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In the Tax Court Last Month --- February 2024

2024-03-06

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In February 2024, the Tax Court published 19 opinions, which included a total of 433 pages. Below are graphs showing the number of opinions by judge and the number of pages by judge. [Edited 3/9/2024. Also below is a chart showing the top 20 code sections referenced by the Tax Court during the month.] [Edited 3/10/2024. Also below is a chart showing the cases cited 4 or more times by the Tax Court during the month.]

February 2024 Code Sections Reference

February 2024 Cases Cited

February 2024 Number of Opinions By Judge

February 2024 Number of Pages By Judge

Excerpts from February 2024 Tax Court Cases

I am always interested in learning well-established tax principles. Often, court cases will explicitly indicate that a tax principle is well established or well settled. Or the court may refer to a “cardinal rule” or a “doctrine.” Below are excerpts from some of the February 2024 Tax Court cases referring to these types of principles, doctrines, or rules.

Hubbard v. Commr., T.C. Memo. 2024-16. (Marshall)

Old Colony Tr. Co. v. Commissioner, 279 U.S. 716, 729 (1929) ("[D]ischarge by a third person of an obligation to [the taxpayer] is equivalent to receipt by the person taxed.").

Hubbard v. Commr., T.C. Memo. 2024-16. (Marshall)

Glenshaw Glass Co. v. Commissioner, 348 U.S. at 431 ("Here we have instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion. The mere fact that the payments were extracted from the wrongdoers as punishment for unlawful conduct cannot detract from their character as taxable income to the recipients.").

Hubbard v. Commr., T.C. Memo. 2024-16. (Marshall)

Du Poux v. Commissioner, T.C. Memo. 1994-448, 68 T.C.M. (CCH) 667, 668 ("[F]ailure to receive tax documents [such as Form 1099-MISC, Miscellaneous Income] does not excuse taxpayers from the duty to report income.").

Crumedy v. Commr., T.C. Memo. 2024-19. (Ashford)

Grunsted v. Commissioner, 136 T.C. 455, 460 (2011) ("This Court and others have repeatedly characterized returns reflecting zero income and zero tax as frivolous.").

Martino v. Commr., T.C. Memo. 2024-18. (Lauber)

Mendes v. Commissioner, 121 T.C. 308, 312-13 (2003) (holding that an argument not pursued on brief may be considered "abandoned").

Whistleblower 14376-16W v. Commr., T.C. Memo. 2024-22. (Thornton)

Weiss v. Commissioner, 147 T.C. 179, 196 (2016) ("The IRM lacks the force of law and does not create rights for taxpayers.").

Oconee Landing Property, LLC v. Commr., T.C. Memo. 2024-25. (Lauber)

Boree v. Commissioner, 837 F.3d at 1105 ("[T]he [taxpayers] deducted expenses related to the property . . . , a practice inconsistent with capital gains treatment . . . .").

Oconee Landing Property, LLC v. Commr., T.C. Memo. 2024-25. (Lauber)

Jones v. Commissioner, 560 F.3d at 1199; Strasburg, 79 T.C.M. (CCH) at 1704 ("The allowable charitable contribution deduction for ordinary income property is limited to the basis of the property donated.").

Oconee Landing Property, LLC v. Commr., T.C. Memo. 2024-25. (Lauber)

Lenihan v. Commissioner, T.C. Memo. 2006-259, 92 T.C.M. (CCH) 463, 466 (holding that the cost basis reported by a taxpayer on his Federal tax return was merely a statement of his position, not evidence that his figure was correct).

Couturier v. Commr., 162 T.C. No. 4 (2024). (Lauber)

United States v. Dixieline Fin., Inc., 594 F.2d 1311, 1312 (9th Cir. 1979) (collecting cases) ("[An assessment] consists of no more than the ascertainment of the amount due and the formal entry of that amount on the books of the secretary.").

Couturier v. Commr., 162 T.C. No. 4 (2024). (Lauber)

Bufferd v. Commissioner, 506 U.S. 523, 525-26 (1993) ("Code § 6501(a) establishes a generally applicable statute of limitations providing that the Internal Revenue Service may assess tax deficiencies within a 3-year period from the date a return is filed.").

Couturier v. Commr., 162 T.C. No. 4 (2024). (Lauber)

N.Y. & Presbyterian Hosp. v. United States, 881 F.3d 877, 886 n.13 (Fed. Cir. 2018) ("[T]itles [in the Code] have no legal effect . . . .").

Couturier v. Commr., 162 T.C. No. 4 (2024). (Lauber)

Badaracco v. Commissioner, 464 U.S. at 398 ("Courts are not authorized to rewrite a statute because they might deem its effects susceptible of improvement.").

