Friday, March 15, 2013

Tax Court Adopts Majority View to Impose Gross Valuation Misstatement Penalty Despite Concessions on Other Grounds (3/14/13)

I recently posted a discussion of a case, Crispin v. Commissioner, ___ F.3d ___, 2013 U.S. App. LEXIS 3852 (3d Cir. 2013), here, that had a good discussion of the current trend -- representing a majority view -- in the Circuits to impose the gross valuation misstatement penalty in Section 6662(h) despite a taxpayer's concession to disallow the claimed tax benefits on other bases than valuation misstatement.  See Yet Another Bullshit Tax Shelter Bites the Dust (2/26/13), here.  Yesterday, reversing its prior precedent, the Tax Court fell in line with the majority view in AHG Investments LLC et al. v. Commissioner, 140 T.C. No. 7 (2013), here.  Of course, in all decided cases, under its Golsen precedent, the Tax Court must follow the precedent of the Circuit Court of Appeals to which an appeal would be taken, so its holding technically only affects cases in which the applicable Circuit Court of Appeals has not spoken.  In this regard, the Tax Court noted in footnote 5 of the opinion:
The Supreme Court has not ruled on the issue * * * , but the U.S. Government has recently filed a petition for a writ of certiorari as a result of the Court of Appeals for the Fifth Circuit's ruling for the taxpayer on a closely related issue in Woods v. United States, 471 Fed. Appx. 320 (5th Cir. 2012). The Supreme Court has not yet granted or denied the Government's petition.
There is a good discussion of the use of the Blue Book to help courts in interpreting a statute.  The Blue Book requires its own interpretation.  The minority view seems to have been based on a misinterpretation of the Blue Book which resulted in a misinterpretation of the statute.

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