax responsibility is split between the employee and the employer. A very recent case indicates yet another significance, namely, whether deductible expenses incurred in the performance of the services are deductible in computing adjusted gross income, on Schedule C, or are deductible as employee business expenses, on Schedule A, subject to the 2-percent-of-adjusted-gross-income floor. This recent case caught my eye because the taxpayer was performing services as an adjunct professor. ...
The taxpayer's situation in Schramm is very similar to that of adjunct faculty generally. It certainly is very similar to the manner in which my Law School treats adjuncts. The major difference is that adjuncts are permitted to select textbooks rather than being told what textbook to use, though they do receive advice and recommendations on that point. It is possible that some of our adjunct faculty do not maintain home offices for their teaching activities, but I've never asked and I don't think anyone has ever asked. Newly-hired adjunct faculty, of course, lack the permanency of relationship that existed in Schramm, though that factor alone will not change the outcome. Next time I speak with one of our adjuncts, I need to remember to ask if they receive a Form W-2 or a Form 1099. Strange that I've never had this conversation, but I've never been involved in the payroll side of things. Perhaps I'll also ask if they have any deductible expenses related to their teaching, because the school does make available to adjuncts computers and similar equipment. My guess is that, like me, they do have computers used for teaching and other business purposes, and pay for an internet connection through which they connect to the on-line classrooms and exchange emails with students, other faculty, and law school administration.
September 2, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Wednesday, August 31, 2011
Tax Court: Adjunct Prof Is Employee, Cannot Deduct Expenses on Schedule C
August 31, 2011 in New Cases, Tax | Permalink | Comments (4) | TrackBack (0)
Monday, August 29, 2011
Enron's Ken Lay Wins Posthumous $3.9 Million Tax Court Victory
This case involves a deficiency of $3,910,000 determined by respondent in the 2001 Federal income tax of Kenneth L. Lay and Linda P. Lay (the Lays). The deficiency is based upon respondent's determination that the Lays received income as a result of the sale of two annuity contracts to Enron Corp. (Enron). For the reasons stated herein, we find that they did not receive the income determined by respondent and are not liable for the deficiency. ...
Enron paid Mr. and Mrs. Lay $10 million in exchange for the annuity contracts. Enron intended for the full amount of its payment to be consideration for the annuity contracts. The annuities transaction is well documented, and all actions of the parties to the transaction reflect that Enron purchased the annuity contracts for $10 million. The Lays properly reported the transaction on their 2001 tax return as a sale of their annuity contracts.
(Hat Tip: Bob Kamman.)
Update: Bloomberg, Enron CEO Kenneth Lay Bests IRS in Tax Court
August 29, 2011 in New Cases, Tax | Permalink | Comments (1) | TrackBack (1)
Saturday, August 27, 2011
Texas Supreme Court Upholds Constitutionality of $5 'Pole Tax'
A Texas statute requires a business that offers live nude entertainment and allows the consumption of alcohol on its premises to remit to the Comptroller a $5 fee for each customer admitted. We are asked to decide whether the statute violates the right to freedom of speech guaranteed by the First Amendment to the United States Constitution. We hold it does not.
Prior TaxProf Blog coverage:
- Texas Imposes "Pole Tax" on Strip Club Patrons (Dec. 22, 2007)
- Texas "Pole Tax" on Strip Club Patrons Ruled Unconstitutional (Apr. 1, 2008)
- Texas Legislator Files Amicus Brief in Support of 'Pole Tax' (Dec. 11, 2009)
- Texas Supreme Court to Decide Constitutionality of 'Pole Tax' (Feb. 15, 2010)
August 27, 2011 in New Cases, Tax | Permalink | Comments (1) | TrackBack (0)
Thursday, August 18, 2011
Tax Court: Accountant Cannot Deduct Bathroom as Home Office
Petitioner has a master's degree in accounting from Florida International University. He worked for the Internal Revenue Service for 7 years, working as a tax technician, revenue agent, Appeals auditor, and Appeals officer. In 1985 petitioner started the accounting business he continues to operate today. This business provides tax return preparation services and has helped prepare approximately 180-220 returns per year.
Petitioner has two daughters. In 2007 his daughters were 17 and 20 years old, respectively. His older daughter was a fulltime student at Rutgers University from September 1, 2005, through May 9, 2007. His younger daughter was a high school student in 2007. Petitioner's daughters provided administrative assistance in his accounting business, but the business did not issue either a Form W-2, Wage and Tax Statement, or a Form 1099- MISC, Miscellaneous Income, to report any wages to either daughter. Petitioner paid his daughters' credit card bills....
Petitioner used one of the bedrooms of his residence exclusively as his office for his accounting business. Petitioner argued that he also used the hallway and the bathroom adjacent to this bedroom exclusively for his accounting business. Petitioner testified, however, that his children and other personal guests occasionally used the bathroom. Accordingly, the hallway and the bathroom were not used exclusively for business purposes. ...
Petitioner argues that both his daughters were paid wages for administrative work performed for his accounting business in 2007. However, neither daughter was issued a paycheck, Form 1099-MISC, or Form W-2. Further, neither had tax withheld. Petitioner testified that he paid his daughters for their work by paying their credit card bills but has not provided any evidence to substantiate amounts paid. Accordingly, we sustain respondent's determinations with respect to the wages paid to petitioner's daughters.(Hat Tip: Bob Kamman.)
August 18, 2011 in New Cases, Tax | Permalink | Comments (7) | TrackBack (2)
Tuesday, August 16, 2011
Daugerdas Seeks New Trial in Tax Shelter Case Based on Juror Misconduct
Counsel for former Jenkens & Gilchrist partners Paul Daugerdas [right, featured in The American Lawyer December 2003 cover story, Helter Shelter] and Donna Guerin and their co-defendants have charged that a juror at their trial for a massive illegal tax shelter scheme hid the fact that she had practiced law, had been suspended from practice for alcohol dependency and professional misconduct, that an appellate court had refused to reinstate her because of mental illness and that there was an outstanding warrant for her arrest.
August 16, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Tuesday, July 26, 2011
Court: Accountant Can't Deduct Value of His Services in Developing Web Site
Petitioner operated his Web site business using the accrual method of accounting. In 2007 petitioner worked 1,000 hours developing the Web site. Petitioner charges unrelated parties between $45 and $55 an hour for performing work similar to that which he performed on his Web site development. Petitioner's proprietorship, the Web site, did not pay him for any services he performed for himself. Petitioner's proprietorship accrued $50,000 as a liability for payment to petitioner for his work to set up his Web site, and the accrued expense was deducted on Schedule C of the return. ...
On the issue of his accrual, petitioner testified that he is an accountant. As an accountant petitioner should be familiar with the concept of imputed or implicit expenses or costs (imputed expenses). Imputed expenses are the opportunity costs of time and capital that the manager of a business has invested in producing "the given quantity of production and the opportunity cost of making a particular choice" among alternatives. Siegel & Shim, Dictionary of Accounting Terms (Barron's Business Guides) 234 (5th ed. 2010). An imputed expense is one that is not actually incurred but is used to compare with an actual cost. Oxford Dictionary of Accounting 227 (Gary Owen & Jonathan Law eds., 4th ed. 2010); Tracy, Accounting for Dummies 237 (3d ed. 2005). An imputed cost is not recorded in the books of account and is not accurately measurable but is a hypothetical cost used in making comparisons; an example is "salaries of owner-directors of sole proprietorship firms." Rajasekaran & Lalitha, Cost Accounting 12 (2011).
From an accounting standpoint, the time petitioner spent on his own Web site instead of earning $45 to $55 an hour from unrelated parties is an opportunity cost, an imputed expense to petitioner and his business. It is not an incurred expense, is not reflected in the financial statements, and is not an actual cost. ....
Respondent cited several cases for petitioners' and the Court's consideration on this issue. In Maniscalco v. Commissioner, T.C. Memo. 1978-274, the Court observed that "Whatever may be said in behalf of taking into account the value of one's own services in lieu of paid labor, such services are not considered an element of the deduction under sec.162(a). ... Petitioner argues that all these cases involve cash basis taxpayers, and he agrees that a cash basis taxpayer cannot deduct a payment to himself in the same year. However, he argues inexplicably that because his business was on the accrual method the cases respondent cites not only are inapposite but also support his position. [Fn.2]
[Fn.2: Petitioner cited Remy v. Commissioner, T.C. Memo. 1997-72, as supporting his position. The Court in that case held that a cash basis taxpayer could not deduct the value of his labor under sec. 162 because it was not paid or incurred. Petitioner interprets the case to mean that an accrual basis taxpayer can deduct the value of his labor, a logical fallacy.]
Perhaps petitioner did not read Rink or he failed to read it carefully. The Court pointed out in that case that the taxpayer took the position, as petitioner does, that "he should be permitted to accrue currently, as a liability, amounts owed by him to himself on account of his labors, but include the value of such labor in income only when and if such labor gives rise" to income in the future. The Court found the argument to be without any merit; "For one thing, we have found that the petitioner incurred no liability, in favor of himself or anyone else, to pay for the value of his services." Id. at 753-754 (emphasis added). ...Neither accounting principles, tax law, nor common sense supports a deduction by petitioners for contract labor as a result of an accrual of an amount "owed" by petitioner to himself for his own labor.
