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Top 10 Supreme Court Cases Cited by the Tax Court


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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."]
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