Justia U.S. 5th Circuit Court of Appeals Opinion Summaries

The Commissioner issued a final partnership administrative adjustment that determined PBBM was not entitled to a charitable contribution deduction to the North American Land Trust and assessed a penalty for the overvaluation of the conservation easement. The Fifth Circuit affirmed the district court's disallowance of a readjustment. The court held that while the contribution protected the conservation purpose of preserving land for outdoor recreation by the general public under 26 U.S.C. 170(h)(4)(A)(i), it did not meet the perpetuity requirement of section 170(h)(5)(A). Accordingly, the donation did not qualify for a deduction. Finally, the court found no error in the tax court's valuation of the easement or its determination of a penalty. View "PBBM-Rose Hill, Ltd. v. Commissioner" on Justia Law

Plaintiff appealed the district court's summary judgment determination that her late husband was personally liable under 26 U.S.C. 6672 for over $4.3 million in penalties for the unpaid withholding taxes of his medical practice. The Fifth Circuit reversed the denial of the motion for reconsideration; affirmed the district court's determination that the husband's $100,000 loan was unencumbered for purposes of section 6672 liability; vacated the remainder of the summary judgment because there was a genuine issue of material fact as to whether his medical practice had $4.3 million in available, unencumbered funds after the husband learned of the unpaid taxes; and remanded for further proceedings. View "McClendon v. United States" on Justia Law

The Fifth Circuit affirmed the judgment of the Tax Court and held that the Tax Court correctly determined that IRS Appeals did not abuse its discretion by concluding that the IRS properly assessed taxpayers' tax liabilities. Furthermore, the Tax Court did not exceed its jurisdiction by analyzing the closing agreement in order to reach that holding. The court also held that the Tax Court's interpretation of the closing agreement was also correct, as well as its conclusion that IRS Appeals did not abuse its discretion by rejecting taxpayers' offer-in-compromise. View "Estate of Robert C. Duncan v. CIR" on Justia Law

The Fifth Circuit affirmed the district court's grant of the Government's motion to dismiss taxpayers' action seeking a refund for an overpayment because it was time-barred. The court agreed with the district court and the government that the claim was filed after the general limitations period in I.R.C. 6511(a) and that the special limitations period in I.R.C. 6511(d)(3)(A) did not apply as the overpayment was not attributable to foreign taxes for which credit was allowed. View "Schaeffler v. United States" on Justia Law

Under Federal Rule of Appellate Procedure 13, the statutory 90-day window to appeal a Tax Court decision to this court runs from either: 1) the entry of the Tax Court decision being appealed or 2) if a party moves to vacate or revise the Tax Court's decision, from the entry of the Tax Court's ruling on that motion to vacate or revise the decision. At issue was whether a party may file successive motions to vacate or revise with the effect of extending the time to appeal into perpetuity. The Fifth Circuit held that successive motions to vacate or revise a Tax Court decision, raising substantially the same grounds as the first motion, will not affect the time period in which a party may appeal a Tax Court decision. The court explained that, where successive post-decision motions are filed in the Tax Court, the statutory 90-day window to appeal the Tax Court decision runs from the Tax Court's ruling on the first motion to vacate or revise filed. In this case, the court dismissed the appeal for lack of appellate jurisdiction because the notice was filed more than 90 days after the Tax Court disposed of the first motion to vacate. View "Annamalai v. CIR" on Justia Law

Under Federal Rule of Appellate Procedure 13, the statutory 90-day window to appeal a Tax Court decision to this court runs from either: 1) the entry of the Tax Court decision being appealed or 2) if a party moves to vacate or revise the Tax Court's decision, from the entry of the Tax Court's ruling on that motion to vacate or revise the decision. At issue was whether a party may file successive motions to vacate or revise with the effect of extending the time to appeal into perpetuity. The Fifth Circuit held that successive motions to vacate or revise a Tax Court decision, raising substantially the same grounds as the first motion, will not affect the time period in which a party may appeal a Tax Court decision. The court explained that, where successive post-decision motions are filed in the Tax Court, the statutory 90-day window to appeal the Tax Court decision runs from the Tax Court's ruling on the first motion to vacate or revise filed. In this case, the court dismissed the appeal for lack of appellate jurisdiction because the notice was filed more than 90 days after the Tax Court disposed of the first motion to vacate. View "Annamalai v. CIR" on Justia Law

The Fifth Circuit affirmed the trial court's conclusion that the $19 million given to petitioner to invest was not a tax-free loan. The court affirmed the trial court's finding that the money became income to petitioner when he diverted it for his personal use, because he was realizing an economic benefit from the money; affirmed the tax court's imposition of penalties resulting from negligence or disregard of rules or regulations, because petitioner failed to show the complete disclosure of relevant facts to his accountants that would compel a good faith defense of reliance; and affirmed the tax court's decision allowing the IRS to recompute the amount of the deficiency after the tax court ruled that all the money was income to petitioner, as oppose to petitioner's corporation. View "Sun v. Commissioner" on Justia Law

The hotel occupancy tax applies only to the discounted room rate paid by the online travel company (OTC) to the hotel. The Fifth Circuit vacated the district court's judgment in a class action asserting that the service fee an OTC charges for facilitating a hotel reservation was included in the "cost of occupancy", and thus subject to the municipalities' hotel occupancy tax ordinances. The court applied City of Houston v. Hotels.com, L.P., 357 S.W.3d 706, 707, and held that OTCs in this case were not liable because the only monetary amounts at issue in this class action were those not included in the scope of the hotel occupancy tax base. The Houston court explained that, under the plain meaning of the ordinance, the cost of occupancy was the amount for which three conditions were satisfied: the consideration at issue must have been paid or charged for the use or possession, or the right to use or possess, a hotel room; the amounts to be taxed must have been paid by the occupant of such room; and the amount to be taxed must have been paid to such hotel. Therefore, the court rendered judgment for the OTCs in this case. View "City of San Antonio, Texas v. Hotels.com, L.P." on Justia Law

BCR Partnerships claimed that the Commissioner wrongfully disallowed their charitable deductions for two conservation easements, and contended that in ruling for the Commission, the Tax Court wrongfully classified the sale of limited partnership interests as disguised sales and wrongfully imposed a gross valuation misstatement penalty. The Fifth Circuit vacated the Tax Court's holding regarding the perpetuity of the easements and the baseline documentation, and remanded for consideration of the other grounds asserted by the Commissioner to support the disqualification of the easements as charitable deductions but not addressed by the Tax Court. The court vacated the Tax Court's determination that the entirety of the limited partners' contributions were disguised sales, and remanded for a determination as to the correct amount of any taxable income that resulted from the disguised sales. Finally, the court vacated and remanded to the Tax Court for it to determine whether the gross valuation misstatement penalty was applicable and if so, the proper amount of any penalty. View "BC Ranch II, LP v. CIR" on Justia Law

These consolidated tax refund actions stem from faulty AMCOR investments. Taxpayers were partners in AMCOR partnerships that the IRS investigated as shams. After taxpayers settled with the IRS and paid the amounts assessed, they sought refunds claiming that the IRS’s assessments were untimely and that the IRS failed to issue notices of deficiency. The court concluded, however, that its decision in Irvine v. United States forecloses taxpayers' arguments. Like in Irvine, the district courts in this case lack subject matter jurisdiction to hear these refund claims. Additionally, the variance doctrine forecloses taxpayers’ argument that the IRS failed to issue notices of deficiency because taxpayers did not make such an argument in their claims for refund before the IRS. Accordingly, the court affirmed the district courts' grant of summary judgment in favor of the IRS. View "Rodgers v. United States" on Justia Law