The Tax Court in Brief October 17 – October 23, 2020

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The Tax Court in Brief October 17 – October 23, 2020

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.

The Week of October 17 – October 23, 2020


Giambrone v. Comm’r, T.C. Memo. 2020-145 

October 19, 2020 | Urda, J. | Dkt. Nos. 11109-18 & 11153-18

Short SummaryMichael Giambrone and his brother, William Giambrone, worked together in the mortgage business.  In 1999, they founded Platinum Community Bank (Platinum).  Platinum’s operations included mortgage, home equity, and consumer and commercial real estate lending.  However, from its inception, Platinum was not profitable.

Accordingly, the Giambrones sought additional investment from various companies owned by Lee Farkas.  Mr. Farkas managed Platinum but ultimately Platinum was required to be placed into receivership by the Federal Deposit Insurance Corporation.  Later, Mr. Farkas was charged and convicted with conspiracy and bank, wire, and securities fraud.

The Giambrones claimed theft loss deductions of 95% of the value of their investments in Platinum on their 2012 federal income tax return.  The bases for their deductions was that they qualified for “an optional safe harbor . . . for taxpayers that experienced losses in certain investment arrangements discovered to be criminally fraudulent.”  See Rev. Proc. 2009-20.  The IRS disallowed the theft loss deductions under the Revenue Procedure and issued notices of deficiency.  The Giambrones filed timely petitions with the United States Tax Court.

Key Issue:  Whether the Giambrones are entitled to theft loss deductions under Rev. Proc. 2009-20.

Primary Holdings

Key Points of Law:

InsightThe Giambrone decision shows that taxpayers who seek to fall within a Revenue Procedure must strictly comply within the requirements of that revenue procedure.


Coleman v. Comm’r, T.C. Memo. 2020-146

October 22, 2020 | Lauber, J. | Dkt. No. 19540-17

Short SummaryMr. Coleman was a compulsive gambler.  In 2014, he received $350,241 of gambling winnings, reported to him on 160 separate Forms W-2G, Certain Gambling Winnings. Mr. Coleman did not file a federal income tax return for 2014.  Accordingly, the IRS prepared a substitute for return and issued him a notice of deficiency.

Key Issue:  Whether Mr. Coleman:  (1) has substantiated gambling losses in excess of $350,241, the amount of his gambling winnings as reported to the IRS; and (2) is entitled to a deduction on Schedule C, Profit or Loss from Business, for the purchase of a laptop computer.

Primary Holdings

Key Points of Law:

InsightThe Coleman decision is a great reminder to taxpayers  on the rules regarding the deduction of gambling losses.  In these cases, taxpayers should ensure that they are able to show through convincing evidence that their losses exceeded their gambling winnings for the year.

Representation in Tax Audits & Appeals

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