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Jason P. Nance named new dean of SMU Dedman School of Law

Jason P. Nance, an education policy and law scholar who studies inequalities in public education, has been named the Judge James Noel Dean of SMU’s Dedman School of Law. Nance comes from the University of Florida’s Levin College of Law, where he served as associate dean for research and faculty development and was a professor of law. He will begin his new role at SMU on August 10.

“I am thrilled and honored to be named the incoming dean of the Dedman School of Law,” Nance said in a press release. “Dedman Law is an impressive law school with a talented faculty and staff, supported by a committed, energetic alumni base. It is well positioned to rise to even greater heights. I look forward to working collaboratively with students, faculty, staff and alumni to help Dedman Law reach its full potential in the coming years.”

Nance earned a B.A. in history and teaching from Brigham Young University. He earned a Ph.D. in education policy and administration from The Ohio State University and earned his J.D. from the University of Pennsylvania School of Law. Nance succeeds current Dedman Law Dean Jennifer M. Collins, who will become president of Rhodes College in Memphis on July 1.

“We look forward to welcoming Dean Nance to Dedman School of Law,” said SMU President R. Gerald Turner in a press release. “His early public education experience combined with a distinguished legal career and passion for education equity issues bring talents that will be valuable on many levels at SMU.”

For more information about SMU Dedman School of Law, go to smu.edu/law.

Photo courtesy of SMU.

 

Original author: Will Korn
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The Key of Lawyer’s Independence Journal Book That Nobody is Talking About

Insurance companies will make use of the providers of claims adjusters who will call you and attempt to settle the declare which is normally not to your advantage but to the insurance coverage firm’s advantage. You wish to make sure that any settlement that’s supplied to you is just not only in writing however will […]

The post The Key of Lawyer’s Independence Journal Book That Nobody is Talking About first appeared on Family in Law.

(Originally posted by Teel Marcus)
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EdTech Platforms May Violate Privacy Laws

Privacy Plus+

Privacy, Technology and Perspective

EdTech Platforms May Violate Privacy Laws.  This week, the privacy risks of education technology (“EdTech”) platforms made news. As reported by the Washington Post and the Fort Worth Star-Telegram, a new study has revealed that EdTech platforms used by schools during the pandemic appear to have tracked children’s online behavior for the benefit of advertisers and others.  The platforms also seem to have requested access to students’ cameras, contacts, and locations, even when that information was unnecessary for schoolwork. Links to the articles follow, and Kate Morris is quoted in the Star Telegram article:

https://www.washingtonpost.com/technology/2022/05/24/remote-school-app-tracking-privacy/

https://www.star-telegram.com/news/politics-government/article261707627.html

In connection with these articles, we think it would be helpful to highlight the federal and state laws at issue:

FERPA: The Family Educational Rights and Privacy Act (FERPA), 20 U.S.C. § 1232g; 34 CFR Part 99, protects the privacy of student education records.  FERPA applies to all schools that receive federal funds.  In addition to giving parents and eligible students certain rights concerning “education records” (a term defined broadly), FERPA generally requires schools to have written consent from a parent or eligible student to release any PII from the student’s education record.  However, disclosure without consent is permitted under certain conditions described in 34 CFR § 99.31.  One of these conditions is the “school official exception,” which allows a platform to receive PII from education records without parental consent if the platform: (1) “performs an institutional service or function,” (2) has “a legitimate educational interest” in the education records, (3) “is under the direct control” of the school “with respect to the use and maintenance of education records,” and (4) uses education records only for authorized purposes and does not redisclose PII from education records to other parties without consent.  The penalty for violating FERPA is the withdrawal of federal funding to the school.  A pitfall for schools is the procurement process, which requires careful attention to ensuring that the contract and the vendor’s privacy practices and policies align.

COPPA: The Children’s Online Privacy & Protection Act (COPPA), 15 U.S.C. § 6502, and the COPPA Rule, 16 C.F.R. pt. 312, impose requirements on operators of websites or online services directed to children under 13 years of age, and on operators of other websites or online services that actually know they are collecting personal information online.  The COPPA Rule requires operators of these types of these services to include a clearly written privacy notice on their home page and anywhere else on their site where user data is collected. COPPA also requires operators to obtain “verifiable parental consent” before collecting or using personal information from children, and to maintain reasonable procedures to protect the confidentiality, security, and integrity of personal information collected from children. The FTC has published guidance on complying with the COPPA Rule, which is available at the following link:

 

https://www.ftc.gov/business-guidance/resources/childrens-online-privacy-protection-rule-six-step-compliance-plan-your-business

Violations of the COPPA Rule carry civil penalties of up to $46,517 per violation.

Student Privacy Act: In Texas, the Student Privacy Act, Tex. Educ. Code § 32, restricts the use of students’ personally identifiable information when used in connection with websites, online services, online applications, or mobile applications for a school purpose.  Specifically, the Act prohibits the “operator” of a website, online service, online application, or mobile app from knowingly engaging in “targeted advertising” if the target of the advertising is based on information the operator acquired through the use of those platforms for a school purpose.  Operators are also prohibited from using the information to create a profile about a student unless the profile is created for a school purpose. In addition, operators cannot sell or rent any student’s “covered information.”  The Act does not include a penalty.

Our view: As mentioned in the Star-Telegram article, linked above, the FTC has recently indicated that enforcement of COPPA is now a priority, especially in EdTech.  You can read the FTC’s policy statement on this issue by clicking on the following link:

https://www.ftc.gov/legal-library/browse/policy-statement-federal-trade-commission-education-technology-childrens-online-privacy-protection

Here, we think that EdTech platforms should take note of the FTC’s enhanced scrutiny because the penalties for violating the COPPA Rule are stout, and the FTC has expressly stated its intent to ensure that EdTech companies protect children’s privacy. 

While we support any action that enhances user privacy – especially children’s privacy – we question the schools’ presumably inadvertent role in the commercialization of student data.  On the “front end,” education agencies and/or school systems that contract for EdTech must be diligent and attentive enough to ensure that students’ privacy is protected not only by “policies” posted somewhere on the vendors’ websites, but that those policies are reflected in the contracts between the vendors and the schools.  And even where the contracts require limitations on data use and impose security obligations, the vendors’ performance under those contracts must be monitored and assured. This will require not just FTC scrutiny of EdTech practices, but also scrutiny of the schools’ roles themselves. 

Without up-front diligence on vendors followed by continued monitoring and oversight, schools will find that they have – albeit inadvertently – played a role in ceding student data to vendors who weren’t adequately committed to responsible data stewardship. And without looking to the entities ultimately responsible for student data – i.e. the schools – we suspect that EdTech privacy problems will persist. 

Hosch & Morris, PLLC is a boutique law firm dedicated to data privacy and protection, cybersecurity, the Internet and technology. Open the Future℠.

