Law Offices of Stuart Levine, LLC

Reasonable Cause and FBAR. In U.S. v. Bittner, the U.S. Court of Appeals for the 5th Circuit addressed two issues with respect to FBAR (the reports required with respect to “Foreign Bank and Financial Accounts”).

The first issue is of general interest because the Court discussed what constitutes “reasonable cause,” a term of art used with respect to many areas of the Internal Revenue Code.

As to the second issue, the Court reached a different result than the 9th Circuit with respect to the number of penalties for non-willful violations one could be exposed to under FBAR. The 5th Cir. held that there was only one penalty per account regardless of the number of years involved. The 9th Cir. had held that a penalty could be imposed for each year for each account. The difference: In Bittner, per the 5th Cir., a $50,000 penalty versus $1.77M had the 9th Cir. rule applied.  Posted 12/03/2021

S versus C.  Taxpayers claimed that, notwithstanding that they had filed an S election for their corporation, the corporation was a C corporation because they had filed 1120 (as opposed to 1120S) returns. The Tax Court held that, unless specifically revoked, an S election remains in place.  The case is Hong Jun Chan.   Posted 12/01/2021

IRS Guidance on Digital Submissions.  The IRS has issued guidance on (i) approval to accept images of signatures and digital signatures and (ii) approval to receive documents and transmit encrypted documents by email. I have posted the guidance.        Posted 11/26/2021

Foreclosure Sales.         The IRS has issued guidance on (i) approval to accept images of signatures and digital signatures and (ii) approval to receive documents and transmit encrypted documents by email.  I have posted the guidance.    Posted 11/22/2021

Taxable IRA Distributions Taxpayers established self-directed IRAs and had the IRAs form single member LLCs of which they were the managers. With funds from pre-existing IRA assets that were liquidated, the LLCs purchased gold American Eagle coins. The Court held that the taxpayers had taxable distributions from the IRA when they received physical custody of the coins “irrespective of [the taxpayers’] status as the [LLC’s managers.]” The Court also sustained accuracy-related penalties against the taxpayers.

The case is Andrew and Donna McNulty Posted 11/19/2021

Involuntary Commitment in Maryland The Maryland Court of Special Appeals has issued a decision in J.H. v. TidalHealth Pennisula Regional, Inc., that reviews the standards and procedures for involuntary commitment. While many of you are not lawyers, you may, from time to time, have the need to be familiar with these procedures due to the illness of relative or loved one.  Posted 11/18/2021