Whistleblower 14376-16W v. Commr., T.C. Memo. 2024-22. (Thornton)

Wadleigh v. Commissioner, 134 T.C. 280, 294 (2010), it is "well-settled" that IRM provisions are "directory rather than mandatory, are not codified regulations, and clearly do not have the force and effect of law," Marks v. Commissioner, 947 F.2d 983, 986 n.1 (D.C. Cir. 1991), aff'g T.C. Memo. 1989-575; accord Weiss v. Commissioner, 147 T.C. 179, 196 (2016) ("The IRM lacks the force of law and does not create rights for taxpayers."), aff'd, No. 16-1407, 2018 WL 27593.

Meyer v. Commr., T.C. Memo. 2024-15. (Buch)

"Judicial estoppel is an equitable doctrine that prevents parties in from asserting positions contradictory to those they previously have affirmatively persuaded a court to accept." Huddleston v. Commissioner, 100 T.C. 17, 26 (1993).

Hubbard v. Commr., T.C. Memo. 2024-16. (Marshall)

"Under the constructive receipt doctrine 'funds [or other property] which are subject to a taxpayer's unfettered command and which he is free to enjoy at his option are constructively received by him whether he sees fit to enjoy them or not.'" Estate of Caan v. Commissioner, No. 14783-18, 161 T.C., slip op. at 20 (Oct. 18, 2023) (quoting Estate of Brooks v. Commissioner, 50 T.C. 585, 592 (1968)).

Acqis Technology, Inc. v. Commr., T.C. Memo. 2024-21. (Marshall)

The sham transaction doctrine requires courts and the Commissioner to look beyond the form of a transaction and to consider its substance. Slone v. Commissioner, 810 F.3d 599, 605 (9th Cir. 2015), vacating and remanding T.C. Memo. 2012-57.

Tags: Statistics

Enrolled Agents Per Million People By State

2024-03-03

We created a new heat map of the number of enrolled agents per million people by state. The heat map can be found here.

All of our heat maps can be found here.

enrolled agents by state

Tags: Statistics

Enrolled Agents By Country

2024-02-25

The IRS provides a list of active enrolled agents on its website. As of September 2023 there were a total of 64,489 enrolled agents, and as of September 2022 there were a total of 63,013 enrolled agents (a 2.3% increase).

The vast majority of the enrolled agents are in the United States. However, as of September 2023 there were 4,078 enrolled agents outside the United States, and as of September 2022 there were 3,559 enrolled agents outside the United States.

The enrolled agents inside the United States grew at a rate of 1.6% from September 2022 to September 2023, but the enrolled agents outside the United States grew at a rate of 14.6% during the same period. Thus, the growth of enrolled agents outside the United States is much higher than the growth inside the United States.

Below is a chart showing the number of enrolled agents as of September 2023 and September 2022 for countries that have at least 20 enrolled agents.

China is the only country that had a decrease in the number of enrolled agents.

Number of enrolled agents by country

Tags: Statistics

Famous Tax Quotes - A Conjurer’s Circle

2024-02-20

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Continuing our series on Famous Tax Quotes, today's tax quote is from a Supreme Court case holding that the Fifth Amendment doesn't excuse a complete failure to file a tax return:

[The taxpayer] could not draw a conjurer’s circle around the whole matter by his own declaration that to write any word upon the government blank would bring him into danger of the law.

United States v. Sullivan, 274 U.S. 259, 263 (1927).

Tags: Other - Famous Tax Quotes

Famous Tax Quotes - Must Timely File Using The Best Information Available

2024-02-11

Tax Court Logo

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:

[I]t is well settled that taxpayers must file timely income tax returns on the basis of the best information available to them at the time, and then file an amended return if necessary. Estate of Vriniotis v. Commissioner, 79 T.C. 298, 311 (1982). We accordingly conclude that [the taxpayer] is liable for the late-filing addition to tax for all five years.

Avery v. Commr., T.C. Memo. 2023-18.

Tags: Other - Famous Tax Quotes

Famous Tax Quotes - Insurance Premiums Were Nonsense

2024-02-04

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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 recent Tax Court case dealing with microcaptive insurance companies:

Although the Swift captives displayed some attributes of insurance companies, they failed to operate as insurance companies and their premiums were nonsense. We therefore conclude that the Swift captives did not provide insurance in the commonly accepted sense.

Swift v. Commr. , T.C. Memo. 2024-13.

