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Tax Blawg

Tax Talk for Tax Pros

Introduction

Welcome to TaxBlawg, a resource for news and analysis of current legal issues facing tax practitioners. Although blawg.com identifies nearly 1,400 active “blawgs,” including 20+ blawgs related to taxation and estate planning, the needs of tax professionals have received surprisingly little attention. The Wall Street Journal's Tax Blog gives “tips and advice for filers,” and Paul Caron’s legendary TaxProf Blog is an excellent clearinghouse for academic and policy-oriented news. Yet, tax practitioners still lack a dedicated resource to call their own. For those intrepid souls, we offer TaxBlawg, a forum of tax talk for tax pros.

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Supreme Court’s Review of Valuation Misstatement Penalty Leaves the Door Open for Appellants

On March 25, the Supreme Court accepted certiorari in U.S. v. Gary Woods.  (Supreme Court order) The issue presented to the Court arose from a split in the Circuits over whether a taxpayer can avoid the valuation misstatement penalties of section 6662(e) and (h) by conceding that there was no economic substance to its return position (and thus that the valuation misstatement was not the basis for its tax deficiency).  Compare, e.g., Todd v. Commissioner, 862 F.2d 540 (5th Cir. 1988) (no penalty imposed under predecessor of section 6662), with e.g., Gustashaw v. Commissioner, 110 A.F.T.R.2d 2012-6169 (11th Cir. 2012) (9/28/12) (criticizing Todd).

In accepting the case, the Supreme Court also directed the parties to address an additional matter - whether the trial court even had jurisdiction under section 6226 (dealing with TEFRA partnership-level proceedings) to consider the valuation misstatement penalty.

Taxpayers who have disputed and lost cases involving the same issue would be wise to preserve their appeal rights, if still available, so that they can potentially benefit from a favorable decision by the Supreme Court.

  • Of Counsel


    David Shakow has specialized in federal taxation for over 30 years.  He has been a professor at the University of Pennsylvania Law School since 1982; was Deputy Tax Legislative Counsel in the U.S. Treasury from 1980-1981; and has ...