Tax Court In Brief | Courturier v. Commissioner | Taxation Of Excess Contributions From IRA

Published date11 July 2022
Subject MatterEmployment and HR, Tax, Retirement, Superannuation & Pensions, Employee Benefits & Compensation, Income Tax, Tax Authorities
Law FirmFreeman Law
AuthorFreeman Law

The Tax Court in Brief - July 4th - July 8th, 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 July 4th, 2022, through July 8th, 2022

  • Barrington v Commissioner, T.C. Memo. 2022-68 | July 6, 2022 | Buch, J.| Dkt. No. 1781-14
  • Wolpert v. Commissioner T.C. Memo. 2022-70 | July 7, 2022 | Jones, J.| Dkt. No. 3182-20, 4693-20

Couturier v. Commissioner, No. 19714-16, T.C. Memo 2022-69 | July 6, 2022 | Lauber | Dkt. 19714-16

Opinion

Short Summary: This case involves a determination by the IRS that petitioner in 2004 made an excess contribution of $25,132,892 to his individual retirement account ("IRA"). Section 4973(a) imposes an excise tax "in an amount equal to 6 percent of the amount of the excess contributions" that a taxpayer makes to an IRA in any given year. This excise tax continues to apply to future tax years, until such time as the original excess contribution is distributed to the taxpayer and included in income. See ' 4973(b)(2). Petitioner contended that the IRS is precluded as a matter of law from asserting excise tax liability under section 4973 because it did not issue him a notice of deficiency challenging his income tax treatment of the transactions that generated the excess contributions. Finding no merit in this argument, the Tax Court denied the Motion.

Key Issues:

  • Whether imposition of an excise tax is dependent on or affected in any way based on whether the taxpayer has an income tax liability, whether the taxpayer has filed (or the IRS has examined) an income tax return, or whether the IRS has issued the taxpayer a notice of deficiency in income tax.
  • Whether the IRS's failure to examine a return, or its failure to challenge a particular position that a taxpayer took on a return, constitutes a concession or admission that the taxpayer's position was correct.

Facts and Primary Holdings:

  • In 1999 petitioner was employed as the president of Noll Manufacturing Co. ("Noll"). He remained president of Noll at least into 2004. Noll was a subsidiary of The Employee Ownership Holding Company, Inc. (TEOHC).
  • TEOHC maintained an employee stock ownership plan (ESOP). As of 2004 petitioner owned 4,586 shares of stock in the ESOP. He also enjoyed benefits, beginning in 2001 or earlier, under...

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