- Jim Maule (Villanova), The Value of Tax Education
- Tax Lawyer's Blog, Accountant Tries to Deduct Value of His Own Services
- Tax Update Blog, If Time Is Money, Why Can't I Deduct It?
July 26, 2011 in New Cases, Tax | Permalink | Comments (1) | TrackBack (0)
Wednesday, July 13, 2011
Hickman: Dissecting Cohen v. United States
The D.C. Circuit's recent en banc decision in Cohen v. United States, No. 08-5088, in some ways represents a significant statement regarding the availability of judicial review for Administrative Procedure Act (APA) procedural challenges in the tax context. At a minimum, the court's decision embraces the Supreme Court's recent rejection of tax exceptionalism in Mayo Foundation for Medical Educ. & Research v. United States, 131 S.Ct. 704 (2011). Nevertheless, the decision's practical implications for APA procedural challenges against Treasury and IRS actions are substantially less clear and potentially minimal.
July 13, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
No Deduction for $1.2m Claim for Services by Tax Attorney Son for Infirm Parents
[T]he issues we must decide are: (1) Whether the estate is entitled to deduct [$1,240,000] as an expense the claim on the estate tax return for services rendered by Anthony M. Olivo (Mr. Olivo), the son of Emilia W. Olivo (decedent) to decedent before her death; (2) whether the estate is entitled to deduct the [$44,200] administrator's commission paid to Mr. Olivo; and (3) whether the estate is entitled to deduct the [$55,000] accountant's and attorney's fees claimed by Mr. Olivo.
Mr. Olivo, the administrator of the estate, resided with decedent at the time of her death and had provided care for her for many years before her death. Mr. Olivo began providing nearly full-time care for decedent and her late husband, Matthew W. Olivo, his parents (we sometimes refer to Matthew W. Olivo as his father), around September 18, 1994. ...
[D]uring September 1994, Mr. Olivo began to find it increasingly difficult to maintain his practice as an attorney. He had received his J.D. from Rutgers University School of Law (Camden) in 1976 and his LL.M. in taxation from New York University School of Law in 1979. Mr. Olivo practiced law at private firms in Cherry Hill, New Jersey, from 1976 until 1988, when he began his own practice. However, his solo practice began to disintegrate during the mid-1990s, in part because of the amount of time he devoted to his parents' health problems. He earned no significant income from his law practice during the period when he was caring for his parents, from 1994 through 2003....
Mr. Olivo's care for decedent during the last years of her life was extraordinary, and the efforts he expended on her behalf are commendable. However, we conclude that the estate has not established that Mr. Olivo is entitled to recover for that care....
Applying the statutory formula to the estate value of $1,711,163.81 reported on the return yields an administrator's commission of $52,223.28. ...
The record shows that Mr. Olivo did perform some legal services for the estate, in addition to his services as administrator. For instance, he filed the estate's tax return,handled the IRS examination on behalf of the estate, and filedthe estate's original petition with this Court. However, the record does not establish the value of his legal services. Mr. Olivo kept no records of the time he spent performing legal services for the estate. Instead, he merely estimated the numberof hours and used a billing rate of $150 per hour. On account of the lack of corroborating evidence in the record concerning theattorney's fees issue, we decline to accept Mr. Olivo's estimates of the amount of time he spent performing legal services for the estate.
(Hat Tip: Bob Kamman.)
July 13, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Wednesday, July 6, 2011
Court: Taxpayer Can't Force IRS to Audit Him -- 'There Is No Right to Pay Taxes'
Guess?, Inc. co-founder Georges Marciano has lost his bid in Washington federal court for an order forcing the IRS to investigate his tax returns and liabilities.
Marciano had argued that the audit could reveal money owed to the government that he believes former employees mishandled. In dismissing the suit on Friday, U.S. District Court Judge Henry Kennedy Jr. noted that the property rights protected under the Fifth Amendment don't guarantee anyone's right to pay taxes.
In his complaint, Marciano claimed that he uncovered evidence of "substantial financial irregularities" in his personal and business affairs around 2005. He believed he was the victim of identity theft, fraud, embezzlement and a host of other financial crimes.
As part of his investigation into these irregularities, Marciano alleges that he repeatedly asked the IRS for copies of previous years' tax returns, but was told that they were unavailable. He claims he also asked the IRS to do an audit of his previous returns, but they refused. ...
The IRS moved to dismiss the suit, claiming Marciano had failed to state a viable claim and that the court lacked jurisdiction.
In his opinion,Kennedy sided with the IRS, finding that Marciano had failed to exhaust administrative remedies and that Marciano could not sue the IRS through statutes designed to give individuals legal remedies in cases where the IRS is demanding payment. ...
"The extraction by the government of money or property via taxation implicates a constitutionally protected property interest, but, as noted above, Marciano has asserted repeatedly that he owes the government money, rather than the reverse," Kennedy wrote. "The Court is aware of no precedent establishing a protected property interest in the ability to pay taxes."
July 6, 2011 in IRS News, New Cases, Tax | Permalink | Comments (10) | TrackBack (0)
Saturday, July 2, 2011
D.C. Cir.: IRS Can't Make Taxpayers Run 'Obstacle Course' to Get Refund
A divided federal appeals court in Washington said a group of taxpayers will be allowed to challenge the procedure the IRS set up to refund billions of dollars collected through an unlawful tax on telephone calls. [Cohen v. United States, No. 08-5808) (D.C. Cir. July 1, 2011) (en banc)]
The full U.S. Court of Appeals for the D.C. Circuit voted 6-3 to send back to the trial court a dispute over whether the IRS refund procedure is unconstitutional. The 10 plaintiffs want an injunction ordering the IRS to craft a new refund method.
The appeals court did not take a stance on the merits of the IRS's refund scheme, instead addressing only whether the court has oversight. The court ordered additional proceedings in the U.S. District Court for the District of Columbia. ...
At issue is whether the plaintiffs must first file refund claims with the IRS and then litigate their dispute in tax suits or whether the group of taxpayers can sue under the Administrate Procedure Act without taking any of the earlier steps. A report issued by the Treasury Inspector General for Tax Administration said the IRS illegally collected $8 billion between February 2003 and August 2006.
The six judges in the majority, including Janice Rogers Brown, who wrote the opinion for the court, rejected the IRS claim that the suit is barred because it seeks restraint of the assessment and collection of taxes. The IRS, the majority said, sees a world in which "no challenge to its actions is ever outside the closed loop of its taxing authority."
"This suit is not about the excise tax, its assessment or its illegal collection. Nor is it about the money owed the taxpayers," Brown said. "This suit is about the obstacle course, and the decisions made by the IRS while setting it up."
Brown said the suit is permitted under the Administrative Procedure Act because it "questions the administrative procedures by which the IRS allows taxpayers to request refunds for the wrongfully collected excise tax." ...
The IRS, Brown wrote, is no victim. The taxpayer plaintiffs "are not raiders in pursuit of an unwarranted windfall." The plaintiffs, the court said, "are aggrieved citizens in search of accountability."
July 2, 2011 in IRS News, New Cases, Tax | Permalink | Comments (3) | TrackBack (0)
Wednesday, June 22, 2011
Hickman on D.C. Circuit's Intermountain Decision
Much like the Federal Circuit, the D.C. Circuit applied Chevron analysis to conclude that § 6501 is ambiguous and that Treasury's interpretation of that provision is reasonable. Because the statute is ambiguous, the Supreme Court's decision in Colony does not foreclose Treasury's interpretation. Whether or not the temporary regulations were procedurally flawed for APA purposes, Treasury finalized them using notice and comment. Treasury's "searching consideration" of the sole comment received in that process, as expressed in the preamble to the final regulations, demonstrated a sufficiently "open mind" to "cure" any procedural problem posed by the use of temporary regulations. (The court did not address at all whether or not the use of temporary regulations without notice and comment complies with the APA. Instead, the court only addressed the argument that the final regulations were procedurally flawed because they had been initially adopted as temporary regulations without notice and comment and the agency failed to keep an open mind in promulgating the final regulations.)
Update: For more, see Miller & Chevalier's Tax Appellate Blog.
Prior TaxProf Blog coverage:
- Johnson: Intermountain, Interpretive Regulations, and Brand X (May 20, 2010)
- Johnson: Intermountain and the Importance of Administrative Law in Tax Law (Aug. 25, 2010)
- Federal Circuit Exacerbates Split on Overstatement of Basis and 6-Year SOL (Mar. 12, 2011)
- Harvard Law Review on Intermountain (Mar. 24, 2011)
June 22, 2011 in New Cases, Tax | Permalink | Comments (1) | TrackBack (0)
Monday, June 20, 2011
3d Cir. Rejects Tax Shelter, Blasts Schering-Plough's 'Chutzpah'
Schering-Plough further complains that the IRS had inappropriate motives for pursuing its audits and requests discovery to explore this allegation further. The language from IRS documents that Schering-Plough quotes indicates that at least one IRS agent thought that Schering-Plough's approach to determining its tax liabilities was less than conscientious, given prior findings of evasion (which were upheld by this circuit, as the District Court noted, see Schering-Plough Corp.). The chutzpah of this argument is notable. To the extent that the IRS pursued Schering-Plough more vigorously because Schering-Plough had a history of failing to comply with the tax laws, this represents commendable agency diligence in the light of past experience, not some kind of impermissible bias against Schering-Plough. Schering-Plough offers no persuasive basis for us to order further discovery.
