Tax Court In Brief | The REDI Foundation, Inc. v. Commissioner | Statutory Employee, FICA, And Form 941

• Published date: 18 April 2022
• Subject Matter: Corporate/Commercial Law, Tax, Corporate and Company Law, Income Tax, Tax Authorities
• Law Firm: Freeman Law
• Author: Freeman Law

The Tax Court in Brief - April 11th- April 15th, 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.

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Tax Litigation: The Week of April 11th, 2022, through April 15th, 2022

• Mihalik v. Comm'r | April 13, 2022?| Gustafson, D. | Dkt. No. 7881-19
• Pediatric Impressions Home Health, Inc. v. Comm'r, T.C Memo. 2022-35 | April 12, 2022 | Greaves, J | Dkt. No. 5769-20

The REDI Foundation, Inc. v. Comm'r, T.C. Memo. 2022-34 |April 11, 2022?|Nega, J. | Dkt. No. 23715-18

Short Summary: Richard Abraham formed The REDI Foundation, Inc. ("REDI") to serve as a vehicle to offer Abraham's seminars on real estate development. Abraham served as a member of REDI's board and as a corporate officer during the tax periods in issue. REDI's sole source of income was from the tuition charged for enrollment in online courses presented by Abraham, and those courses represented REDI's only activities. REDI reported that it paid Abraham'as an independent contractor'$91,918 in 2014 and did not file a Form 941, Employer's Quarterly federal Tax Return, for any of the periods in issue. The IRS selected REDI's Form 990 return for employment tax examination and determined that Abraham was to be legally classified as an employee for purposes of federal employment taxes. The IRS also made additions to tax under section 6651(a)(1) and (2) and penalties under section 6656. REDI challenged those determinations.

Primary Holdings:

• Abraham was properly classified as an employee for federal employment tax purposes. He provided'and received remuneration for'more than "minor services" for REDI and those services constituted REDI's entire source of income. REDI presented insufficient evidence to show that Abraham worked for or was engaged by REDI in a capacity other than as an officer. REDI failed to carry its burden of establishing that Abraham was engaged by REDI in a capacity other than as an officer or in dual roles as an employee and an independent contractor. All additions to tax liability were upheld.

Key Points of Law:

• Burdens of Proof. Generally, the IRS's determinations are presumed correct, and the taxpayer bears the burden of proving the IRS's determinations are erroneous. Rule 142(a); Welch v. Helvering, 290 U.S 111, 115 (1933). This principle...