2023-12-04
Some time ago I downloaded all of the Tax Court opinions available on the Tax Court’s website (from 1995 to 2023). It was about 10,000 opinions.
I converted the PDF files to text files so that I could search them. I searched for citations to Supreme Court cases using regular expressions. I then counted the most frequently cited cases. Below is a table of the top 10 Supreme Court opinions most frequently cited by the Tax Court. The table includes the numbers of times cited and a brief description of what principle or principles the case is frequently cited for.
| Case | Times Cited | Principle Frequently Cited For |
|---|---|---|
| Welch v. Helvering, 290 U.S. 111 (1933). | 2,081 |
[The IRS’s determination in a notice of deficiency is presumptively
correct, and the taxpayer bears the burden of proving that the IRS is
wrong.] [As used in section 162(a), "necessary" has been construed to mean "appropriate" or "helpful" in the development of the taxpayer's business.] |
| INDOPCO, Inc. v. Commr., 503 U.S. 79 (1992). | 833 |
[Deductions are strictly a matter of legislative grace, and taxpayers
bear the burden of proving their entitlement to any deduction
claimed.] [To qualify for deduction under section 162(a), an item must (1) be paid or incurred during the taxable year, (2) be for carrying on any trade or business, (3) be an expense, (4) be a necessary expense, and (5) be an ordinary expense.] |
| New Colonial Ice Co. v. Helvering, 292 U.S. 435 (1934). | 622 | [Deductions are strictly a matter of legislative grace, and taxpayers bear the burden of proving their entitlement to any deduction claimed.] |
| U.S. v. Boyle, 469 U.S. 241 (1985). | 613 |
[The taxpayer bears the burden of proving that his failure to file a
timely return is due to reasonable cause and not willful neglect.] [A taxpayer who files his return after the deadline cannot establish reasonable cause by proving that he relied on his attorney or accountant to file his return.] |
| Deputy v. Dupont, 308 U.S. 488 (1940). | 398 |
[Deductions are a matter of legislative grace, and taxpayers bear the
burden of proving that they are entitled to any deductions claimed on
their returns.] [Generally, expenditures by a substantial shareholder for the benefit of his corporation are deemed capital and are not deductible due to a lack of connection with the shareholder/taxpayer's own trade or business.] [Interest is a payment for the use or forbearance of money.] [As used in section 162(a), "ordinary" has been defined as that which is "normal, usual, or customary" in the taxpayer's trade or business.] [For an expense to be "ordinary", "the transaction which gives rise to it must be of common or frequent occurrence in the type of business involved".] |
| Gregory v. Helvering, 293 U.S. 465 (1935). | 325 |
[The economic substance of a transaction or series of transactions,
rather than the form, controls for federal tax purposes.] [Taxpayers are generally free to structure their business transactions as they wish, even if motivated by tax reduction considerations.] |
| Commr. v. Glenshaw Glass Co., 348 U.S. 426 (1955). | 269 | [Gross income includes all "accessions to wealth, clearly realized, and over which the taxpayers have complete dominion."] |
| Spies v. U.S., 317 U.S. 492 (1943). | 195 | [Because direct proof of a taxpayer's intent is rarely available, fraud may be proved by circumstantial evidence, or "badges of fraud", including understatement of income, inadequate records, implausible or inconsistent explanations of behavior, concealing assets, or failure to cooperate with tax authorities.] |
| Commr. v. Heininger, 320 U.S. 467 (1943). | 192 |
[The determination of whether an expenditure satisfies the
requirements of deductibility under section 162 is a question of
fact.] [An expense is necessary if it is appropriate and helpful to the taxpayer's trade or business.] |
| Freytag v. Commr., 501 U.S. 868 (1991). | 191 | [Reliance on professional advice may constitute reasonable cause and good faith, but "it must be established that the reliance was reasonable."] |
2023-12-01
Yesterday the IRS published a new practice unit titled Taxation of Beneficiary of a Foreign Non-Grantor Trust.
This practice unit discusses the classification of foreign trusts, the “default calculation”, Form 3520, Form 4970, and more.
This new practice unit has been added to our Practice Units By Topic page.