Original author: Hosch And Morris
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EdTech Platforms May Violate Privacy Laws

Privacy Plus+

Privacy, Technology and Perspective

EdTech Platforms May Violate Privacy Laws.  This week, the privacy risks of education technology (“EdTech”) platforms made news. As reported by the Washington Post and the Fort Worth Star-Telegram, a new study has revealed that EdTech platforms used by schools during the pandemic appear to have tracked children’s online behavior for the benefit of advertisers and others.  The platforms also seem to have requested access to students’ cameras, contacts, and locations, even when that information was unnecessary for schoolwork. Links to the articles follow, and Kate Morris is quoted in the Star Telegram article:

https://www.washingtonpost.com/technology/2022/05/24/remote-school-app-tracking-privacy/

https://www.star-telegram.com/news/politics-government/article261707627.html

In connection with these articles, we think it would be helpful to highlight the federal and state laws at issue:

FERPA: The Family Educational Rights and Privacy Act (FERPA), 20 U.S.C. § 1232g; 34 CFR Part 99, protects the privacy of student education records.  FERPA applies to all schools that receive federal funds.  In addition to giving parents and eligible students certain rights concerning “education records” (a term defined broadly), FERPA generally requires schools to have written consent from a parent or eligible student to release any PII from the student’s education record.  However, disclosure without consent is permitted under certain conditions described in 34 CFR § 99.31.  One of these conditions is the “school official exception,” which allows a platform to receive PII from education records without parental consent if the platform: (1) “performs an institutional service or function,” (2) has “a legitimate educational interest” in the education records, (3) “is under the direct control” of the school “with respect to the use and maintenance of education records,” and (4) uses education records only for authorized purposes and does not redisclose PII from education records to other parties without consent.  The penalty for violating FERPA is the withdrawal of federal funding to the school.  A pitfall for schools is the procurement process, which requires careful attention to ensuring that the contract and the vendor’s privacy practices and policies align.

COPPA: The Children’s Online Privacy & Protection Act (COPPA), 15 U.S.C. § 6502, and the COPPA Rule, 16 C.F.R. pt. 312, impose requirements on operators of websites or online services directed to children under 13 years of age, and on operators of other websites or online services that actually know they are collecting personal information online.  The COPPA Rule requires operators of these types of these services to include a clearly written privacy notice on their home page and anywhere else on their site where user data is collected. COPPA also requires operators to obtain “verifiable parental consent” before collecting or using personal information from children, and to maintain reasonable procedures to protect the confidentiality, security, and integrity of personal information collected from children. The FTC has published guidance on complying with the COPPA Rule, which is available at the following link:

 

https://www.ftc.gov/business-guidance/resources/childrens-online-privacy-protection-rule-six-step-compliance-plan-your-business

Violations of the COPPA Rule carry civil penalties of up to $46,517 per violation.

Student Privacy Act: In Texas, the Student Privacy Act, Tex. Educ. Code § 32, restricts the use of students’ personally identifiable information when used in connection with websites, online services, online applications, or mobile applications for a school purpose.  Specifically, the Act prohibits the “operator” of a website, online service, online application, or mobile app from knowingly engaging in “targeted advertising” if the target of the advertising is based on information the operator acquired through the use of those platforms for a school purpose.  Operators are also prohibited from using the information to create a profile about a student unless the profile is created for a school purpose. In addition, operators cannot sell or rent any student’s “covered information.”  The Act does not include a penalty.

Our view: As mentioned in the Star-Telegram article, linked above, the FTC has recently indicated that enforcement of COPPA is now a priority, especially in EdTech.  You can read the FTC’s policy statement on this issue by clicking on the following link:

https://www.ftc.gov/legal-library/browse/policy-statement-federal-trade-commission-education-technology-childrens-online-privacy-protection

Here, we think that EdTech platforms should take note of the FTC’s enhanced scrutiny because the penalties for violating the COPPA Rule are stout, and the FTC has expressly stated its intent to ensure that EdTech companies protect children’s privacy. 

While we support any action that enhances user privacy – especially children’s privacy – we question the schools’ presumably inadvertent role in the commercialization of student data.  On the “front end,” education agencies and/or school systems that contract for EdTech must be diligent and attentive enough to ensure that students’ privacy is protected not only by “policies” posted somewhere on the vendors’ websites, but that those policies are reflected in the contracts between the vendors and the schools.  And even where the contracts require limitations on data use and impose security obligations, the vendors’ performance under those contracts must be monitored and assured. This will require not just FTC scrutiny of EdTech practices, but also scrutiny of the schools’ roles themselves. 

Without up-front diligence on vendors followed by continued monitoring and oversight, schools will find that they have – albeit inadvertently – played a role in ceding student data to vendors who weren’t adequately committed to responsible data stewardship. And without looking to the entities ultimately responsible for student data – i.e. the schools – we suspect that EdTech privacy problems will persist. 

Hosch & Morris, PLLC is a boutique law firm dedicated to data privacy and protection, cybersecurity, the Internet and technology. Open the Future℠.

(Originally posted by Hosch And Morris)
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SCOTUS Asked to Block Ruling on Counting Undated Pennsylvania Mail Ballots

The petition was filed by Cameron Norris of Consovoy McCarthy.

     
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Lawyers, Judges Bring Focus to Current Risks to LGBTQ Rights at City Bar Panel

While the leaked draft of the U.S. Supreme Court opinion overruling Roe v. Wade included an assertion that the ruling "concerns the constitutional right to abortion and no other right," attorneys warned that similar reasoning could be used to strike down LGBTQ rights.

     
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Pa. Commonwealth Court: Case Law Leaves Gun Control at State Level, Rejecting Cities' Power to Legislate

The judgment of the court said that a Pennsylvania statute was written to preempt the field. A dissenting opinion argued that with differing levels of gun violence between urban and rural areas, state law should allow for variation in gun regulation.

     
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Texas Access to Justice Foundation creates new fellowship to serve veterans

The Texas Access to Justice Foundation, or TAJF, which provides grant funding for civil legal aid in Texas, announced the creation of the Terry O. Tottenham Veterans Justice Fellowship. The fellowship honors veteran, current TAJF Secretary, and former State Bar of Texas President Terry O. Tottenham, who is of counsel at Norton Rose Fulbright in Austin.

The new fellowship will be a priority for one of the annually selected, TAJF-sponsored Equal Justice Work Fellows to help address the legal needs of our veterans. Each year a Veterans Justice Fellow will be selected ensuring that lawyers are routinely placed to address the pressing legal issues facing veterans throughout Texas.

“Veterans deserve access to our civil justice system as they struggle with legal needs affecting their health, housing, and financial security,” said Deborah Hankinson, chair of the TAJF board of directors, in a press release. “Terry Tottenham is an exceptional lawyer who served in the U.S. Marines, and we’re honored to create this fellowship in recognition of his tireless efforts to serve those who have served.”

Tottenham joined the TAJF Board of Directors in 2013. In 2010, while president of the State Bar of Texas, he formed the Texas Lawyers for Texas Veterans program, which was based on a program originally created by the Houston Bar Association in 2008. This model is now followed by many other states to provide pro bono civil legal assistance to veterans and their families who otherwise cannot afford legal services.

