Tax Court: 6 Year Statute of Limitations Still Does Not Apply to Understated Basis Cases

The U.S. Tax Court in a reviewed opinion, accompanied by two concurrences, rejects the applicability of final Treas. Reg. Sec. 301.6229(c)(2)-1(b) and follows its opinions in Intermountain Insurance Service of Vail v. Commissioner and Bakersfield Energy Partners, LP v. Commissioner to hold that the 6 year statute of limitations does not apply to an understatement of income. The majority opinion, sua sponte, considered the final regulations in light of the U.S. Supreme Court’s opinion in Mayo Foundation v. United States.

Read the Tax Court’s opinion here:
Carpenter Family Investments, LLC v. Commissioner, 136 T.C. No. 17 (2011)

What does Mayo Foundation mean for Tax Litigation?

The Supreme Court’s decision in Mayo Foundation will have a lasting impact. Chevron deference is now the standard. One scholar asks whether that is always the case.

What to do about regulations that appear to be promulgated in order to affect the outcome of a pending case? Does Chevron deference still apply? Does another standard apply? Should another standard apply?

Prof. Lederman of the Univeristy of Indiana at Bloomington will present “Hold the Mayo: What Respect Should Courts Accord Tax Regulations and Rulings Issued During Litigation?” at the University of Florida Faculty Colloquia Series.

Please visit Tax Prof Blog for an abstract.

U.S. Supreme Court: Medical Residents are Employees Subject to FICA Withholding

A unanimous United States Supreme Court (8-0) rules that medical residents are employees, not students, and therefore are subject to FICA withholding. Chevron deference applies to Treasury Regulations rather than the standard set forth in National Muffler.

Mayo Foundation v. United States, No. 09-837 (January 11, 2011)