The Tax Court in Brief October 24 – October 30, 2020

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 October 24 – October 30, 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 24 – October 30, 2020

Sharma v. Comm’r, T.C. Memo. 2020-147 

October 29, 2020 | Gale, J. | Dkt. No. 19466-17

Short SummaryThe taxpayers field a joint federal income tax return for their 2014 tax year.  On their return, they claimed a loss of $26,877 from rental real estate activities detailed on Schedule E.  The IRS disallowed $20,913 of their claimed $26,877 Schedule E loss deduction, resulting in a deficiency in tax of $5,230.  The taxpayers filed a timely petition with the Tax Court.

Key Issue:  What portion of the taxpayers’ loss deduction from rental real estate activities claimed on Schedule E is disallowed under I.R.C. § 469(a) and limitations on the deductibility of passive activity losses.

Primary Holdings

Key Points of Law:

InsightThe Sharma decision serves as a good reminder as to how complex the passive activity loss rules can be under section 469 of the Code.  Taxpayers should consult with a tax professional where they are engaged in real estate activities.

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, any 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.