Smith v. Commissioner, a pending research credit case in the United States Tax Court, presents an issue of first impression: Is a partner’s self-employment income in a partnership allowable as a qualified research expense...more
The United States Tax Court skillfully dodged answering the headline question with a holding on standing. The court decided, however, that IRS appeals officers and IRS appeals team managers are not officers of the United...more
2/20/2025
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Government Agencies ,
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Tax Liability
Taxpayers had mixed success in two recent research credit cases in the United States Tax Court.
In Smith v. Commissioner, the taxpayer was an architectural firm....more
In Libitzky v. United States, the United States Court of Appeals for the Ninth Circuit affirmed disallowance of a $700,000 federal income tax refund claim. The court said that this was an “unfortunate” case, but they were...more
Issue: In Meyer, Borgman, and Johnson, Inc. v. Commissioner, the issue was whether the taxpayer’s (“MBJ” or “MBJ’s”) customers funded MBJ’s research activities. The court found that its customers did so, with the consequence...more
Over an objection by the IRS, the Tax Court recently ruled in Kapur v. Commissioner that it could limit discovery and permit statistical sampling of voluminous data related to a claimed research credit. The court refused,...more
The stream of cases challenging disallowance of research tax credits continues in the Tax Court with Phoenix Design Group, Inc. v. Commissioner. The taxpayer in Phoenix Design designs mechanical, electrical, and plumbing...more
The recent Tax Court opinion in Hyatt Hotels Corporation v. Commissioner of Internal Revenue informs a federal income taxpayer about its tax responsibility for funds for a guest reward program: when the taxpayer will be...more
If a taxpayer calculates research tax credits using an appropriate statistical sampling method on its tax return, does the taxpayer then make a prima facie case in the Tax Court by introducing evidence of that statistical...more
All is not necessarily lost if a taxpayer files a petition after the filing deadline in United States Tax Court to contest a federal tax deficiency. A recent case ruled that the filing deadline may be suspended in appropriate...more
Three courts - the Supreme Court, the Sixth Circuit, and the Tax Court - recently rejected administrative guidance in tax cases because the guidance was either wrong as applied, unnecessary, or inapplicable.
The...more
Key Takeaways:
..In Boechler P.C., v. Commissioner (“Boechler”), the Supreme Court held that the thirty-day period to petition the Tax Court for review of an adverse determination by the IRS Appeals Office in a collection...more
For some time, the IRS has "listed" certain transactions as suspect. Based on a recent Sixth Circuit decision, a taxpayer against whom the IRS proposes a penalty for failure to report participation in a listed transaction may...more
The taxpayer in Little Sandy Coal Co. v. Commissioner, T.C. Memo 2021-15 (Feb. 11, 2021) has appealed an unfavorable United States Tax Court decision to the United States Court of Appeals for the Seventh Circuit. The decision...more
For practitioners advancing research credit claims, a recent Tax Court case is of concern because it said more than was necessary to reject the taxpayer's claim. The Commissioner may seize upon dicta in the opinion to...more
A recent United States Tax Court decision raises a high bar for taxpayers claiming federal income tax credits for research expenses. The case turned on whether the taxpayer proved that "substantially all" of its research...more
A recent Tax Court decision - which arguably is wrongheaded - could cause many suppliers of production parts to original equipment manufacturers to lose federal income tax credits. Suppliers are well advised to consider...more
In Audio Technica U.S., Inc. v. United States, 2020 WL 3481702 (6th Cir. 2020), the Sixth Circuit has made clear that calculation of the federal income tax credit for increasing research activities may require a taxpayer...more