(Hat Tip: Richard Jacobus.) For more, see Subpart F and Schering-Plough, 60 Emory L.J. 503 (2010).
June 20, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Thursday, June 16, 2011
Forbes: The IRS's War Against Charitable Donations of Facade Easements
The IRS's seven year campaign against questionable charitable deductions for the donation of historic building facade easements has ratcheted up another notch. On Tuesday, the Department of Justice filed a lawsuit seeking to enjoin the non-profit Trust for Architectural Easements from practices that allegedly promote improper and inflated easement deductions.
The suit, filed in Federal District Court in Washington, D.C., also demands the names of 800 property owners in New York City, Boston and Baltimore who have claimed charitable deductions totaling more than $1.2 billion for the donation of easements to the Trust. ...
The government's 38-page lawsuit alleges, among other things, that the Trust made "false and fraudulent" statements to prospective donors about the tax benefits available for donating facades; steered donors to appraisers who had been "coached" by it to go along with its questionable practices; helped donors to claim deductions before donations were final; and allowed donors to terminate easements they had already granted. ...
The IRS itself has come under criticism from some tax practitioners for its aggressive stance on historic easement donations, which it included in its "Dirty Dozen" list of tax scams for 2005 and 2006. In a 2009 report, the IRS Advisory Council said that the agency's "strict view" was "diluting" the tax incentive Congress created in 1976 for the donation of easements that protect a historic property by restricting facade changes or development in perpetuity. The IRS' aggressive audits, the report added, "have added to the perception that the IRS is overreaching on this issue."
June 16, 2011 in IRS News, New Cases, Tax | Permalink | Comments (0) | TrackBack (1)
Tuesday, June 14, 2011
Tax Court Rejects Private Equity Manager's 'Blame the Accountant' Defense
Mr. Woodsum terminated the swap ahead of its set termination date because his watchful eye noted that it was not performing satisfactorily as an investment. That is, when his own receiving of income was in question, Mr. Woodsum was evidently alert and careful. But when he was signing his tax return and reporting his tax liability, his routine was so casual that a halfmillion- dollar understatement of that liability could slip between the cracks. We cannot hold that this understatement was attributable to reasonable cause and good faith.
(Hat Tip: Bob Kamman.)
June 14, 2011 in Celebrity Tax Lore, New Cases, Tax | Permalink | Comments (1) | TrackBack (1)
Monday, June 13, 2011
L.A. Tax Lawyer Sentenced in Hollywood Kickback, Tax Evasion Case
As the criminal case against the former Hollywood tax lawyer Matthew Krane heads to a conclusion — Mr. Krane is to be sentenced after pleading guilty to tax evasion and making a false statement on a passport application — the Treasury Department can breathe a little easier about the deficit.
According to a supplemental sentencing memorandum filed Wednesday with the United States District Court for the Western District of Washington in Seattle, Mr. Krane has entered an agreement with the IRS, his former client Haim Saban, and others under which the federal government is to receive $23 million of the approximately $46.6 million Mr. Krane and others were accused of siphoning from a Saban deal in 2002.
- ABA Journal, Suspended LA Lawyer Gets 32 Months, Must Repay $41M, in Quellos Tax-Shelter
- Accounting Today, Lawyer Sentenced in Quellos Tax Shelter Scheme
- Forbes, Show Biz Lawyer Finally Sentenced in Massive Fraud Case
- Sacramento Bee, CA Man Gets 2 1/2 Years in Prison for Tax Evasion
(Hat Tip: Bob Kamman.)
June 13, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
WSJ on the Cat Lady's Tax Deductions
Following up on last week's post, Attorney Can Deduct Some, But Not All, Expenses of Caring for 70-80 Foster Cats:
Wall Street Journal, Stray Cat Strut: Woman Beats IRS, by Laura Saunders:
When Jan Van Dusen appeared before a U.S. Tax Court judge and a team of Internal Revenue Service lawyers more than a year ago, there was more at stake than her tax deduction for taking care of 70 stray cats.
Hanging in the balance were millions of dollars in annual tax deductions by animal-rescue volunteers across the nation—and some needed clarity on the treatment of volunteers' unreimbursed expenses for 1.55 million other IRS-recognized charities.
Early this month, Ms. Van Dusen learned she had won her case. "I was stunned," she said. "It feels great to have established this precedent."
The Tax Court allowed her to take a charitable deduction for expenses she incurred while taking care of the cats in her home for an IRS-approved charity, Fix Our Ferals. Among the $12,068 in expenses she deducted: food, veterinarian bills, litter, a portion of utility bills, and other items such as paper towels and garbage bags.
The decision, in Van Dusen v. Commissioner, paves the way for volunteers of animal-rescue groups like the ASPCA and Humane Society of the U.S. to deduct unreimbursed expenses that further the groups' missions, such as fostering stray animals.
It also clarifies rules for anybody deducting unreimbursed charitable expenses of $250 or more, especially if they involve use of a home.
June 13, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Strip Club Liable for $125k Sales Tax; Lap Dances Are Not Tax-Exempt as 'Musical Performances' or 'Theater-in-the-Round'
Albany Times-Union, Court: Lap Dances Aren't Tax-Exempt:
While a lap dance might prompt a strong reaction from an audience, it doesn't rise to the level of art -- at least according to a state appellate court.
Thursday's ruling said entertainers at a local strip club are subject to sales taxes, and their expressions are not considered choreographed artistic performances that would be exempt.
Nite Moves, an adult "juice bar" on Route 9 in Latham, has been fighting the tax law -- first in an administrative hearing and then in court -- following a 2005 audit by the state Division of Taxation that concluded the club owed nearly $125,000 in sales tax, plus interest for door admission charges and private dance sales. The Appellate Division of state Supreme Court upheld that decision in an unanimous opinion.
Patrons at Nite Moves "view exotic dances performed by women in various stages of undress," the decision said. Revenue is generated from admission charges, "couch sales" -- the fee charged when a dancer performs for a customer in one of the club's private rooms -- as well as register sales from the non-alcoholic beverages sold and house fees paid by the dancers to the club.
- Daily Mail, 'Stripping Is NOT Art': NY Ruling Means Lap Dancing Is a Taxable Service
- NY Daily News, Lap Dance Tax? Court Says Erotic Dances Are Not Art, Subject to Sales Tax
- NY Post, Taxman in $lap Dance: Hand in Clubs' Pockets
- Reuters, NY Court Rules Private Lap Dances Not Tax Exempt
- Wall Street Journal, NY Court Says Juice Bar's Lap Dances are Taxable
- Washington Post, NY Court: Strip Club Has to Pay Taxes on Lap Dances Because They're Not Artistic Performances
June 13, 2011 in Celebrity Tax Lore, New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Saturday, June 11, 2011
Zelinsky: New York's Irrational Income Taxation of Nonresidents
As a law professor, I routinely commute from my home in New Haven, Connecticut to Manhattan where I teach my classes at the Cardozo Law School of Yeshiva University. On most days when I don't teach, I work at home. Modern technology (e.g., the internet, email, legal databases like Lexis and Westlaw) allows me to research and write at my residence in Connecticut while staying in touch electronically with my Cardozo students and colleagues. Given its obvious benefits, such "telecommuting" is blossoming.
On days when telecommuting nonresidents like me work at our out-of-state homes, New York takes the irrational position that we are really working in the Empire State, though in fact we are outside New York's borders. By the legal fiction known as the "convenience of the employer" doctrine, New York assesses income taxes for nonresident telecommuters' work-at-home days – even though we do not set foot in New York on those out-of-state days. New York's convenience of the employer doctrine typically results in double taxation on the days nonresident telecommuters work at their out-of-state homes.
When I challenged New York's convenience of the employer rule as unconstitutional, I found myself in a prolonged and public controversy over New York's irrational taxation of nonresident telecommuters. I ultimately lost my case in New York's highest court.
John J. Barker of New Canaan, Connecticut now finds himself enmeshed in an equally convoluted controversy about New York's self-destructive tax policies vis-a-vis nonresidents of the Empire State. Mr. Barker was an investment manager who commuted regularly from his home in New Canaan to his office in Manhattan. ... New York concedes that the Barkers were domiciled in Connecticut from 2002 through 2004. Nevertheless, New York insists that the Barkers were New York residents and owe a second, New York income tax on their investment income by virtue of the modest beach house the Barkers owned in Napeague, New York. The Barkers used this house for short, sporadic vacations. In 2002, for example, the Barkers used their small New York beach house five times for a total of only nineteen days. ...
New York's Tax Appeals Tribunal recently sustained this double tax. Even though the Barkers stayed at their small New York beach house for a handful of days each year, the Tribunal let the Department tax the Barkers as New York residents by virtue of their minimally-used vacation home.
Mr. Barker thus threatens to displace me as the poster boy for New York's systematic overtaxation of nonvoting nonresidents.