2023-11-19
Continuing our series on Famous Tax Quotes (quotes from court opinions and rulings with language that is colorful or that concisely states an important tax principle), today's tax quote is from a case where the judge is discussing the tax consequences of a sale of a partnership interest to the other partners versus a liquidation of the partnership interest by the partnership itself:
Yet the practical difference between [a sale of a partnership interest to the other partners] and one in which the withdrawing partner agrees merely to receive payments in liquidation directly from the partnership itself would hardly be a meaningful one in most circumstances. Why then the enormous disparity in tax burden, turning upon what for practical purposes is merely the difference between Tweedledum and Tweedledee * * *? The answer * * * is to be found in the legislative history of subchapter K * * *.
Foxman v. Commr. , 41 T.C. 535 (1964).
2023-11-18
Continuing our series on Famous Tax Quotes (quotes from court opinions and rulings with language that is colorful or that concisely states an important tax principle), today's tax quote is:
One would not expect such a narrow rule, helpfully titled "Recapture of overall foreign loss" and adopted to limit a taxpayer's foreign tax credit, to serve the dual function of exempting billions of dollars of gain from U.S. taxation. As the Supreme Court has said, "Congress does not 'hide elephants in mouseholes' by 'alter[ing] the fundamental details of a regulatory scheme in vague terms or ancillary provisions.'"
Liberty Global, Inc. v. Commr. , 161 T.C. No. 10 (2023).
2023-11-10
In the past I have blogged about how I track and document the tax cases that I read. One of the components I document for each case is its citation.
I often make typos when inputting the citation. In order to catch my own errors, every time I document cases I have read, I run a Python script to confirm that all of the citations are valid. To do this, I use “regular expressions.”
Regular expressions (often referred to as “regex” or “regexp”) are a tool to find patterns in text. For example, the citation for a U.S. Supreme Court decision is represented by the following pattern:
1 to 3 digits followed by a space, followed by “U.S.”, followed by a space, followed by 1 to 3 digits, followed by a space, followed by an opening parenthesis, followed by 4 digits, and ending with a closing parenthesis
This pattern can be expressed in a regular expression as follows:
"\d+ U\.S\. \d+ (\d{4})"
Below is a table of regular expressions I use for citations to various courts. If anyone else uses regular expressions for tax-related items, I would love to hear about them.
| Regular Expression for Citation | Applicable Court |
|---|---|
| \d+ U\.S\. \d+ \(\d{4}\) | Supreme Court |
| \d+ F\.([23]d|4th) \d+ \(1st Cir\. \d{4}\) \d+ F\.([23]d|4th) \d+ \(2d Cir\. \d{4}\) \d+ F\.([23]d|4th) \d+ \(3d Cir\. \d{4}\) \d+ F\.([23]d|4th) \d+ \(4th Cir\. \d{4}\) \d+ F\.([23]d|4th) \d+ \(5th Cir\. \d{4}\) \d+ F\.([23]d|4th) \d+ \(6th Cir\. \d{4}\) \d+ F\.([23]d|4th) \d+ \(7th Cir\. \d{4}\) \d+ F\.([23]d|4th) \d+ \(8th Cir\. \d{4}\) \d+ F\.([23]d|4th) \d+ \(9th Cir\. \d{4}\) \d+ F\.([23]d|4th) \d+ \(10th Cir\. \d{4}\) \d+ F\.([23]d|4th) \d+ \(11th Cir\. \d{4}\) \d+ F\.([23]d|4th) \d+ \(D\.C\. Cir\. \d{4}\) |
Circuit Courts of Appeals (These could be reduced further, but I like to see them separated) |
| \d+ F\.([23]d|4th) \d+ \(Fed\. Cir\. \d{4}\) |
Federal Circuit, started in 1982 |
| \d+ F\.[23]d \d+ \(Ct\. Cl\. \d{4}\) | Court of Claims appellate division (pre-1983) |
| \d+ Ct\. Cl\. \d+ \(\d{4}\) | Court of Claims trial division (pre-1983) |
| \d+ Cl\. Ct\. \d+ | Claims Court 1983 to 1992 |
| \d+ Fed\. Cl\. \d+ \(\d{4}\) | Court of Federal Claims (post-1992) |
| \d+ F\. Supp\. \d[^d]\d* \d+ F\. Supp\. 2d \d+ \d+ F\. Supp\. 3d \d+ |
District Court |
| \d+ BTA \d+ \(\d{4}\) | Board of Tax Appeals (until 1942) |
| \d+ T\.C\. \d+ \(\d{4}\) | Tax Court |
| \d+ T\.C\. No\. \d+ \(\d{4}\) | Tax Court (prior to being assigned a page number) |
