Tax Court In Brief | Fields v. Comm'r | IRS Automated Underreporter Program, Gifts From Employer, Accuracy-Related Penalty

Published date15 November 2022
Subject MatterTax, Income Tax, Tax Authorities
Law FirmFreeman Law
AuthorFreeman Law

Tax Litigation: The Week of November 7th, 2022, through November 11th, 2022

  • Green Valley Investors, LLC v. Comm'r 159 T.C. No. 5 | November 9, 2022 | Weiler, J. | Dkt. Nos 17379-19, 17380-19, 17381-19, 17382-19 (consolidated)
  • Amos v. Comm'r, T.C. Memo. 2022-109 | November 10, 2022 | Urda, J. | Dkt. No. 4331-18

Fields v. Comm'r, T.C. Summary Opinion 2022-22 | November 10, 2022 | Panuthos, Special Trial J. | Dkt. No. 2925-20S (IRS Automated Underreporter, gifts from employer, unreported gross income, and accuracy-related penalty)

Summary: Pursuant to 26 U.S.C. ' 7463(b), this decision is not reviewable by any other court, and the opinion shall not be treated as precedent for any other case. The case regards a deficiency determination and a 26 U.S.C. ' 6662(a) accuracy-related penalty assessed against petitioners, Jennifer Fields ("Jennifer") and Walter Fields (with Jennifer, the "Fields"). Jennifer worked for Paragon Canada ULC. Paragon Canada ULC operated in Canada, and it operated in the U.S. as Paragon Gaming (collectively, Paragon). She had a personal relationship with the CEO of Paragon, Scott Menke. On a few occasions, Paragon wired funds to or for Jennifer's personal benefit, such as for use as a down payment to purchase a residence or other unspecified. In January 2017, she separated from Paragon. In a severance agreement, the respective parties agreed to a write-off of certain employee advances totaling $79,581.50. A revised draft severance agreement modified the consideration but was never signed. Jennifer executed a Form W-9, Request for Taxpayer Identification Number and Certification, which was provided to Paragon. Paragon issued to Jennifer and filed with the IRS a Form 1099-MISC, reporting $79,581 in other income for the year in issue. With help from a tax preparer, the Fields timely filed Form 1040 for the year in issue, but the return did not include any amounts reported on the Form 1099-MISC. The IRS Automated Underreporter (AUR) Program determined a mismatch. The IRS issued a notice of deficiency, adjusting the Fields' income to include $79,581 in other income from Paragon. The IRS also determined that the Fields were liable for a section 6662(a) and (b)(2) accuracy-related penalty for an underpayment attributable to a substantial understatement of income tax.

Key Issues: (1) Whether the Fields failed to report income of $79,581 for the year in issue? (2) Whether the Fields are liable for a section 6662(a) accuracy-related penalty?

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