Prior TaxProf Blog coverage:
- Bill to Prohibit NY Tax on Prof's Salary Attributable to Work in CT Home Office (Sept. 15, 2004)
- NY Court of Appeals to Hear Telecommuter Tax Case (Jan. 3, 2005)
- NY Court of Appeals Upholds Tax on Non-Resident Telecommuter (Mar. 30, 2005)
- Update on NY Telecommuter Tax (May 8, 2005)
- WSJ: NY Alters Telecommuter Tax Rule (May 31, 2006)
- NY Times: Taxing Telecommuters (Aug. 6, 2006)
- Zelinsky: NY's "Convenience of the Employer" Rule Is Unconstitutional (May 9, 2008)
- Swine Flu, Telecommuting and NY's Taxation of Nonresidents' Incomes (May 6, 2009)
- NY's 'Convenience of the Employer Test' (Dec. 30, 2009)
- Court: NY Can Tax Income of Owner of NY Vacation Home Used 17 Days/Year (Feb. 11, 2011)
June 11, 2011 in New Cases, Tax | Permalink | Comments (32) | TrackBack (0)
Monday, June 6, 2011
Supreme Court Denies Cert. in Wesley Snipes' Tax Appeal
- Is an accused person deprived of the right under Article III and the Sixth Amendment to be tried only by a jury of the community where venue is proper, when factual questions determinative of whether venue has been correctly laid are determined solely by a jury selected in the place challenged by the defendant as incorrect?
- Where venue is a contested factual issue in a criminal trial, does the government bear a burden of proof beyond a reasonable doubt or only by a preponderance of the evidence?
June 6, 2011 in New Cases, Tax | Permalink | Comments (5) | TrackBack (0)
Attorney Can Deduct Some, But Not All, Expenses of Caring for 70-80 Foster Cats
Van Dusen, a resident of Oakland, California, is an attorney who cared for cats in her private residence in 2004. Van Dusen volunteered for an organization called Fix Our Ferals and argues that her out-of-pocket expenses for caring for cats qualify as charitable contributions to that organization. The parties stipulate that Fix Our Ferals is a § 501(c)(3) organization. ...
Van Dusen was a Fix Our Ferals volunteer in 2004. She trapped feral cats, had them neutered, obtained vaccinations and necessary medical treatments, housed them while they recuperated, and released them back into the wild. She also provided longterm foster care to cats in her home. She attempted to place long-term foster cats in one of two no-kill shelters, Berkeley East Bay Humane Society or East Bay Society for the Prevention of Cruelty to Animals, or otherwise find them adoptive homes. Some foster cats, however, stayed with her indefinitely. In 2004, Van Dusen had between 70 and 80 cats total, of which approximately 7 were pets. The pet cats had names, but the foster cats generally did not. Most cats roamed freely around Van Dusen's home (except for bathrooms) and resided in common areas. Less domesticated cats stayed in a separate room called the "feral room". Some cats lived in cages for taming. Others lived in cages because of illness.
Van Dusen devoted essentially her entire life outside of work to caring for the cats. Each day she fed, cleaned, and looked after the cats. She laundered the cats' bedding and sanitized the floors, household surfaces, and cages. Van Dusen even purchased a house "with the idea of fostering in mind"....
We find that taking care of foster cats was a service performed for Fix Our Ferals, a § 501(c)(3) organization that specializes in the neutering of wild cats. Some of Van Dusen's expenses are categorically not related to taking care of foster cats and are therefore not deductible. These expenses are the cost of cremating a pet cat, bar association dues, and DMV fees. Some of Van Dusen's other expenses are not solely attributable to foster cat care and are not deductible. These expenses are the cost of repairing her wet/dry vacuum and her membership dues at a store.
Other expenses are attributable to the services Van Dusen provided to Fix Our Ferals. These expenses are 90% of her veterinary expenses and pet supplies and 50% of her cleaning supplies and utility bills. Some payments to Orchard Supply Hardware and Lowe's for pet supplies, however, are disallowed because the amounts spent on pet supplies cannot be determined with precision. In deciding whether Van Dusen kept adequate records of the expenses attributable to her volunteer services, we hold that the regulatory requirements for money contributions govern Van Dusen's expenses of less than $250. Van Dusen has met the requirements for these less than $250 expenses. Her records are acceptable substitutes for canceled checks under the substantial compliance doctrine. For expenses of $250 or more, however, Van Dusen does not have contemporaneous written acknowledgment from Fix Our Ferals. Therefore, these expenses are not deductible.
(Hat Tip: Bob Kamman.)
June 6, 2011 in New Cases, Tax | Permalink | Comments (5) | TrackBack (0)
Sunday, June 5, 2011
Schwidetzky: Musings on Watson and the John Edwards Sub S Tax Shelter
Last December, an Iowa federal district court came out with a decision on the "John Edwards gambit" (Watson v. United States, 107 A.F.T.R.2d 311 (IA D.C. 2010)) TaxProf blog coverage here and here.] Some musings:
In Watson, the taxpayer formed an S corporation of which he was the sole shareholder. The S corporation was a partner in an accounting firm partnership. The other partners were also one-person S corporations. In 2002, Watson's S corporation received profit distributions of $203,651 from the the partnership. In 2003, it received $175,470 in profit distributions. In each of those years, the S corporation paid Watson a salary of $24,000 per year, let the balance of the income "flow through" as nonwage income, and paid it to Watson as a dividend. The court concluded that Watson's salary and dividend payments were an effort to avoid federal employment taxes, and that the dividends paid to Watson were remuneration for services performed. Interestingly, the court did not conclude, at it might have, that the dividends paid were income for services and subject to federal employment taxes. As expert witness testified that fair market value of Watson's services for the years in question was about $91,044 per year, and only the difference between that amount and $24,000 was held to be subject to federal employment taxes, interest, and penalties.
Watson does not sound the death knell to the John Edwards technique. Iowa federal district courts are not the last word on tax matters. The salary the taxpayer took, while not de minimis, was quite small. Finally, and most importantly, the court looked not to the income generated by the taxpayer's services in calculating his employment income, but rather what a third-party expert said the value of his services were worth. A significant amount of income generated by the taxpayer's services, about $110,000 in 2002 and about $85,000 in 2003 still avoided employment taxes.
In some ways, the court's holding provides an additional incentive to use the technique. The court's holding permits significant amounts of income earned through services to avoid federal employment taxes, taxpayers just cannot be too greedy. Query whether it would be worth it to the Service to litigate a case where salaries equal to the social security tax maximum were paid, since it is more likely that the fair market value of services will be relatively close to such a number. Note that under the Court's reasoning in Watson at issue is not the fair market value of the taxpayer's own services, but those of an average, similarly situated taxpayer, whose services might be worth less than that of a given taxpayer's. Indeed, that allegedly is what John Edwards did. According to the New York Times, he took a salary of $360,000 per year on income over 4 years of $27 million. The salary was supposedly based on what the average personal injury lawyer earned in North Carolina. Under the Iowa court's reasoning, his approach would have survived challenge.
At this point, the future of the technique is uncertain. The Iowa court keeps the door open, indeed may open it wider, for those taking substantial salaries. However, another court might conclude that all the income is federal employment income, which would disallow the technique entirely. Further, there is a bill pending in Congress which would largely also shut this technique down.
The Health Care and Education Affordability Reconciliation Act of 2010, starting on January 1, 2013, applies an additional .9% Medicare tax on earned income exceeding certain thresholds (generally these thresholds are $250,000 if married, filing jointly, and $200,000 for single taxpayers). (The Act's 3.8% tax on net investment income should not apply to "dividends" as S corporation shareholder receives.) The .9% tax should provide an additional incentive to use the technique.
June 5, 2011 in New Cases, Tax | Permalink | Comments (1) | TrackBack (0)
More on the 'John Edwards Sub S Tax Shelter' Case
This note analyzes the "definition" of "reasonable compensation" under the IRS's revenue ruling and how the Tax Code applies that definition in determining employment-tax liability. The revenue ruling requires compensation to shareholder-employees of a small corporation to be reasonable. The IRS's subsequent re-characterization of "unreasonable" payments – i.e., those that should have been originally characterized as wages – subjects the re-characterized portion to penalties, interest, and additional taxes; specifically, taxes under the FICA. The case, here, involves a shareholder-employee of a Subchapter S corporation. The IRS challenged the shareholder-employee's amount of FICA-tax liability after determining his salary was unreasonably low, by re-characterizing a portion of his distributions, or dividends, he received from his S-corporation.
Prior TaxProf Blog coverage:
- Court Gives IRS Rare Win in 'John Edwards Sub S Tax Shelter' Case (Jan. 24, 2011)
- More on the 'John Edwards Sub S Tax Shelter' (Feb. 6, 2011)
June 5, 2011 in New Cases, Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)
Saturday, June 4, 2011
Senior Manager Files $350m Gender Discrimination Class Action Against KPMG
Aiming to put an end to the systemic gender discrimination at KPMG, a former female Senior Manager filed a $350 million class action discrimination lawsuit against the company today in the U.S. District Court for the Southern District of New York. The Plaintiff, Donna Kassman, lives in New York and worked in KPMG's New York office for seventeen years before resigning as a result of gender discrimination. ...
Plaintiff Kassman alleges that KPMG engages in systemic discrimination against its female Managers, including but not limited to Managers, Senior Managers and Managing Directors. The lawsuit is intended to change KPMG's discriminatory pay and promotion policies and practices, as well as its systemic failure to properly investigate and resolve complaints of discrimination and harassment. The Plaintiff is filing this action on behalf of a class of thousands of current and former female employees who have worked as Managers at KPMG from 2008 through the date of judgment.
