Case Summary #2
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School
University of Houston, Victoria *
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Course
4311
Subject
Philosophy
Date
Dec 6, 2023
Type
docx
Pages
1
Uploaded by DeaconWorld8316
Case:
Loughman, TCM 2018-85
Student:
Raghad Albuaqari
Facts:
For the relevant years, the petitioners filed joint income tax returns. Palisades paid them
as well as through passthrough income and officer remuneration. Petitioners' Schedules E,
Supplemental Income and Loss, Part II, Revenue or Loss from Partnerships and S Corporations,
attached to their income tax returns for the relevant years, showed passthrough revenue from
Palisades of $15,101, $190,778, and $227,219, respectively.
On their Forms 1040, U.S.
Individual Income Tax Return, petitioners disclosed earnings of $46,458 and $173,228 for tax
years 2011 and 2012, respectively, that they received from Palisades. Palisades salaries were not
disclosed by the petitioners on their 2010 Form 1040. They have acknowledged that they ought
to have disclosed a portion of the 2010 salary they got from Palisades. The petitioners deducted
Palisades' labor payments from their section 162 deductions as part of Palisades' costs.
Issue:
Do the Palisades is entitled to deduct the salary it paid to the petitioners? Do the
petitioners have the right to remove tax disparities that they are entitled to section 530 relief?
Holdings:
"No deduction shall in any case be allowed in respect of items specified in this part,"
according to Section 261. In this instance, the petition was submitted in response to a notice of
insufficiency rather than a notice of worker categorization determination. See section 7436(a) on
page 697.
In this instance, Section 530 is not relevant.
Rationale:
[
I]items specified in this part" relates to section 280E, "Expenditures in Connection with
the Illegal Sale of [*7] Drugs," which is part IX of subchapter B of chapter 1, "Items Not
Deductible." View Californians Aiding in the Relief of Medicine.
Palisades' wage expense deductions are applied uniformly and without discrimination,
irrespective of whether the petitioners or a third party receives the wages.
The petitioners decided to run Palisades as a S corporation in the medical marijuana
industry. Petitioners bear the responsibility for any tax implications resulting from their
actions [*11].
530 relief does not applicable to statutory workers, such as corporate officials, and is
restricted to disputes involving the employment tax status of service providers under
common law. 119 T.C. at 131–132; Joseph M. Grey Public Accountant, P.C. v. [*12]
Commissioner. Only in cases where the taxpayer has not previously designated the
individuals in question as workers and the government tries to designate them as
employees retrospectively does Section 530(a)(1)(B) come into play.
After giving careful thought to every argument put out by the parties, we have concluded
that the ones that we did not address above are moot, irrelevant, or meritless.
Considering the, Rule 155 will be applied to the decision.
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