Allen Martin, an Abilene native and a graduating third-year student at Pepperdine University’s Caruso School of Law, has been selected as the inaugural Tottenham Veterans Justice Fellow. Martin’s fellowship will mitigate veteran homelessness in rural Central Texas by implementing a medical-legal partnership at a VA clinic to meet legal needs related to housing, discharge upgrades, and financial and family stability. Martin will begin his two-year fellowship in September at the Texas Legal Services Center in Austin.

For more information about the TAJF, go to teajf.org.

Original author: Will Korn
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Tax Court in Brief | Genecure, LLC v. Commissioner | Capital Expenses, QTDP Recapture Tax, Fraud-Related Penalty Requirements

The Tax Court in Brief – May 23rd – May 27th, 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 May 23rd, 2022, through May 27th, 2022

Albrecht v. Comm’r, T.C. Memo 2022-53 | May 25, 2022 | Greaves, J. | Dkt. No. 13314-20.

Genecure, LLC v. Comm’r, T.C. Memo 2022-52 | May 23, 2022 | Jones, J. | Dkt. No. 14916-15.

Opinion

Short Summary: This is a TEFRA partnership-level case. Genecure is a biotech firm and is organized as a member-managed LLC. It is treated as a partnership for federal income tax purposes. See Treas. Reg. § 301.7701-3(b)(1). Frank Tung was Genecure’s tax matters partner. The opinion addresses a number of splintered issues that arose from Genecure’s business transactions in tax years 2009-2012, including taxation of settlement proceeds received in contract dispute, deductibility of item-by-item categories of business expenses, recapture tax for an Affordable Care Act-Qualified Therapeutic Discovery Project (QTDP) grant received by Genecure, characterization of amounts received from an LLC owned by Frank Tung’s wife (i.e., is it a loan, or not a loan), and possible capital contributions from the LLC owned by Frank Tung’s wife. The IRS examined Genecure’s tax returns for years 2009 through 2012. The examining agent prepared a Form 11661, Fraud Development Recommendation-Examination, and Frank Tung was given summary report transmittal Letter 1807 to attend a closing conference, which conference never occurred. Ultimately, the IRS issued Frank Tung, in his capacity as tax matters partner, a separate Notices of Final Partnership Administrative Adjustment (FPAA) for each of the years in issue, as well as a section 6663 civil fraud penalty for underpayment of tax for each year. In the Tax Court proceeding, Frank Tung sought to admit emails, letters, and other documentation from Genecure’s day-to-day business, most of which the Tax Court refused to admit or consider.

Key Issues:

Whether Genecure carried its burden of proof to overcome the presumption of correctness of the IRS’s determinations? Whether the IRS complied with the initial determination requirements to assess fraud-related penalties against Genecure?

Primary Holdings:

The Tax Court found primarily in favor of the IRS on all tax issues. Frank Tung’s testimony was self-serving, evasive, conflicted, and improbable with respect to his position on the issues. His purported evidence was not in admissible form, and he provided no exceptions to applicable exclusionary rules. Settlement proceeds received constituted gross income that was taxable, and most of the itemized business expenses were not deductible due to lack of substantiation or business purpose. Genecure was subject to a recapture tax for the excess QTDP grant. And, in the absence of any credible and commercially reasonable evidence, a $200,000 payment from Frank Tung’s wife was not a loan for rent and there was no evidence of any capital contribution in the year claimed. As for the fraud-related penalties, the IRS Civil Penalty Approval Form and its Form 11661 did not satisfy the written supervisory approval requirements for purposes of assessing section 6663 civil fraud penalties; therefore, such penalties were inapplicable against Genecure at the partnership level.

Key Points of Law:

Evidentiary Issues. Tax Court evidentiary rulings are determined under the Federal Rules of Evidence. See 7453; Rule 143(a). Irrelevant evidence is not admissible. See Fed. R. Evid. 402. An item of evidence is relevant to the extent it tends to make a fact more or less probable and such fact is consequential to determining the action. See Fed. R. Evid. 401. Hearsay evidence is inadmissible unless another provision of the rules or law provides otherwise. See Fed. R. Evid. 802, 803, 804. Hearsay is an out-of-court statement offered to prove the truth of the matter asserted. See Fed. R. Evid. 801(c). Burdens of Proof. The adjustments rendered in an FPAA bear a presumption of correctness, and the taxpayer generally bears the burden of proving erroneous the adjustments at issue. See, e.g., Welch v. Helvering, 290 U.S. 111, 115 (1933); Rule 142(a)(1). The IRS does not bear the burden of production with respect to penalties in a partnership-level proceeding. See 7491(c); Dynamo Holdings Ltd. P’ship v. Commissioner, 150 T.C. 224, 236 (2018). The IRS must produce some minimal evidentiary foundation. See Blohm v. Commissioner, 994 F.2d 1542, 1548–49 (11th Cir. 1993). For example, a bank deposit presented by the IRS is prima facie evidence of income to a taxpayer. Tokarski v. Commissioner, 87 T.C. 74, 77 (1986). Evaluation of Witness. The Tax Court observes the truthfulness, sincerity, and demeanor of each witness to evaluate his or her testimony. The Court assigns weight to that testimony for the purpose of finding disputed facts based on the record as a whole. In the light of that testimony, the Court weighs the evidence, makes appropriate inferences, and finds what the Court believe to be the truth. The Court is “careful to avoid making the courtroom a haven for the skillful liar . . .” Garavaglia v. Commissioner, T.C. Memo. 2011-228. Unreported Income. Gross income means all income from whatever source derived unless specifically excluded by another provision of the Code. It includes gross income derived from business. § 61(a)(2). To the extent a given amount does not fall within a statutorily enumerated category of gross income, gross income is construed broadly. See Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955). Settlement proceeds that do not otherwise satisfy an exclusionary provision constitute gross income. See George v. Commissioner, T.C. Memo. 2016-156, at *5–6, *10. Business Expense Deductions. Section 162(a) permits a deduction for ordinary and necessary expenses paid to carry on a trade or business during the taxable year. An expense is ordinary if it is normal or customary within the particular trade, business, or industry of the taxpayer. See Welch v. Helvering, 290 U.S. at 114. An expense is necessary if it is appropriate and helpful. at 113. Section 174(a) permits a taxpayer to deduct research and experimental expenses paid in connection with his trade or business. Deductions are a matter of legislative grace, and the taxpayer bears the burden of clearly showing his entitlement to any deduction claimed. See INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Higbee v. Commissioner, 116 T.C. 438, 440 (2001); § 6001. Expenses for travel (including meals and lodging) and expenses with respect to any listed property under section 280F(d)(4) are subject to heightened burden of proof for deductibility. See § 274(d)(1), (4). No deduction is permitted for personal, living, or family expenses unless expressly permitted under the Code. See § 262(a). Rent Expenses. A rental expense paid for property used in a trade or business is deductible as an ordinary and necessary business expense. § 162(a)(3). A cash method taxpayer may only deduct an expense that is actually paid during the taxable year. See Saviano v. Commissioner, 80 T.C. 955, 964 (1983), aff’d, 765 F.2d 643 (7th Cir. 1985); Treas. Reg. § 1.461- 1(a)(1)), 1.446-1(c)(1)(i). A rental expense paid with a promissory note executed in lieu of cash payment may be deducted only when the note is satisfied. See Helvering v. Price, 309 U.S. 409, 413 (1940). Legal Expenses. A capital expenditure may not be deducted for the taxable year in which it is paid, notwithstanding the fact that it may otherwise be an ordinary and necessary expense paid to carry on a trade or business. See§ 161, 263(a). A capital expense is one that either (1) creates or enhances a separate and distinct asset or (2) otherwise generates significant benefits beyond the taxable year. See Mylan, Inc. & Subs. v. Commissioner, 156 T.C. 137, 149 (2021). “A taxpayer must capitalize amounts paid to a governmental agency to obtain, renew, renegotiate, or upgrade its rights under a trademark, trade name, copyright, . . . or other similar right granted by that governmental agency.” See Treas. Reg. § 1.263(a)-4(d)(5)(i). A “patent” is treated as a “similar right” for these purposes. A taxpayer must capitalize any amounts paid to facilitate the acquisition or creation of such an intangible. See id. § 1.263(a)-4(b)(1)(v), (e)(1)(i). Fees paid for legal services ancillary to the renewal of a patent must also be capitalized. Id. However, if such costs in the aggregate do not exceed $5,000 in a given taxable year, they are deemed de minimis and are not treated as facilitative costs subject to capitalization. See id. § 1.263(a)-4(e)(4)(i), (iii). Tax Expenses. Property tax payments may be deducted under section 162(a) to the extent they are ordinary and necessary business expenditures. See Bello v. Commissioner, T.C. Memo. 2001-56, 2001 Tax Ct. Memo LEXIS 72, at *17–19. Research and Development Expenses. A taxpayer may “treat research or experimental expenditures which are paid or incurred by him during the taxable year in connection with his trade or business as expenses which are not chargeable to capital account.” § 174(a)(1). Such expenses may be deducted. “[R]esearch and experimental expenditures” are research and development costs in the experimental or laboratory sense and include incidental costs. See Reg. § 1.174-2(a)(1). Amounts which are paid to others for research or experimentation on the taxpayer’s behalf may also be deducted. See Treas. Reg. § 1.174-2(a)(8). QTDP Grant Recapture. Section 48D permits taxpayers to claim a credit (or receive a grant in lieu of a credit) equal to 50% of the qualified investment a taxpayer makes with respect to a QTDP in a taxable year beginning in 2009 or 2010. Generally, a “qualified investment” is defined as “the aggregate amount of the costs paid . . . for expenses necessary for and directly related to the conduct of a qualifying therapeutic discovery project.” § 48D(b)(1), (2), and (3). However, the ACA provides for a recapture of excessive grant amounts in the taxable year the grant was actually disbursed. See 9023(e)(5)(B)(i); Silver Med., Inc. v. Commissioner, 147 T.C. 547, 554–56 (2016). A portion of a grant is excess to the extent the qualified investment for which it was awarded (i.e., the amount certified by the IRS upon its review of the participating taxpayer’s Form 8942) was not actually paid. See Wang v. Commissioner, T.C. Memo. 2017-81, at *21–22. Recapture is effected in the form of an increase in federal income tax equal to the excess portion of the grant. See ACA § 9023(e)(5)(A), 124 Stat. at 882. Section 6663 Civil Fraud Penalties. Section 6751(b)(1) provides that no penalty, including the penalty under section 6663, may “be assessed [against a taxpayer] unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination.” In a partnership-level proceeding under TEFRA, section 6751(b)(1) generally requires that written supervisory approval of a penalty determination occur no later than the issuance of the FPAA. See Palmolive Bldg. Inv’rs, LLC v. Commissioner, 152 T.C. 75, 83 (2019). The “initial determination” for purposes of section 6751(b)(1) must reflect, in a formal writing, that the IRS Examination Division “completed its work and made an unequivocal decision to assert penalties.” See Belair Woods, LLC v. Commissioner, 154 T.C. 1, 15 (2020). A Letter 1807 generally does not constitute the “initial determination.” Non-compliance with section 6751(b)(1) is treated as an affirmative defense to the section 6663 penalties and must be included in the pleadings or considered tried by consent in the proceeding. Jurisdiction. The Tax Court lacks subject matter jurisdiction to determine a partner’s outside basis in a partnership-level proceeding.

Insights: Frank Tung, in a pro se capacity and as tax matters partner for Genecure, sought to admit an array of documentary evidence during the Tax Court proceeding. Due to evidentiary standards and Frank Tung’s failure to provide available exceptions to the rules, his proffered evidence was not admitted. From a substantive tax perspective, Genecure failed to document and substantiate most of the claimed business expenses it sought to deduct in the returns in issue. And, Genecure was negligent in failing to report taxable income such as amounts received in settlement from a business contract dispute. Genecure also claimed deductions and other tax benefits for rent, loans and capital contribution, none of which were properly substantiated. This case is another reminder of the due care the taxpayer must take in documenting all aspects of the business that are relevant for taxation, deductions, and fraud-related assessments or defense purposes.

The post Tax Court in Brief | Genecure, LLC v. Commissioner | Capital Expenses, QTDP Recapture Tax, Fraud-Related Penalty Requirements appeared first on Freeman Law.

Original author: Freeman Law
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Tax Court in Brief | Genecure, LLC v. Commissioner | Capital Expenses, QTDP Recapture Tax, Fraud-Related Penalty Requirements

The Tax Court in Brief – May 23rd – May 27th, 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 May 23rd, 2022, through May 27th, 2022

Albrecht v. Comm’r, T.C. Memo 2022-53 | May 25, 2022 | Greaves, J. | Dkt. No. 13314-20.

Genecure, LLC v. Comm’r, T.C. Memo 2022-52 | May 23, 2022 | Jones, J. | Dkt. No. 14916-15.

Opinion

Short Summary: This is a TEFRA partnership-level case. Genecure is a biotech firm and is organized as a member-managed LLC. It is treated as a partnership for federal income tax purposes. See Treas. Reg. § 301.7701-3(b)(1). Frank Tung was Genecure’s tax matters partner. The opinion addresses a number of splintered issues that arose from Genecure’s business transactions in tax years 2009-2012, including taxation of settlement proceeds received in contract dispute, deductibility of item-by-item categories of business expenses, recapture tax for an Affordable Care Act-Qualified Therapeutic Discovery Project (QTDP) grant received by Genecure, characterization of amounts received from an LLC owned by Frank Tung’s wife (i.e., is it a loan, or not a loan), and possible capital contributions from the LLC owned by Frank Tung’s wife. The IRS examined Genecure’s tax returns for years 2009 through 2012. The examining agent prepared a Form 11661, Fraud Development Recommendation-Examination, and Frank Tung was given summary report transmittal Letter 1807 to attend a closing conference, which conference never occurred. Ultimately, the IRS issued Frank Tung, in his capacity as tax matters partner, a separate Notices of Final Partnership Administrative Adjustment (FPAA) for each of the years in issue, as well as a section 6663 civil fraud penalty for underpayment of tax for each year. In the Tax Court proceeding, Frank Tung sought to admit emails, letters, and other documentation from Genecure’s day-to-day business, most of which the Tax Court refused to admit or consider.