KPMG promotes fewer women to Partner (18%) than the industry average (23%) and fewer women to Senior Manager (35%) than the industry average (44%). "Across the accounting industry, women are conspicuously absent from leadership positions; but at KPMG, women fare even worse," said Janette Wipper. "As soon as women come within reach of partnership, the Company's male-dominated owners find ways to block their advancement,"
June 4, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Wednesday, June 1, 2011
10th Circuit Adds to Circuit Split Over 6-Year SOL for Overstatement of Basis
- Miller & Chevalier Tax Appellate Blog, 10th Circuit Sides With Government on Intermountain Issue
- TaxProf Blog, Fed. Cir. Exacerbates Split on Overstatement of Basis, 6-Year SOL (Mar. 12, 2011)
June 1, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Thursday, May 26, 2011
Zelinsky: The Inadvisibility of Constitutionalizing Tax Expenditure Analysis
Tax expenditure analysis, despite its contribution to tax policy debate, is ill-suited as a tool of constitutional decisionmaking. Sometimes tax provisions are, for constitutional purposes, equivalent to direct monetary outlays; sometimes they are not. That equivalence can only be evaluated on a case-by-case basis, considering the nature of the specific tax provision and the particular constitutional clause at issue. Contrary to the approach of the Winn dissent, the Court is ill-advised to invoke tax expenditure analysis as a tool of constitutional decisionmaking. At the end of the day, we do not know what a tax expenditure is.
May 26, 2011 in New Cases, Scholarship, Tax | Permalink | Comments (1) | TrackBack (0)
Smith: Friedland -- Did the Tax Court Blow its Whistleblower Jurisdiction?
This article analyzes Friedland [T.C. Memo. 2011-90 (Apr. 25, 2011)], a recent Tax Court memorandum opinion, and concludes that in light of recent Supreme Court opinions, the Tax Court was wrong to hold that the 30-day period to file a petition in a whistleblower award action cannot be equitably tolled.
All Tax Analysts content is available through the LexisNexis® services.
May 26, 2011 in New Cases, Scholarship, Tax, Tax Analysts | Permalink | Comments (0) | TrackBack (0)
Wednesday, May 25, 2011
Supreme Court to Decide If Underreporting Income Merits Deportation
The Supreme Court on Monday granted certiorari in Kawashima v. Holder, 615 F.3d 1043 (9th Cir. 2010). The question presented is:
Whether, in direct conflict with the Third Circuit, the Ninth Circuit erred in holding that Petitioners' convictions of filing, and aiding and abetting in filing, a false statement on a corporate tax return in violation of 26 U.S.C. §§ 7206(1) and (2) were aggravated felonies involving fraud and deceit under 8 U.S.C. § 1101(a)(43)(M)(i), and Petitioners were therefore removable.
May 25, 2011 in New Cases, Tax | Permalink | Comments (1) | TrackBack (0)
Does Arizona Christian School Doom Challenge to Pastors' Housing Allowance?
Legal scholars say a recent Supreme Court decision upholding Arizona's tax credits for scholarship donations could contain the seeds of defeat for a pending California challenge to the housing allowance enjoyed by pastors. ...
The ruling sends a signal that the Freedom From Religion Foundation (FFRF) cannot rely on Flast in its current federal challenge to ministerial housing allowances, said church law expert Richard Hammar.
Notre Dame law professor Rick Garnett agrees. He noted a separate mid-April ruling by the Seventh District Court of Appeals, which dismissed the FFRF complaint that the presidential proclamation of a National Day of Prayer amounted to government establishment of religion. The Seventh Court said that since FFRF was not directly injured, it lacked legal standing.
"The ruling suggests that the Supreme Court is not alone in thinking that Flast should not be read over-broadly," Garnett said. "It is powerful, persuasive authority for the claim that the foundation lacks standing to challenge the pastoral housing exemption."
May 25, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Daugerdas, Three Others Convicted in Criminal Tax Shelter Case
- DOJ Press Release
- ABA Journal
- Bloomberg
- New York Law Journal
- New York Times
- Reuters
- Wall Street Journal
- Washington Post
May 25, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (1)
Sunday, May 22, 2011
No $120k Internet Poker Loss Deduction for Lawyer Denied BigLaw Partnership
A Toronto lawyer who left Bay Street in 2006 in an abortive attempt to make it as a professional Internet poker player has failed in a bid to write off the $120,000 loss he ran up that year before slinking back to practice. Steven A. Cohen claimed he made the career switch in December 2005 after Goodmans LLP deferred a decision on elevating him to partner for a second consecutive year.
His master plan envisioned a $150,000 annual profit by targeting weak, inexperienced players in small-stakes games, before elevating in the long-term to higher stakes for a $500,000 annual return, the same level he would have made as partner at Goodmans, according to the ruling in Cohen v. The Queen. ...
But things didn't quite go as planned, and his $80,000 in winnings for 2006 were dwarfed by the $200,000 he ploughed into the venture. ... In the May 12 ruling, Tax Court of Canada Justice Frank Pizzitelli decided Cohen's actions did not suggest the poker venture was conducted in a business-like way, and refused Cohen's appeal of his tax assessment which denied his bid to deduct his $120,000 losses. ... The decision also delivered a damning verdict on Cohen's poker skills.
(Hat Tip: Francine Lipman.)
May 22, 2011 in New Cases, Tax | Permalink | Comments (3) | TrackBack (0)
Saturday, May 21, 2011
TP Has $28k Income on Paying $45k on $20k Student Loan ($73k With Interest)
Petitioner attended college in the early 1980s. Petitioner borrowed $19,986.72 from the Connecticut Student Loan Foundation (CSLF) in order to finance his college education. At some point petitioner became delinquent in his loan payments. In 1988 CSLF filed a complaint in the Connecticut Superior Court. Petitioner received personal service of the complaint, failed to appear at the judicial proceeding, and a default judgment was entered on May 17, 1989, for $27,655.30. ... On December 28, 2005, petitioner mailed CSLF a personal check for $45,000 to extinguish his then-outstanding liability of approximately $73,258.
In February 2006 CSLF filed documents in the Connecticut Superior Court evidencing petitioner's satisfaction of the judgment and a release of CSLF's claim against petitioner. CSLF issued a Form 1099-C, Cancellation of Debt, to petitioner for 2006 reporting income of $27,821. ...
Petitioner did not present any evidence that the basis of the agreement with CSLF to extinguish the debt for less than the full amount was based on these positions or any good-faith claim that he was not liable for some or all of the debt. On this record, we conclude petitioner did not have a good-faith dispute with respect to the indebtedness with CSLF in the amount claimed by the creditor.
May 21, 2011 in New Cases, Tax | Permalink | Comments (1) | TrackBack (0)
6th Cir: IRS Tax Lien Has Priority Over Mortgage Lien Filed in Wrong County
It sometimes pays to check a map. The mortgage lender in this case did not, and as a result it recorded an interest in Tammy Church's property in the wrong county. Luckily for the public fisc, the IRS, which also placed a lien on Church's property, did not make the same mistake. When the lender realized what had happened, it sued, seeking in equity what it could not get in law -- a declaration that it had the superior claim to the property. Equity does not save the lender in this instance, and we therefore affirm.
May 21, 2011 in IRS News, New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Wednesday, April 13, 2011
Taxpayer With Tax LL.M. Lacked Substantial Authority for Tax Return Position
In 2005, Bruce Brown held a life insurance contract with Northwestern Mutual Life Insurance Company. On December 18, 2005, Northwestern terminated the contract, using its entire cash value of $37,365.06 to pay policy debt. Petitioners (the Browns) did not report any gain or loss on their 2005 federal income tax return from the termination of the life insurance contract.
In a notice dated December 24, 2007, respondent (the IRS) determined a deficiency in tax of $8,553 for tax year 2005. The deficiency was the result of the IRS's determination that Mr. Brown recognized a taxable gain of $29,093.30 on termination of the Northwestern contract. The IRS also determined that the Browns were liable for a penalty of $1,711 under § 6662. The Browns dispute those determinations. ...
Bruce Brown is a commercial litigation attorney who has been licensed since 1973. His wife, Carol Anfinson Brown, is also an attorney. She has a master of laws degree (LL.M.) in taxation. ...
Northwestern sent Mr. Brown a Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. The Form 1099-R showed a gross distribution of $37,365.06 and a taxable amount of $29,093.30. ... According to Northwestern's calculations, the $29,093.30 taxable amount was equal to the policy's cash value of $37,365.06 minus what it called "net cost" of $8,271.76. ... [W]e agree with the IRS that the Browns were required to include $29,093.30 in gross income from the termination of the Northwestern life insurance contract. ...[T]he Browns' experience, knowledge, and education weigh against them: both are licensed attorneys, and one has a master of laws degree (LL.M.) in taxation. In short, the Browns have failed to show that they had reasonable cause for and acted in good faith regarding the underpayment. We therefore find that the IRS correctly determined that the Browns are liable for the substantial understatement penalty under § 6662(a).
(Hat Tip: Bob Kamman.)