| T.C. Memo \d{4}-\d+ | Tax Court Memorandum |
| \d+ T\.C\.M\. \d+ | Tax Court Memorandum using CCH-style |
| T.C. Summary Opinion \d{4}-\d+ | Tax Court Summary |
| \d+ USTC | CCH-style for tax opinions not from the Tax Court |
| \d+ AFTR \d[^d]\d* \d+ AFTR 2d \d+ |
RIA-style for tax opinions not from the Tax Court |
2023-11-09
Today the IRS published Revenue Procedure 2023-34, setting forth inflation adjusted items for 2024. Some of the important inflation adjustments in the international arena include:
$201,000 --- Code §877(a)(2)(A) --- The average annual net income tax that must be imposed for the five taxable years ending before the date of the loss of United States citizenship (or cessation of long-term permanent residency) for an individual to be considered a “covered expatriate” under Code § 877A(g)(1). This amount is up from $190,000 in 2023.
$866,000 --- Code §877A(a)(1) --- The amount that can be excluded from the mark-to-market gain upon expatriation of a covered expatriate. This amount is up from $821,000 in 2023.
$126,500 --- Code §911(b)(2)(D)(i) --- Foreign earned income exclusion. This amount is up from $120,000 in 2023.
$18,000 --- Code §2503 --- The amount of the annual gift tax exclusion for gifts to any person. This amount is up from $17,000 in 2023.
$185,000 --- Code §2523(i) --- The amount of the annual gift tax exclusion for gifts to non-citizen spouses. This amount is up from $175,000 in 2023.
$19,570 --- Code §6039F --- Notice of large gifts received from foreign persons. This amount is up from $18,567 in 2023.
$62,000 --- Code §7345 --- Amount of a serious delinquent tax debt. This amount is up from $59,000 in 2023.
2023-10-27
Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the third quarter of 2023.
The number of published expatriates for the third quarter was 749. See the chart below for the quarterly expatriates from 2013 to the third quarter of 2023.
The 8-quarter moving average is roughly 750 names per quarter.
For our prior coverage of expatriation, see all posts tagged Expatriation.
2023-10-15
Continuing our series on Famous Tax Quotes (quotes from court opinions and rulings with language that is colorful or that concisely states an important tax principle) today's tax quote is:
Mr. Smith concedes that he had no interaction with any IRS official prior to executing the * * * Closing Agreement, so we find it hard to see how the Commissioner might have placed him under duress.
Smith v. Commr., 159 T.C. No. 3 (2022)
2023-09-20
I recently downloaded data from the Tax Court website regarding the opinions the court has published. When analyzing the number of cases published by each judge, it was striking how many cases are authored by Judge Lauber.
Judge Lauber began serving as a judge on the Tax Court in January 2013, just over 10 years ago. Below is a chart showing the number of opinions published by each Tax Court judge over the 10-year period from 2013 to 2022:
As can be seen, Judge Lauber has published many more opinions than any other Tax Court judge during the same period. It is not necessarily a fair comparison for all of the judges, because some of the judges were not on the court for the full 10-year period. But some of the judges were, and Judge Lauber stands head and shoulders above all of them.
I thought perhaps that he was assigned cases that could be handled more quickly than others, but when I looked at the number of pages published by each judge it was clear that Judge Lauber still far exceeds all other judges.
Not only does Judge Lauber author many opinions, but he also stands out in authoring the important Tax Court Reported opinions (as opposed to Memorandum opinions). During the 10-year period he has been on the court, Judge Lauber has published 18% of all Tax Court Reported decisions.
Given these overwhelming statistics, it is safe to say that Judge Lauber is a rock star!
2023-09-11
Today we published 2 new situational charts to our website.
You can view these and over 1300 additional charts here.