Tags: Other - Famous Tax Quotes

Tax Court Statistics - 2023

2024-01-27

The Tax Court has substantially reduced the number of opinions that it publishes each year.

In 1996, the Tax Court published 553 Memorandum Opinions. In 2023, the Tax Court published 154 Memorandum Opinions, a 72% decrease.

Chart of Memorandum Opinions

In 1996, the Tax Court published 49 Reported Opinions. In 2023, the Tax Court published 29 Reported Opinions, a 41% decrease.

Chart of Reported Opinions

In 2001, the Tax Court began publishing Summary Opinions. In 2001, the Tax Court published 89 Summary Opinions. In 2023, the Tax Court published 35 Summary Opinions, a 61% decrease.

Chart of Summary Opinions

In 2008, the Tax Court began publishing Bench Opinions. In 2008, the Tax Court published 142 Bench Opinions. In 2023, the Tax Court published 49 Bench Opinions, a 65% decrease.

Chart of Bench Opinions

Below is a chart of the number of opinions issued by each Tax Court judge in 2023.

Chart of Number of Opinions by Judge in 2023

Typically, the Special Trial Judges only issue Summary and Bench Opinions. However, during 2023, Chief Special Trial Judge Carluzzo issued two Memorandum Opinions and Special Trial Judge Landy also issued two Memorandum Opinions. Unfortunately, the Tax Court website was revised several years ago so that opinions can no longer be directly linked to. Otherwise, I would link to the cases mentioned.

Below is a chart of the number of pages published by each Tax Court judge in 2023. Judge Morrison authored 3M Co. v. Commr., 160 T.C. No. 3 (2023), which itself was 346 pages long.

Chart of Number of Pages by Judge in 2023
Tags: Statistics

2023 4th Quarter Published Expatriates

2024-01-26

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 fourth quarter of 2023.

The number of published expatriates for the fourth quarter was 1,145, bringing the total number of published expatriates in 2023 to 3,260. The number of expatriates for 2023 is a 15% decrease from 2022.

Below are two charts. The first chart shows the annual expatriations from 2008 to 2023. The second chart shows the quarterly expatriations from 2014 to 2023, including an 8-quarter moving average.

The 8-quarter moving average continues to be somewhat below 1,000 names per quarter.

For our prior coverage of expatriation, see all posts tagged Expatriation.

annual chart of the number of people expatriating quarterly chart of the number of people expatriating

Tags: 877A Individual Expatriation

Exchange Rates for 2023

2024-01-09

Image of Schedule H, Lines 5d and 5e

Last Friday the IRS published average currency exchange rates for 2023. These average rates are used:

  • On Schedules H and M of Form 5471,
  • To convert local currency Subpart F Income and GILTI tested income amounts into U.S. dollars. Code §989(b)(3), and
  • To convert GILTI inclusion amounts back into the functional currency of the CFCs. See Form 8992, Schedule A, Column (l) and Treas. Reg. §1.951A-5(b)(3).

I also use these average rates to convert from local currency to U.S. dollars on Schedule C (Income Statement) of Form 5471.

The Treasury Department has also published year-end currency exchange rates for 2023. These year-end exchange rates are used:

  • On Form 8938, and
  • On the FBAR.

I also use these year-end rates to convert from local currency to U.S. dollars on Schedule F (Balance Sheet) of Form 5471. For example, I use the December 31, 2022 year-end rate to convert the 2023 beginning of the year balance sheet and the December 31, 2023 year-end rate to convert the 2023 end of the year balance sheet. You can access the year-end exchange rates from our exchange rates page.

Tags: Form 5471, Form 8938, Other - FBAR, Form 8992

Pages Published by the IRS in 2023 (in the Federal Register & in the IRB)

2024-01-08

The IRS publishes a variety of documents in the Federal Register. These documents include regulations, proposed rules and notices, executive orders, etc.

In 2023, the IRS published 1,397 pages in the Federal Register. Below is a graph showing the number of pages published in the Federal Register by the IRS from 1995 to 2023. It is interesting to note that the number of pages published tends to increase during the years of each presidential administration.

Graph of the number of IRS pages published in the Federal Register Per Year

The IRS also pushes many of the same documents (and more) in the Internal Revenue Bulletin. During 2023, the IRS published a total of 3,316 pages in the Internal Revenue Bulletin. Below is a graph showing the number of pages published in the Internal Revenue Bulletin by the IRS from 2001 to 2023. Similar to the Federal Register, the number of pages tends to increase during the years of most presidential administrations.

Graph of the number of IRS pages published in the Internal Revenue Bulletin Per Year

Tags: Authority - Treasury Decisions, Statistics

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