Key Issues:

Whether Genecure carried its burden of proof to overcome the presumption of correctness of the IRS’s determinations? Whether the IRS complied with the initial determination requirements to assess fraud-related penalties against Genecure?

Primary Holdings:

The Tax Court found primarily in favor of the IRS on all tax issues. Frank Tung’s testimony was self-serving, evasive, conflicted, and improbable with respect to his position on the issues. His purported evidence was not in admissible form, and he provided no exceptions to applicable exclusionary rules. Settlement proceeds received constituted gross income that was taxable, and most of the itemized business expenses were not deductible due to lack of substantiation or business purpose. Genecure was subject to a recapture tax for the excess QTDP grant. And, in the absence of any credible and commercially reasonable evidence, a $200,000 payment from Frank Tung’s wife was not a loan for rent and there was no evidence of any capital contribution in the year claimed. As for the fraud-related penalties, the IRS Civil Penalty Approval Form and its Form 11661 did not satisfy the written supervisory approval requirements for purposes of assessing section 6663 civil fraud penalties; therefore, such penalties were inapplicable against Genecure at the partnership level.

Key Points of Law:

Evidentiary Issues. Tax Court evidentiary rulings are determined under the Federal Rules of Evidence. See 7453; Rule 143(a). Irrelevant evidence is not admissible. See Fed. R. Evid. 402. An item of evidence is relevant to the extent it tends to make a fact more or less probable and such fact is consequential to determining the action. See Fed. R. Evid. 401. Hearsay evidence is inadmissible unless another provision of the rules or law provides otherwise. See Fed. R. Evid. 802, 803, 804. Hearsay is an out-of-court statement offered to prove the truth of the matter asserted. See Fed. R. Evid. 801(c). Burdens of Proof. The adjustments rendered in an FPAA bear a presumption of correctness, and the taxpayer generally bears the burden of proving erroneous the adjustments at issue. See, e.g., Welch v. Helvering, 290 U.S. 111, 115 (1933); Rule 142(a)(1). The IRS does not bear the burden of production with respect to penalties in a partnership-level proceeding. See 7491(c); Dynamo Holdings Ltd. P’ship v. Commissioner, 150 T.C. 224, 236 (2018). The IRS must produce some minimal evidentiary foundation. See Blohm v. Commissioner, 994 F.2d 1542, 1548–49 (11th Cir. 1993). For example, a bank deposit presented by the IRS is prima facie evidence of income to a taxpayer. Tokarski v. Commissioner, 87 T.C. 74, 77 (1986). Evaluation of Witness. The Tax Court observes the truthfulness, sincerity, and demeanor of each witness to evaluate his or her testimony. The Court assigns weight to that testimony for the purpose of finding disputed facts based on the record as a whole. In the light of that testimony, the Court weighs the evidence, makes appropriate inferences, and finds what the Court believe to be the truth. The Court is “careful to avoid making the courtroom a haven for the skillful liar . . .” Garavaglia v. Commissioner, T.C. Memo. 2011-228. Unreported Income. Gross income means all income from whatever source derived unless specifically excluded by another provision of the Code. It includes gross income derived from business. § 61(a)(2). To the extent a given amount does not fall within a statutorily enumerated category of gross income, gross income is construed broadly. See Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955). Settlement proceeds that do not otherwise satisfy an exclusionary provision constitute gross income. See George v. Commissioner, T.C. Memo. 2016-156, at *5–6, *10. Business Expense Deductions. Section 162(a) permits a deduction for ordinary and necessary expenses paid to carry on a trade or business during the taxable year. An expense is ordinary if it is normal or customary within the particular trade, business, or industry of the taxpayer. See Welch v. Helvering, 290 U.S. at 114. An expense is necessary if it is appropriate and helpful. at 113. Section 174(a) permits a taxpayer to deduct research and experimental expenses paid in connection with his trade or business. Deductions are a matter of legislative grace, and the taxpayer bears the burden of clearly showing his entitlement to any deduction claimed. See INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Higbee v. Commissioner, 116 T.C. 438, 440 (2001); § 6001. Expenses for travel (including meals and lodging) and expenses with respect to any listed property under section 280F(d)(4) are subject to heightened burden of proof for deductibility. See § 274(d)(1), (4). No deduction is permitted for personal, living, or family expenses unless expressly permitted under the Code. See § 262(a). Rent Expenses. A rental expense paid for property used in a trade or business is deductible as an ordinary and necessary business expense. § 162(a)(3). A cash method taxpayer may only deduct an expense that is actually paid during the taxable year. See Saviano v. Commissioner, 80 T.C. 955, 964 (1983), aff’d, 765 F.2d 643 (7th Cir. 1985); Treas. Reg. § 1.461- 1(a)(1)), 1.446-1(c)(1)(i). A rental expense paid with a promissory note executed in lieu of cash payment may be deducted only when the note is satisfied. See Helvering v. Price, 309 U.S. 409, 413 (1940). Legal Expenses. A capital expenditure may not be deducted for the taxable year in which it is paid, notwithstanding the fact that it may otherwise be an ordinary and necessary expense paid to carry on a trade or business. See§ 161, 263(a). A capital expense is one that either (1) creates or enhances a separate and distinct asset or (2) otherwise generates significant benefits beyond the taxable year. See Mylan, Inc. & Subs. v. Commissioner, 156 T.C. 137, 149 (2021). “A taxpayer must capitalize amounts paid to a governmental agency to obtain, renew, renegotiate, or upgrade its rights under a trademark, trade name, copyright, . . . or other similar right granted by that governmental agency.” See Treas. Reg. § 1.263(a)-4(d)(5)(i). A “patent” is treated as a “similar right” for these purposes. A taxpayer must capitalize any amounts paid to facilitate the acquisition or creation of such an intangible. See id. § 1.263(a)-4(b)(1)(v), (e)(1)(i). Fees paid for legal services ancillary to the renewal of a patent must also be capitalized. Id. However, if such costs in the aggregate do not exceed $5,000 in a given taxable year, they are deemed de minimis and are not treated as facilitative costs subject to capitalization. See id. § 1.263(a)-4(e)(4)(i), (iii). Tax Expenses. Property tax payments may be deducted under section 162(a) to the extent they are ordinary and necessary business expenditures. See Bello v. Commissioner, T.C. Memo. 2001-56, 2001 Tax Ct. Memo LEXIS 72, at *17–19. Research and Development Expenses. A taxpayer may “treat research or experimental expenditures which are paid or incurred by him during the taxable year in connection with his trade or business as expenses which are not chargeable to capital account.” § 174(a)(1). Such expenses may be deducted. “[R]esearch and experimental expenditures” are research and development costs in the experimental or laboratory sense and include incidental costs. See Reg. § 1.174-2(a)(1). Amounts which are paid to others for research or experimentation on the taxpayer’s behalf may also be deducted. See Treas. Reg. § 1.174-2(a)(8). QTDP Grant Recapture. Section 48D permits taxpayers to claim a credit (or receive a grant in lieu of a credit) equal to 50% of the qualified investment a taxpayer makes with respect to a QTDP in a taxable year beginning in 2009 or 2010. Generally, a “qualified investment” is defined as “the aggregate amount of the costs paid . . . for expenses necessary for and directly related to the conduct of a qualifying therapeutic discovery project.” § 48D(b)(1), (2), and (3). However, the ACA provides for a recapture of excessive grant amounts in the taxable year the grant was actually disbursed. See 9023(e)(5)(B)(i); Silver Med., Inc. v. Commissioner, 147 T.C. 547, 554–56 (2016). A portion of a grant is excess to the extent the qualified investment for which it was awarded (i.e., the amount certified by the IRS upon its review of the participating taxpayer’s Form 8942) was not actually paid. See Wang v. Commissioner, T.C. Memo. 2017-81, at *21–22. Recapture is effected in the form of an increase in federal income tax equal to the excess portion of the grant. See ACA § 9023(e)(5)(A), 124 Stat. at 882. Section 6663 Civil Fraud Penalties. Section 6751(b)(1) provides that no penalty, including the penalty under section 6663, may “be assessed [against a taxpayer] unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination.” In a partnership-level proceeding under TEFRA, section 6751(b)(1) generally requires that written supervisory approval of a penalty determination occur no later than the issuance of the FPAA. See Palmolive Bldg. Inv’rs, LLC v. Commissioner, 152 T.C. 75, 83 (2019). The “initial determination” for purposes of section 6751(b)(1) must reflect, in a formal writing, that the IRS Examination Division “completed its work and made an unequivocal decision to assert penalties.” See Belair Woods, LLC v. Commissioner, 154 T.C. 1, 15 (2020). A Letter 1807 generally does not constitute the “initial determination.” Non-compliance with section 6751(b)(1) is treated as an affirmative defense to the section 6663 penalties and must be included in the pleadings or considered tried by consent in the proceeding. Jurisdiction. The Tax Court lacks subject matter jurisdiction to determine a partner’s outside basis in a partnership-level proceeding.