Update: Tax Update Blog, The Perils of Too Much Education
April 13, 2011 in New Cases, Tax | Permalink | Comments (1) | TrackBack (1)
Tuesday, April 5, 2011
Supreme Court Adds Fuel to Tax Expenditure Debate
The U.S. Supreme Court, in a case involving separation of church and state, provided rhetorical backing for congressional Republicans who argue that government grants and tax credits aren't equivalent.
The court yesterday upheld an Arizona program that gives taxpayers a credit for contributions made to groups that provide scholarships to private schools, including religious institutions. The 5-4 majority on the court said such tax expenditures, unlike spending programs, involve private funds that don't reach the government's coffers.
"When the government collects and spends taxpayer money, governmental choices are responsible for the transfer of wealth," Justice Anthony Kennedy wrote for the majority. "Here, by contrast, contributions result from the decisions of private taxpayers regarding their own funds." That distinction led the majority to determine that the taxpayers suing Arizona lacked standing, or the right to challenge the program as a constitutional violation. Politically, the decision provides support for lawmakers who argue against lowering the budget deficit by curbing tax expenditures, no matter how much they resemble spending programs.
"Cases like this encourage more government spending, rather than less," said Edward Kleinbard, a law professor at the University of Southern California and former chief of staff of the congressional Joint Committee on Taxation. "It simply encourages that spending to take the form of ever sillier tax credits and other targeted tax breaks." ...The question of whether tax expenditures are equivalent to spending has been roiling the Republican Party in recent months. ...
If tax credits aren't considered government spending, [Kleinbard] said, Congress could just add pages to the income tax form to give tax filers an unlimited number of credits and decisions about how to spend them. "And then having done that," Kleinbard said, "we will declare that we've shrunk the size of government to zero."
April 5, 2011 in New Cases, Tax | Permalink | Comments (10) | TrackBack (0)
Monday, April 4, 2011
Former TV Anchor Glad She Challenged IRS
(Hat Tip: Bob Kamman.)
Even the IRS acknowledged that former television news anchor Anietra Hamper kept meticulous records of the clothes and other items she bought for business use.
But detailed receipts weren't enough. An IRS audit — and a tax judge — concluded that nearly all the business expenses that Hamper listed as deductions on her 2005-08 federal income-tax returns were invalid, and they slapped her with a bill for nearly $20,000.
"I would hate for anyone else to go through this," said Hamper, 38, who decided to share her story as a tale of caution during tax season.
For years, Hamper had deducted the cost of the clothing she wore on air and for business functions, as well as other expenses she incurred while working as an anchor for WCMH-TV (Channel 4) and WBNS-TV (Channel 10) in Columbus.
Other TV anchors told her they did it, and professionals who prepared her taxes over the years told her it was fine. ...
Hamper thought her deductions were legitimate, so she took the case to U.S. Tax Court, where she explained the deductions to a judge last fall. The judge ruled against her in late February and ordered her to pay $16,492 in back taxes, plus a penalty of $3,298.
"The general rule is that, where business clothes are suitable for general wear, a deduction for them is not allowable," the judge wrote. Most professionals, the decision said, "typically do not wear their business clothes for private or personal wear," yet they cannot deduct the cost of those clothes.
The judge also ruled that most other items Hamper used as deductions were personal, not business, expenses. They included contact lenses that helped her read the teleprompter, makeup, haircuts, manicures, teeth whitening and subscriptions to magazines and newspapers.
The decision doesn't surprise Donald B. Tobin, associate dean of the Ohio State University Moritz College of Law. Tobin teaches a class on federal income-tax law and uses the case of a saleswoman at a high-end clothing store as an example. In that case, the saleswoman argued that she had to wear clothing from the store while she worked, but that she never would have worn it otherwise, so she deducted the cost as a business expense. The IRS disallowed the deduction. "It only cares about whether you can use it, not if you actually do use it," Tobin said. ...
She's not ... happy about a New York Daily News story about the tax-court decision in her case. The story, which traveled around the world, listed thong underwear among the items she deducted.
April 4, 2011 in New Cases, News, Tax | Permalink | Comments (3) | TrackBack (1)
Thursday, March 31, 2011
Tax Court: Woman Can Deduct Funds Withdrawn by Abusive Boyfriend
(Hat Tip: Bob Kamman.)
In 1991 petitioner was working two jobs to support herself and her two young children. One job was as the owner of an H&R Block franchise; the other was in a prison detention center. She had recently divorced, her father had recently died, and her mother had moved into her house to help take care of the children. About this time petitioner became involved with a man working at her H&R Block office, and he moved in with her. She later learned that he had an extensive criminal record and a violent temper.
Petitioner's relationship with the boyfriend was marked by intimidation and physical abuse. When she failed to do his bidding or attempted to leave him, he reacted violently. He once threw her from a moving car. Another time when she threatened to leave him, he placed a gun against her forehead and cocked the hammer. On another occasion, in midwinter, he hit her in the head with a beer bottle and threw her from a boat into a lake. On another occasion, she testified credibly, he "gave me a picture of my daughter with her face shot out, and told me that's what would happen to her if I tried to leave."
At some point after becoming involved with petitioner, the boyfriend obtained a video poker license and opened an establishment in Monroe, Louisiana. After only a few months, he lost his license for misdeeds that included selling liquor to a minor. The boyfriend convinced petitioner to open her own video poker business.
In 1996 petitioner acquired two video poker licenses in her own name. Because, according to petitioner's testimony, the licenses were required "to be run separately", she opened two sandwich shops next door to each other in Farmerville, Louisiana, each with a video poker machine. Petitioner worked in the shops making sandwiches and dealing with the public. The boyfriend took charge of the finances and the books and had check-signing authority on the business bank accounts. Virtually all the shops' income resulted from video poker revenue.
Petitioner and the boyfriend had no agreement regarding his compensation. Rather, as petitioner testified, he "set his own compensation". He did this by writing checks to himself or to cash, signing either his name or petitioner's name. In this manner he withdrew from petitioner's business accounts $114,000 during 1997 and $96,000 during 1998. He used these funds to pay his personal expenses, including his child support obligations.
Petitioner knew that the boyfriend was writing checks and taking money out of her business accounts. But she did not know beforehand when he might write checks or for how much. Consequently, she was left in constant uncertainty about the balances in her business checking accounts. To avoid overdraft fees, she worked out an arrangement with a friend who worked at her local bank and who knew of petitioner's troubles with the boyfriend. Each morning petitioner would call her friend at the bank to determine how many of her checks were set to clear the accounts that day. As long as petitioner made a cash deposit to cover the checks by noon of any given business day, the bank would honor the checks and not charge overdraft fees. ...
There is no dispute about any item of petitioner's income or deductions other than the deductions that petitioner claims with respect to the amounts the boyfriend received, stipulated to have been $114,000 for 1997 and $96,000 for 1998. ... [W]e conclude that ... all these amounts are deductible as theft losses under § 165. ...
A preponderance of the evidence convinces us that the boyfriend's taking of funds from petitioner's business accounts for his personal purposes constituted theft within the meaning of Louisiana law. The evidence does not suggest, and respondent does not contend, that petitioner consented before the fact to the boyfriend's writing checks from petitioner's business accounts to pay his personal expenses. To the contrary, as previously discussed, the evidence shows that petitioner would often find out about these checks only after the fact by making inquiries at the bank. We infer that petitioner proceeded in this manner to avoid physical confrontation with the boyfriend.
On brief, respondent contends that the boyfriend's takings should not be viewed as thefts or conversions because petitioner "never objected to the transfers and there is no evidence that she reported any theft to the appropriate authorities". Under Louisiana law, however: "In order to consent to the theft of his property, an owner must do more than passively assent to the taking." State v. Johnson, 408 So. 2d 1280, 1283 (La. 1982). We do not believe that petitioner ever gave more than passive assent to the boyfriend's taking her business funds. But even if petitioner might be thought in some general way to have consented to the boyfriend's compensating himself with her business funds, we do not believe that it was effective consent, but rather that it was induced by force and threats by the boyfriend, who had on more than one occasion threatened to kill petitioner and her children. For similar reasons, we assign little significance to the fact that she did not report the thefts to the authorities.
Respondent contends that because petitioner and the boyfriend lived together at times, she personally benefited from the withdrawals, such that they should be considered her nondeductible living expenses pursuant to § 262. We are not convinced by respondent's argument, which is inconsistent with our finding, based upon petitioner's unopposed proposed finding of fact, that the boyfriend used the funds taken from petitioner's business to pay his personal expenses.
March 31, 2011 in New Cases | Permalink | Comments (0) | TrackBack (0)
Monday, March 14, 2011
Tax Lawyer's Conviction in Tax Shelter Case Results in Automatic Disbarment
According to the petitioner, the respondent "was convicted of conspiring with others to create and implement illegal tax shelters for clients of Ernst & Young as well as for his own personal tax benefit. This scheme included making false statements and providing false documents to the IRS as well as understating his personal income." Further, the respondent "was convicted of filing a fraudulent U.S. Individual Income Tax Return, Form 1040, which substantially understated his taxable income." The respondent does not object to this description of the offense, but points out that he "was not convicted of filing a false tax return which substantially understated his taxable income. Rather, the tax evasion counts of [the] conviction[s] related to the tax returns of clients of . . . Ernst & Young." Further, the respondent consents to his name being stricken from the roll of attorneys.
