Tax Court In Brief | Harrison v. Commissioner | Itemized Deductions, Charitable Contributions, Passive Income

• Published date: 16 May 2022
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Tax, Trials & Appeals & Compensation, Real Estate, Income Tax, Tax Authorities
• Law Firm: Freeman Law
• Author: Freeman Law

The Tax Court in Brief - May 9th - May 13th, 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 May 9th, 2022, through May 13th, 2022

• Lewis v. Commissioner, TC Memo. 2022-47| May 9, 2022 | Greaves, J. | Dkt. No. 10007-20W
• Rogerson v. Commissioner, TC Memo. 2022-49| May 12, 2022 | Toro, J. | Dkt. No. 5848-20
• Jackson v. Comm'r, T.C. Memo. 2022-50 | May 12, 2022 | Vasquez, J. | Dkt. No. 19634-18L
• Evert v. Comm'r, T.C. Memo. 2022-48| May 9, 2022 | Marshall, A | Dkt. No 12901-19

Harrison v. Comm'r, T.C. Memo 2022-6 | May 12, 2022 | Panuthos, J | Dkt. No. 12170-19S

Opinion

Summary: The IRS declared a deficiency, additional tax, and accuracy-related penalties on the 2015 income tax return of Nicole Harrison, an employee of Samsung Electronics and a consultant on the side. Harrison made several charitable contributions, mostly made through a PayPal account, and she regularly donated clothing, shoes, and jewelry to organizations such as Goodwill and Dress for Success. Harrison traveled in connection with Samsung and normally booked business class flights; however, when company policy changed so that she could only be reimbursed for the cost of coach, she continued to book business class. She began to deduct the difference on her Schedule A and substantiated the costs with bank statements of her corporate card. In connection with her sole proprietorship consulting, she paid a company to set up a website, networked, traveled for two clients, bought a laptop, and renovated her personal apartment to include a home-office. Lastly, she and a relative, purchased a rental property. She contributed to the mortgage by sending Venmo payments. She did not receive any income and claimed passive-activity losses for remediating a flooded basement, insurance, and other house-related expenses.

Issues:

• Whether Harrison is entitled to deduct charitable contributions and unreimbursed employee expenses reported on Schedule A, Itemized Deductions?
• Whether Harrison is entitled to certain expense deductions relating to her consulting activity reported on Schedule C, Profit or Loss from Business?
• Whether Harrison is entitled to deduct real estate activity expenses reported on Schedule E, Supplemental Income and Loss?
• Whether Harrison is liable for an addition to tax for failure to timely file pursuant to ' 6651(a)(1)?

Primary Holdings

• Yes and no. The Court limited charitable contributions for lack of evidence to properly substantiate the claimed deductions on both cash and noncash contributions. The record lacked approximate dates of acquisition, detailed descriptions, and the costs or other bases for the non-cash contributions, and Harrison did not provide sufficient substantiation for her claimed deduction...