Insights: Frank Tung, in a pro se capacity and as tax matters partner for Genecure, sought to admit an array of documentary evidence during the Tax Court proceeding. Due to evidentiary standards and Frank Tung’s failure to provide available exceptions to the rules, his proffered evidence was not admitted. From a substantive tax perspective, Genecure failed to document and substantiate most of the claimed business expenses it sought to deduct in the returns in issue. And, Genecure was negligent in failing to report taxable income such as amounts received in settlement from a business contract dispute. Genecure also claimed deductions and other tax benefits for rent, loans and capital contribution, none of which were properly substantiated. This case is another reminder of the due care the taxpayer must take in documenting all aspects of the business that are relevant for taxation, deductions, and fraud-related assessments or defense purposes.

The post Tax Court in Brief | Genecure, LLC v. Commissioner | Capital Expenses, QTDP Recapture Tax, Fraud-Related Penalty Requirements appeared first on Freeman Law.

(Originally posted by Freeman Law)
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Tax Court in Brief | Albrecht v. Commissioner | Charitable Contributions and Contemporaneous Written Acknowledgements

The Tax Court in Brief – May 23rd – May 27th, 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 May 23rd, 2022, through May 27th, 2022

Genecure, LLC v. Comm’r, T.C. Memo 2022-52 | May 23, 2022 | Jones, J. | Dkt. No. 14916-15.

Albrecht v. Comm’r, T.C. Memo 2022-53 | May 25, 2022 | Greaves, J. | Dkt. No. 13314-20.

Opinion

Short Summary: Martha Albrecht donated 120 items of Native American jewelry and artifacts (donation) to the Wheelwright Museum of the American Indian (Museum). Pursuant to the express terms of a “Deed of Gift” (deed), Albrecht transferred all her rights in the property, unless otherwise stated in a separate Gift Agreement. The Gift Agreement was not included with the deed, and the Museum did not provide Albrecht with any further written documentation concerning the donation. Albrecht filed Form 1040, U.S. Individual Income Tax Return, for the year at issue in which she reported the donation on Schedule A, Itemized Deductions, and attached a copy of the deed. The return was examined, and the IRS disallowed the donation on the ground that the requirements of section 170 were not met. Albrecht sought review in the Tax Court.

Key Issue:

Whether Albrecht, through the deed and the Gift Agreement, satisfied the contemporaneous written acknowledgement requirements of 26 U.S.C. § 170(f)(8)(B) to receive a charitable contribution deduction for the donation to the Museum?

Primary Holdings:

No. Neither the deed nor the Gift Agreement specified whether the Museum provided any goods or services in return for the donation, and such an acknowledgement is a statutory and regulatory requirement for a taxpayer to receive a tax deduction for a charitable contribution. And, the deed did not indicate it constituted the entire agreement of the parties or that any prior understandings between Albrecht and the Museum were merged into the deed.

Key Points of Law:

Burden of Proof. The IRS’s determinations in a notice of deficiency are generally presumed correct, and the taxpayer bears the burden of proving that the determinations are in error. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). The taxpayer bears the burden of proving entitlement to any deduction claimed. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). A taxpayer claiming a tax deduction must demonstrate that the deduction is provided for by statute and must maintain records sufficient to enable the IRS to determine the correct tax liability. See 26 U.S.C. § 6001; Hradesky v. Commissioner, 65 T.C. 87, 89–90 (1975), aff’d per curiam, 540 F.2d 821 (5th Cir. 1976); Treas. Reg. § 1.6001-1(a). Charitable Contributions. Charitable contributions are deductible, but such deductions are allowable only if the taxpayer satisfies specific substantiation requirements. See 26 U.S.C. § 170(a)(1); Reg. § 1.170A-13. Charitable Contribution Acknowledgements. For any contribution of $250 or more, section 170(f)(8)(A) requires that the taxpayer obtain from the donee organization, and maintain, a “contemporaneous written acknowledgement” (CWA). The CWA must include (i) the amount of cash and a description (but not value) of any property other than cash contributed; (ii) whether the donee organization provided any goods or services in consideration, in whole or in part, for any such property; and (iii) a description and good faith estimate of the value of any such goods or services. 26 U.S.C. § 170(f)(8)(B); 15 W. 17th St. LLC v. Commissioner, 147 T.C. 557, 563 (2016); Treas. Reg. § 1.170A-13(f)(2). The taxpayer must receive the CWA from the donee organization on or before the earlier of the date the taxpayer files his or her return or the due date for filing such return. 26 U.S.C. § 170(f)(8)(C). The requirement that a CWA be obtained “is a strict one,” and a taxpayer may not deduct the contribution if the donation acknowledgment fails to meet the statutory and regulatory requirements. 15 W. 17th St. LLC, 147 T.C. at 562. Gift Deed as a Charitable Acknowledgement. Where a deed does not contain an explicit statement that the donee did not any goods or services in consideration, in whole or in part, for receipt of the property, the Tax Court may review the deed as a whole to determine whether the donee provided goods or services in return for the donation, taking into consideration whether the deed (i) effectively states whether any goods or services were provided in the exchange; (ii) states the donation is an unconditional gift; (iii) recites no consideration received in the exchange; and (iv) contains a provision stating that the deed is the entire agreement of the parties. See, e.g., French v. Commissioner, T.C. Memo. 2016-53, at *10–12; RP Golf, LLC v. Commissioner, T.C. Memo. 2012-282, at *10–11; Averyt v. Commissioner, T.C. Memo. 2012-198, slip op. at 12–13. If the deed leaves open a question about whether the parties had entered into a side agreement that included additional, superseding terms, the instrument fails to meet the strict terms of the CWA requirements—substantial compliance is insufficient.

