Publication Title

Texas Tech Law Review

Document Type

Article

Abstract

During the survey period, the Fifth Circuit decided nine federal tax cases. Four of the nine cases were appealed from district courts. The remaining five were appealed from the Tax Court. Three of the Tax Court's five decisions (60%) were affirmed, and three of the four district court decisions (75%) were affirmed. Thus, the Fifth Circuit affirmed most of the lower court decisions (66%). Interestingly, only three of the decisions (33%) favored the taxpayer—EC Term of Years Trust v. United States; Garber Industries, Inc. v. Commissioner; and Estate of Baird v. Commissioner—even though the Fifth Circuit is often known as a taxpayer-friendly circuit. As usual, the cases covered a broad range of issues from tax protests to family partnership valuation. In Gandy Nursery, Inc. v. United States, the Fifth Circuit reversed an award of post-judgment interest by the Eastern District Court of Texas and remanded the case to determine whether there had been unauthorized collection practices. In Estate of Baird v. Commissioner, the Fifth Circuit reversed the Tax Court for abusing its discretion in determining that the Internal Revenue Service (IRS) had substantial justification for its legal position and remanded the case to determine the amount to be awarded to the estate because the IRS did not have substantial justification. In Strangi v. Commissioner, the Fifth Circuit affirmed the Tax Court's determination that Albert Strangi had impermissibly retained enjoyment of assets contributed to his family limited partnership. This was the fourth case in a series involving the Albert Strangi estate. In United States v. Simkanin, the Fifth Circuit affirmed the conviction of a tax protestor in the Northern District Court of Texas. In United States v. Saldana, the Fifth Circuit affirmed the convictions and sentences given by the Western Texas District Court to two brothers who filed false statements with the IRS to harass certain individuals. In Estate of Smith v. Commissioner, the Fifth Circuit decided that the Tax Court was without jurisdiction and vacated the Tax Court's judgment that the IRS was precluded from offsetting unpaid interest against the overpayment due to the estate. In EC Term of Years Trust v. United States, the Fifth Circuit affirmed the United States Western District of Texas Court's dismissal of a refund claim when the sole remedy was a wrongful levy action. In Garber Industries, Inc. v. Commissioner, the Fifth Circuit affirmed the Tax Court's application of family attribution rules in a corporate reorganization, which limited the corporation's deduction for net operating loss carryforwards. Finally, in Deaton v. Commissioner, the Fifth Circuit upheld the Tax Court's determination that remittance filed with an application for a filing extension was a payment of estimated taxes rather than a deposit.

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