See Legal Profession Blog, Disbarred For Tax Shelter Advice.
March 14, 2011 in New Cases, News, Tax | Permalink | Comments (0) | TrackBack (0)
Sunday, March 13, 2011
IRS Tries to Bogart Medical Marijuana Club's Deductions
The IRS has notified the Marin Alliance for Medical Marijuana in Fairfax that it owes millions of dollars in unpaid back taxes, according to the alliance's founder and director, Lynnette Shaw.
Shaw said the IRS audited the alliance's tax returns for 2008 and 2009 and disallowed all of its business deductions. She said that although dispensaries throughout the state are being audited by the IRS, the alliance is the first to be told it can't deduct business expenses. "Every dispensary in the nation, past, present and future is dead if this is upheld," Shaw said. ...
Shaw said the IRS disallowed her deductions — for buying marijuana, hiring employees, securing office space and more — based on § 280E of the federal tax code, which states that no deduction shall be allowed for any business trafficking in controlled substances.
Under federal law, marijuana is classified as a schedule I controlled substance, a category of drugs not considered legitimate for medical use — despite voters' 1996 approval of Proposition 215, which legalized the use of marijuana for medical purposes in California.
(Hat Tip: Bob Kamman.) The title is courtesy of Country Joe and the Fish:
Don't bogart that joint, my friend
Pass it over to me.
Don't bogart that joint, my friend
Pass it over to me.
March 13, 2011 in Celebrity Tax Lore, New Cases, News, Tax | Permalink | Comments (3) | TrackBack (1)
Saturday, March 12, 2011
Federal Circuit Exacerbates Split on Overstatement of Basis and 6-Year SOL
Kristin Hickman (Minnesota):
Whereas the Seventh Circuit in Beard found that the statute unambiguously supports the government, and other circuits have found that the statute unambiguously (especially in light of Colony) supports the taxpayers, the Federal Circuit in Grapevine concludes that the statute is ambiguous and, in light of Mayo, Brand X, and Chevron, defers to the government. The court only briefly addresses the procedural shortcomings of the regulations at issue, concluding that any procedural flaws of the temporary Treasury regulations were rendered moot when Treasury issued the final regulations.
Miller & Chevalier Tax Appellate Blog, Federal Circuit Adds to Intermountain Conflict by Deferring to New Regulations That Apply Six-Year Statute to Overstatements of Basis:
The Federal Circuit has ruled for the government in Grapevine, throwing the circuits into further disarray by adopting an approach that differs from all three of the courts of appeals that have previously addressed the Intermountain issue subsequent to the issuance of the new regulations. Becuase the Federal Circuit had already rejected the government's construction of the statute in Salman Ranch, the Grapevine case starkly posed the question whether the new regulations had the effect of requiring the court to disregard its prior decision and reach the opposite result. As we previously reported, at oral argument the day after the decision in Mayo Foundation, the government told the Federal Circuit that Mayo compelled that result. The court has now agreed. ...
The Grapevine decision is significant in the specific context of the Intermountain cases, as it virtually ensures that a circuit conflict on the issue will persist even if the Seventh Circuit reconsiders its decision in Beard. And it is the first appellate decision to address in detail the merits of the government's primary argument that it can overturn the prior adverse decisions in this area by regulation. More generally, the case is a great illustration of Treasury's power under the combination of Mayo and Brand X. The Federal Circuit was keenly aware of the implications of its decision, summarizing it as follows: "This case highlights the extent of the Treasury Department's authority over the Tax Code. As Chevron and Brand X illustrate, Congress has the power to give regulatory agencies, not the courts, primary responsibility to interpret ambiguous statutory provisions." Presumably, Treasury will continue to test the limits of how far it can go in exercising that "primary responsibility."
Miller & Chevalier Tax Appellate Blog, Seventh Circuit to Consider Petition for Rehearing in Beard:
On March 7, the taxpayer filed a petition for rehearing en banc with the Seventh Circuit in Beard, emphasizing that both the Fifth and Fourth Circuits had explicitly disagreed with that decision and reached the opposite result on the Intermountain issue. Although courts of appeals often deny such petitions without a response, the Seventh Circuit almost immediately directed the government to file a response, which is due March 23.
Today's pro-government decision by the Federal Circuit in Grapevine perhaps takes a little steam out of the possibility of rehearing since a circuit conflict will likely persist even if the Seventh Circuit rehears the case and reverses itself.
March 12, 2011 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)
Friday, March 11, 2011
Tax Court: Settlement Payments From Auto Accidents Are Not Casualty Losses
In Whitney v. Commissioner, 13 T.C. 897, 899 (1949), this Court observed that "the losses allowable under § 23(e)(3) [a predecessor to § 165] are specifically limited to losses of property arising from casualty, and damages paid for injuries and wrongful death are plainly without the provisions of the statute." (Emphasis added.) This Court has consistently held that settlement payments which result from automobile accidents do not constitute deductible casualty losses. Tarsey v. Commissioner, 56 T.C. 553 (1971); Dickason v. Commissioner, 20 B.T.A. 496 (1930); Mulholland v. Commissioner, 16 B.T.A. 1331 (1929); Peyton v. Commissioner, 10 B.T.A. 1129 (1928); Hall v. Commissioner, T.C. Memo. 1980-485.
The Pangs maintain, however, that their $250,000 settlement payment is deductible under § 165(c)(3) as a casualty loss because Webster's Dictionary defines "casualty" as "[l]osses caused by death, wounds" and the accident victim's death in December 2002 was certainly a casualty.
This issue is resolved not by Webster's definition of "casualty" but by the Code's provisions for "casualty loss" quoted above. Moreover, the Pangs' position conflates two distinct things -- the victim's casualty (which occurred when he died in 2002) and the Pangs' financial loss (which occurred when they made their payment in 2004) -- and does not explain how the "casualty" of the victim results in a deductible "casualty loss" for the Pangs under § 165.
This Court has held that "physical damage or destruction of property is an inherent prerequisite in showing a casualty loss." Citizens Bank of Weston v. Commissioner, 28 T.C. 717, 720 (1957), affd. 252 F.2d 425 (4th Cir. 1958). ... As a result, to obtain the deduction the Pangs must demonstrate that the claimed casualty loss is attributable to physical damage to their property (e.g., damage caused to their vehicle during the accident). They have not done so -- and any damage to their property occurred in 2002, not 2004.
The Pangs' claimed loss is attributable not to property damage but to the monetary settlement of a wrongful death claim. To the extent the Pangs are arguing that the payment constitutes a loss of their property, we find that to be beyond the scope of § 165(c)(3). The term "losses of property" in § 165(c)(3) does not include a taxpayer's monetary payment to a third party or a decrease in the taxpayer's net worth
Update: Tax Update Blog, Tax Court: No Casualty Loss Deduction for Casualties You Inflict.
March 11, 2011 in New Cases, Tax | Permalink | Comments (1) | TrackBack (1)
Wednesday, February 23, 2011
The Tax Implications of Obama's Abandonment of the Defense of Marriage Act
If DOMA were not on the books, Edie Windsor would not have had to pay the IRS $363,000 in taxes. Since the Executive Branch is still enforcing DOMA, that means that the case will have to be litigated to conclusion before Windsor knows whether she is entitled to the refund or not. And even if the Attorney General is not willing to defend DOMA, it seems likely that Congress will step in and defend the law.
February 23, 2011 in New Cases, Tax | Permalink | Comments (8) | TrackBack (0)
Bogdanski: Retained Interests and Estate of Stewart
Section 2036(a) hauls back into a decedent's gross estate, for federal estate tax purposes, property that she gave away while alive, if the decedent retained at death the income from the property or the right to designate who should enjoy or possess the property. Routinely applied to trusts, this provision has also been held applicable to other types of retained interests, including interests in property transferred to family partnerships and family limited liability companies. Quite often, applying § 2036(a) unravels valuation discounts that the decedent had hoped to use in determining the bases of the gift and estate taxes.
In a recent case, a split panel of the Second Circuit vacated and remanded a Tax Court ruling that § 2036(a) required inclusion of a 49% tenant-incommon interest that a decedent had given to her son in the final year of her life. The appeals court majority opinion raises intriguing questions about how the estate tax should apply to undivided real property interests created by a decedent, particularly when the co-tenants occupy a portion of the real estate together both before and after the co-tenancy is created. This report seeks to identify and answer some of the questions that the circuit court decision has presented, especially the apportionment issue that the circuit court has directed the Tax Court to address on remand.
All Tax Analysts content is available through the LexisNexis® services.
February 23, 2011 in New Cases, Scholarship, Tax, Tax Analysts | Permalink | Comments (1) | TrackBack (0)


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comprehensive nuclear disarmament must, therefore, be embedded in an international security system that would make the possibility of cheating or breakout highly unlikely.
In exploring the desirability and feasibility of prohibiting nuclear weapons, the balance of benefits and risks that this course of action would entail must be evaluated. A durable prohibition on nuclear weapons would have three main advantages. First, it would virtually eliminate the risk that nuclear weapons might be used by those states now possessing them. Even the smallest nuclear arsenals have immense destructive power. No matter how carefully and conscientiously these arsenals are constructed and operated, there will be some risk that they might be used, either deliberately or accidentally, authorized or unauthorized. In a sense, a prohibition on the possession of nuclear weapons is a logical extension of the dealerting measures recommended in Chapter 3, extending from hours or days to months or years the time required to reconstitute an ability to use nuclear weapons. A durable prohibition would expand as far as possible the firebreak between a decision to ready weapons for use and the ability to launch a nuclear attack, thereby allowing as much time as possible to resolve the underlying concerns, and decreasing the risk of nuclear catastrophe to an irreducible minimum.
