Tax Court in Brief | Sezonov v. Commisioner | Side Gigs and Passive Activities

Share this Article
Facebook Icon LinkedIn Icon Twitter Icon

Freeman Law is a tax, white-collar, and litigation boutique law firm. We offer unique and valued counsel, insight, and experience. Our firm is where clients turn when the stakes are high and the issues are complex.

The Tax Court in Brief – April 18th- April 22nd, 2022

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

For a link to our podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project.

Tax Litigation:  The Week of April 18th, 2022, through April 22nd, 2022

Sezonov. Comm’r, TC Memo. 2022-40 | April 20, 2022 | Marvel, J. | Dkt. No. 26650-17

Short Summary: The Sezonovs (“Petitioners”) had their primary residence in Ohio during 2013 and 2014. Mr. Sezonov was the only member of a single-member LLC. Petitioners owned two properties that they rented out through the LLC during those years (the “Rental Properties”). Petitioners performed various activities with regard to the Rental Properties, including communicating with prospective renters and preparing the properties for new renters.

Petitioners kept records of the hours they worked on the Rental Properties for these years:

Mrs. Sezonov Mr. Sezonov
2013 2014 2013 2014
Hours 476:20 80:20 405:30 26:40

 

 

 

 

Petitioners jointly filed their 2013 and 2014 Forms 1040, U.S. Federal Income Tax Returns, reporting the income, expenses, and losses associated with the Rental Properties on Schedule E, Supplemental Income and Loss. The IRS issued a statutory notice of deficiency disallowing the loss deduction that Petitioners claimed on their Schedules E for 2013 and 2014.

Key Issues

Primary Holdings

Key Points of Law

Insights:  This case is another illustration of the (frustrating) principle that deductions can be hard to come by—taxpayers need to be able to prove them up in order to get them.

Tax Court Litigation Attorneys

Need assistance litigating in the U.S. Tax Court? Freeman Law’s tax attorneys are experienced litigators with trial-tested litigation skills and in-depth substantive tax knowledge, having collectively litigated hundreds of cases before the U.S. Tax Court. Our tax controversy lawyers have extensive experience in Tax Court matters involving partnership audits and litigation under both the TEFRA and BBA regimes, international tax penalties, foreign trusts, valuation, reasonable compensation disputes, unreported income, fraud penalties, other tax penalties, and many other matters. We draw on our experience and wealth of tax knowledge to advise and guide clients through the entire tax controversy process, building the right strategy to resolve tax controversies from day one. Schedule a consultation or call (214) 984-3000 to discuss your Tax Court concerns or questions.