Insights: To enjoy a deduction for a charitable contribution, the taxpayer must strictly comply with the contemporaneous written acknowledgement requirements of section 170 and the related Treasury Regulations. In Albrecht, the gift deed referenced the Gift Agreement and expressly stated that it superseded the terms of the deed with respect to the donor’s rights in the donation. The deed failed to indicate, for example, that “no goods or services were provided by the Museum to Albrecht in exchange for the donation.” The deed made reference to a separate Gift Agreement, which was not provided to Albrecht before she filed the tax return in issue and also failed to adequately address the CWA requirements. Thus, the deed, by its terms, provided Albrecht the ability—or possibility—to retain an interest in the donation. These errors in substantiation proved fatal to a charitable contribution deduction. On March 22, 2022, Freeman Law attorney, Cory Halliburton, provided great insight on the tax treatment of charitable contributions. See Joint Committee on Taxation Report on Tax Treatment of Charitable Contributions. If only Martha Albrecht had the benefit of that wise counsel when she made the generous donation to the Wheelwright Museum of the American Indian.

The post Tax Court in Brief | Albrecht v. Commissioner | Charitable Contributions and Contemporaneous Written Acknowledgements appeared first on Freeman Law.

Original author: Freeman Law
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Tax Court in Brief | Albrecht v. Commissioner | Charitable Contributions and Contemporaneous Written Acknowledgements

The Tax Court in Brief – May 23rd – May 27th, 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 May 23rd, 2022, through May 27th, 2022

Genecure, LLC v. Comm’r, T.C. Memo 2022-52 | May 23, 2022 | Jones, J. | Dkt. No. 14916-15.

Albrecht v. Comm’r, T.C. Memo 2022-53 | May 25, 2022 | Greaves, J. | Dkt. No. 13314-20.

Opinion

Short Summary: Martha Albrecht donated 120 items of Native American jewelry and artifacts (donation) to the Wheelwright Museum of the American Indian (Museum). Pursuant to the express terms of a “Deed of Gift” (deed), Albrecht transferred all her rights in the property, unless otherwise stated in a separate Gift Agreement. The Gift Agreement was not included with the deed, and the Museum did not provide Albrecht with any further written documentation concerning the donation. Albrecht filed Form 1040, U.S. Individual Income Tax Return, for the year at issue in which she reported the donation on Schedule A, Itemized Deductions, and attached a copy of the deed. The return was examined, and the IRS disallowed the donation on the ground that the requirements of section 170 were not met. Albrecht sought review in the Tax Court.

Key Issue:

Whether Albrecht, through the deed and the Gift Agreement, satisfied the contemporaneous written acknowledgement requirements of 26 U.S.C. § 170(f)(8)(B) to receive a charitable contribution deduction for the donation to the Museum?

Primary Holdings:

No. Neither the deed nor the Gift Agreement specified whether the Museum provided any goods or services in return for the donation, and such an acknowledgement is a statutory and regulatory requirement for a taxpayer to receive a tax deduction for a charitable contribution. And, the deed did not indicate it constituted the entire agreement of the parties or that any prior understandings between Albrecht and the Museum were merged into the deed.

Key Points of Law:

Burden of Proof. The IRS’s determinations in a notice of deficiency are generally presumed correct, and the taxpayer bears the burden of proving that the determinations are in error. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). The taxpayer bears the burden of proving entitlement to any deduction claimed. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). A taxpayer claiming a tax deduction must demonstrate that the deduction is provided for by statute and must maintain records sufficient to enable the IRS to determine the correct tax liability. See 26 U.S.C. § 6001; Hradesky v. Commissioner, 65 T.C. 87, 89–90 (1975), aff’d per curiam, 540 F.2d 821 (5th Cir. 1976); Treas. Reg. § 1.6001-1(a). Charitable Contributions. Charitable contributions are deductible, but such deductions are allowable only if the taxpayer satisfies specific substantiation requirements. See 26 U.S.C. § 170(a)(1); Reg. § 1.170A-13. Charitable Contribution Acknowledgements. For any contribution of $250 or more, section 170(f)(8)(A) requires that the taxpayer obtain from the donee organization, and maintain, a “contemporaneous written acknowledgement” (CWA). The CWA must include (i) the amount of cash and a description (but not value) of any property other than cash contributed; (ii) whether the donee organization provided any goods or services in consideration, in whole or in part, for any such property; and (iii) a description and good faith estimate of the value of any such goods or services. 26 U.S.C. § 170(f)(8)(B); 15 W. 17th St. LLC v. Commissioner, 147 T.C. 557, 563 (2016); Treas. Reg. § 1.170A-13(f)(2). The taxpayer must receive the CWA from the donee organization on or before the earlier of the date the taxpayer files his or her return or the due date for filing such return. 26 U.S.C. § 170(f)(8)(C). The requirement that a CWA be obtained “is a strict one,” and a taxpayer may not deduct the contribution if the donation acknowledgment fails to meet the statutory and regulatory requirements. 15 W. 17th St. LLC, 147 T.C. at 562. Gift Deed as a Charitable Acknowledgement. Where a deed does not contain an explicit statement that the donee did not any goods or services in consideration, in whole or in part, for receipt of the property, the Tax Court may review the deed as a whole to determine whether the donee provided goods or services in return for the donation, taking into consideration whether the deed (i) effectively states whether any goods or services were provided in the exchange; (ii) states the donation is an unconditional gift; (iii) recites no consideration received in the exchange; and (iv) contains a provision stating that the deed is the entire agreement of the parties. See, e.g., French v. Commissioner, T.C. Memo. 2016-53, at *10–12; RP Golf, LLC v. Commissioner, T.C. Memo. 2012-282, at *10–11; Averyt v. Commissioner, T.C. Memo. 2012-198, slip op. at 12–13. If the deed leaves open a question about whether the parties had entered into a side agreement that included additional, superseding terms, the instrument fails to meet the strict terms of the CWA requirements—substantial compliance is insufficient.