Second, a prohibition on nuclear weapons would reduce the likelihood that additional states will acquire nuclear weapons. Although the Nonproliferation Treaty (NPT) currently enjoys almost universal adherence, the nuclear weapons states cannot be confident of maintaining indefinitely a regime in which they proclaim nuclear weapons essential to their security while denying all others the right to possess them. The recognition that a permanent division between nuclear "haves" and "have-nots" is unacceptable is captured in Article VI of the NPT, in which all parties promise to pursue complete nuclear disarmament. This commitment was reaffirmed by the United Nations Security Council in connection with the 1995 NPT extension conference. In a recent advisory opinion, the International Court of Justice (ICJ) underscored the "vital importance" of satisfying this obligation under Article VI:
In the long run, international law, and with it the stability of the international order which it is intended to govern, are bound to suffer from the continuing difference of views with regard to the legal status of weapons as deadly as nuclear weapons. It is consequently important to put an end to this state of affairs: the long-promised complete nuclear disarmament appears to be the most appropriate means of achieving that result.2
Moreover, the current lack of a serious commitment to comprehensive nuclear disarmament undermines the authority of the United States and other nuclear weapons states in combating proliferation and responding to violations of the NPT. It would be easier to marshal decisive international action against countries

subset: commoncrawl


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Lionheart is one of America's leading ensembles in vocal chamber music. Acclaimed for its "smoothly blended and impeccably balanced sound" (The New York Times), Lionheart is best known for its interpretation of medieval and Renaissance a cappellamusic, with Gregorian Chant as the keystone of its repertoire. In El Siglo de Oro (The Century of Gold) Lionheart explores rarely performed sacred music of 16th century Spain associated with the tolerant, multi-cultural city of Toledo: from the cosmopolitan sonorities of Cristobal Morales to the playful Andalusian exuberance of Francisco Guerrero's Canciones y Villanescas Espirituales. This concentrated, mystical music thrived in the Old World and gained a wide, accepting audience in the New World.
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Grafton Homes
1175 Airport Road
Fairmont, WV 26554
Phone: 304-534-7500
Toll-Free: 866-284-5344
email: firstname.lastname@example.com
Grafton Homes Description:
"...At the Grafton Homes facility, your custom project will be stick-built in our controlled environment and delivered to your site in modules. Our homes are built to International Residential Code and National Electric Code. For over two decades, Grafton Homes has been a leader in building new homes. We use brand name products like Delta faucets, GE appliances, Owens Corning roofing..."
Providing these building styles:
Ranch modular homes
Cape Cod modular homes
Contemporary modular homes
Providing modular homes and buildings in:
Company Background
How Long in Business
Yearly Avg. Number of Homes (Est.)
Professional Organizations/Affiliations
None provided
Design Staff
(Architects & Draftsmen)
No architects on staff
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Grafton, WV
How to Buy a Home
Available direct from the factory
Construction Details
Building Materials
Wood construction
Energy Efficiency
Ceilings R-30 fiberglass with vapor barrier, Walls R-13 fiberglass with vapor barrier, Floors R-19 fiberglass with vapor barrier
Construction Timeframe
2 to 6 weeks
Customization Flexibility
Customization is allowed
Amount of Floorplans
Over 60 online home floorplans
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Included in cost of home
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Included in cost of home
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Not provided
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Depends on model selected
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Not offered
Not stated
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200 miles from Grafton, WV
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Upon completion
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Information available on their website including downloadable brochure.
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Grafton Homes is now closed. They were a builder of above average modular homes. They offered many options and customization features. This was a good example of a small operation doing good work and passing along the savings to the home buyer. Their standard building specification was higher than most others. This was a good option for anyone in or near West Virginia. These homes would match the quality of stick-built homes and blend in well in any neighborhood.
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Personal Reviews of Grafton Homes
Robin Miller from Sandyville, WV 25275
We had our home built by Grafton Homes at Grafton WV, it was the most greatest way to build a home, we were tremendously happy with all aspects during game the building process. They took much pride in there work, always there to answer questions, I was able to visit grafton to see my house being built, we were very disappointed to here they were no longer in buisness. We have been our home now for 15 years this year and have been pleased with it and have recommended dedicated them to other friends but in finding out they are no longer there. If I would ever build again I would hope they would be around again. We are very happy and would not of built any other way
Maria from Oakland, MD
Overall my home is well built....except for the site built which was done by a subcontractor hired by Grafton. Grafton service after delivery was terrible. No communication!!! Their "onsite contractor" who did our garage and laundry room was a waste and probably was part of the reason Grafton Homes has filed bankrupt. There was no communication with me after the house was set....thus, those "supervisors" and "management" was not doing their job and also contributed to them filing bankrupt! We still have some issues that were to be covered by the warrenty but Grafton never did. What a shame this once a good builder is gone....because of a few bad apples!
Sue from Fairmont
1997, took over three months after told house was "move in ready" to resolve contractor work/house issues enough to move in. Took another six to finish work and hire other contractors to fix things. Awful!
David Hibbs from Springfield, WV - Hampshire County, WV
Terrible service after delivery. Had a previous GH home in Fairmont, WV built in 1997 no problems with that one. However, something changed with the company and the management, so drastice that after delivering the 2nd home to Hampshire County, WV that it took 8 weeks to finally get into the house in summer 2005. Since have had to have an electrician, plumber and HVAC "fix" problems that should have never been allowed to occur. Watch out, may re-open under new name. Would never refer anyone to them or a new company in same facility by same management.
john windsor from marion county
very poor quality control and after market service...now bankrupted.
Brenda from lewis county
0 stars from me, I bought a grafton home and they did the plumbing and electric wrong, the wrap up crew was terrible and they never came back to finish
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This is an astonishing book. It is astonishing on several levels: as a worm's-eye view of the "undercity" of one of the world's largest metropolises; as an intensely reported, deeply felt account of the lives, hopes and fears of people traditionally excluded from literate narratives; as a story that truly hasn't been told before, at least not about India and not by a foreigner. But most of all, it is astonishing that it exists at all.
Katherine Boo, a New Yorker staff writer who won a Pulitzer Prize while working at The Washington Post, spent three years and four months (from November 2007 to March 2011) following the lives of some of Mumbai's most deprived citizens, the dirt-poor residents of a squatter slum on the periphery of its international airport. Annawadi, in the shadow of luxury hotels, is "a bitty slum popped up in the biggest city of a country that holds one third of the planet's poor." Built on swampy land abutting a sewage lake, it is home to a motley collection of marginal Indians desperate to make a living out of the detritus of the city's economic boom.


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A day after an FIR was registered against businessman Ness Wadia following a written complaint from actor Preity Zinta that he molested, abused and threatened her inside Wankhede stadium in south Mumbai on May 30, Mumbai police sources said Saturday they would record IPL CEO Sundar Raman's statement in the case.
ALSO READ: Police record statement of two persons in connection with alleged molestation of Preity Zinta
The Marine Drive police, meanwhile, began recording statements of other witnesses. The police have also sought CCTV footage from the Garware pavilion in Wankhede stadium to ascertain what transpired between the two co-owners of the IPL franchise Kings XI Punjab that evening.
"We have started our probe. We are recording statements of Wankhede staff and will record Raman's statement," said an officer from Marine Drive police station.
The FIR against Wadia was registered around 12.10 am on Friday at the station. The complaint was registered under Sections 354 (assault or criminal force to woman with intent to outrage her modesty), 509 (word, gesture or act intended to insult modesty of a woman), 504 (intentional insult with intent to provoke breach of the peace), 506 (punishment for criminal intimidation) of the IPC.
In her complaint dated June 12, Zinta stated she had known Wadia for the last 10 years and had a relationship with him. It reads, "But for some time, we have ended our relationship. Although we are co-owners of Kings XI Punjab, we are no longer in a relationship and only talk for professional reasons."
"For some time now, we are not even talking to each other. In between, once or twice, we had heated argument regarding work and during that time he tried to abuse me, and used extremely derogatory language and tried to misbehave in a manner where I was put to shame in front of my colleagues, friends and family. I've orally warned him during that time and told him I was not comfortable with such behaviour," the complaint states.
Zinta alleged Wadia threatened her. "During the match on 30th May, 2014 at Wankhede stadium in the evening, Ness Wadia intimidated me by saying he could make me disappear as I was a nobody and only an actress and he's a powerful person," her complaint alleges.
Explaining why she did not take up the matter earlier, Zinta said she "tried to be very normal and nice to him" as she wanted peace, but the Wankhede incident left her fearing for her life. She claimed she lodged a complaint with BCCI officials, but stayed calm as she did not want to disturb the morale of her team that had qualified for the IPL finals.
Wadia's publicist Naveen Soni rubbished the allegations. "It is totally false and baseless," he said.
Sources close to Wadia claimed he was celebrating his birthday on May 30 and …continued »
Only In The Express


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