Insights: To enjoy a deduction for a charitable contribution, the taxpayer must strictly comply with the contemporaneous written acknowledgement requirements of section 170 and the related Treasury Regulations. In Albrecht, the gift deed referenced the Gift Agreement and expressly stated that it superseded the terms of the deed with respect to the donor’s rights in the donation. The deed failed to indicate, for example, that “no goods or services were provided by the Museum to Albrecht in exchange for the donation.” The deed made reference to a separate Gift Agreement, which was not provided to Albrecht before she filed the tax return in issue and also failed to adequately address the CWA requirements. Thus, the deed, by its terms, provided Albrecht the ability—or possibility—to retain an interest in the donation. These errors in substantiation proved fatal to a charitable contribution deduction. On March 22, 2022, Freeman Law attorney, Cory Halliburton, provided great insight on the tax treatment of charitable contributions. See Joint Committee on Taxation Report on Tax Treatment of Charitable Contributions. If only Martha Albrecht had the benefit of that wise counsel when she made the generous donation to the Wheelwright Museum of the American Indian.

The post Tax Court in Brief | Albrecht v. Commissioner | Charitable Contributions and Contemporaneous Written Acknowledgements appeared first on Freeman Law.

(Originally posted by Freeman Law)
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Customer of Morgan Stanley Broker Thomas Bonds Files $5M Unsuitability Case

Morgan Stanley Broker Thomas Bonds Has Three Investor Claims Resulted in Settlements 

Our broker misconduct attorneys are investigating claims of losses involving current and former customers of Morgan Stanley broker Thomas Craig Bonds. According to his BrokerCheck record, the Kirkland, WA financial advisor has one pending customer dispute. In the investor’s FINRA arbitration claim, the claimant seeks $5M in damages and alleges unsuitability related to how the broker managed their account from April 2015 to September 2021. 

Unsuitability generally alleges that actions were taken by the financial advisor that were not a suitable fit for the investor given several factors, including: 

The post Customer of Morgan Stanley Broker Thomas Bonds Files $5M Unsuitability Case appeared first on Investor Lawyers Blog.

Original author: Shepherd Smith Edwards & Kantas and LLP
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Customer of Morgan Stanley Broker Thomas Bonds Files $5M Unsuitability Case

Morgan Stanley Broker Thomas Bonds Has Three Investor Claims Resulted in Settlements 

Our broker misconduct attorneys are investigating claims of losses involving current and former customers of Morgan Stanley broker Thomas Craig Bonds. According to his BrokerCheck record, the Kirkland, WA financial advisor has one pending customer dispute. In the investor’s FINRA arbitration claim, the claimant seeks $5M in damages and alleges unsuitability related to how the broker managed their account from April 2015 to September 2021. 

Unsuitability generally alleges that actions were taken by the financial advisor that were not a suitable fit for the investor given several factors, including: 

The post Customer of Morgan Stanley Broker Thomas Bonds Files $5M Unsuitability Case appeared first on Investor Lawyers Blog.

(Originally posted by Shepherd Smith Edwards & Kantas and LLP)
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Despite Red Flags, Centaurus Financial Allegedly Raised Cap for Selling L Bonds To Customers

SSEK Law Firm is Representing Investors Against Centaurus Financial 

In a recent InvestmentNews column, reporter Bruce Kelly discussed how broker-dealers and their financial advisors continued selling L Bonds to customers despite indications of possible troubles at GWG Holdings, Inc. In April 2022, the alternative asset firm filed for Chapter 11 bankruptcy protection. 

The firm sold $1.6B in life insurance-backed bonds through over 140 regional brokerage firms and managing broker-dealer Emerson Equity. It is unknown what value these high-yield bonds still have or if they are worth anything at all now. Visit our L Bonds and GWG Holdings, Inc. pages to find out more.

The post Despite Red Flags, Centaurus Financial Allegedly Raised Cap for Selling L Bonds To Customers appeared first on Investor Lawyers Blog.

Original author: Shepherd Smith Edwards & Kantas and LLP
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Despite Red Flags, Centaurus Financial Allegedly Raised Cap for Selling L Bonds To Customers

SSEK Law Firm is Representing Investors Against Centaurus Financial 

In a recent InvestmentNews column, reporter Bruce Kelly discussed how broker-dealers and their financial advisors continued selling L Bonds to customers despite indications of possible troubles at GWG Holdings, Inc. In April 2022, the alternative asset firm filed for Chapter 11 bankruptcy protection. 

The firm sold $1.6B in life insurance-backed bonds through over 140 regional brokerage firms and managing broker-dealer Emerson Equity. It is unknown what value these high-yield bonds still have or if they are worth anything at all now. Visit our L Bonds and GWG Holdings, Inc. pages to find out more.

The post Despite Red Flags, Centaurus Financial Allegedly Raised Cap for Selling L Bonds To Customers appeared first on Investor Lawyers Blog.

(Originally posted by Shepherd Smith Edwards & Kantas and LLP)
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UBS Financial Services Ordered To Pay Yield Enhancement Strategy Customers Almost $4 Million

Francis Amsler and Marc Lobarde Were the UBS Financial Brokers of Record

A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded a Houston, Texas, couple $3.9 million in their claim against UBS Financial Services (UBS). The couple alleged losses from the firm’s Yield Enhancement Strategy (YES). 

Now, UBS must pay these former YES investors almost $4 million to compensate the investors for their losses. This includes $2.9 million in compensatory damages and approximately $1 million in legal fees and other costs.

The post UBS Financial Services Ordered To Pay Yield Enhancement Strategy Customers Almost $4 Million appeared first on Investor Lawyers Blog.

Original author: Shepherd Smith Edwards & Kantas and LLP
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UBS Financial Services Ordered To Pay Yield Enhancement Strategy Customers Almost $4 Million

Francis Amsler and Marc Lobarde Were the UBS Financial Brokers of Record

A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded a Houston, Texas, couple $3.9 million in their claim against UBS Financial Services (UBS). The couple alleged losses from the firm’s Yield Enhancement Strategy (YES). 

Now, UBS must pay these former YES investors almost $4 million to compensate the investors for their losses. This includes $2.9 million in compensatory damages and approximately $1 million in legal fees and other costs.

The post UBS Financial Services Ordered To Pay Yield Enhancement Strategy Customers Almost $4 Million appeared first on Investor Lawyers Blog.

(Originally posted by Shepherd Smith Edwards & Kantas and LLP)
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Michael Sussmann Had 'Everything to Lose' By Lying to FBI, Defense Lawyer Says in Closings

Both sides delivered their closing arguments on Friday in the false statements trial for former Perkins Coie partner Michael Sussmann.

     
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Former Bear Stearns Broker Not Entitled to SEC Whistleblower Award, DC Circuit Rules

The broker was not entitled to collect a portion of a $100 million disgorgement because he provided information before a federal law took effect.

     
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