Tax Court In Brief | Lim v. Comm'r | Disallowance Of Charitable Contribution Deduction For Lack Of Qualified Appraisal; Reasonable Cause Exception

• Jurisdiction: United States,Federal
• Law Firm: Freeman Law
• Subject Matter: Tax, Income Tax, Tax Authorities
• Author: Freeman Law
• Published date: 10 February 2023

The Tax Court in Brief - January 23rd - January 27th, 2023

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 January 23rd, 2022, through January 27th, 2023

• Freman v. Comm'r, T.C. Memo. 2023-10| January 23, 2023 |Jones, J. | Dkt. No. 8895-20
• Shilgevorkyan v. Comm'r, T.C. Memo 2023-12| January 23, 2023 | Ashford, J. | Dkt. No 9247-15
• Belton v. Comm'r, T.C. Memo. 2023-13| January 24, 2023 |Toro, J. | Dkt. No. 22438-19P
• Adams v. Comm'r, 160 T.C. No. 1| January 24, 2023 | Toro, J. | Dkt. No. 1527-21P
• Mulu v. Comm'r, T.C. Summary Opinion 2023-2| January 25, 2023 | Leyden, J. | Dkt. No 12975-21S
• Aragoni v. Comm'r, T.C. Summary Opinion 2023-3| January 25, 2023 | Panuthos, J. | Dkt. No 20914-21S
• Johnson v. Comm'r, 160 T.C. No. 2| January 25, 2023 |Nega, J. | Dkt. No. (Consolidated) 19973-18 19975-18, 19978-18, 20001-18

Lim v. Comm'r, T.C. Memo. 2023-11| January 23, 2023 | Lauber, J. | Dkt. No. 14015-20

Summary: This case involves taxpayers, Calvin Lim and Helen Chu (together, "Petitioners") federal income tax liabilities for 2016 and 2017 with respect to a disallowed charitable contribution deduction.

"The Ultimate Tax, Estate, and Charitable Plan." During 2016 and 2017, Petitioners were the sole shareholders of Integra Capital Group, Inc. (Integra), an S corporation. In December 2016, Michael L. Meyer, an attorney, made a presentation to Petitioners he called "The Ultimate Plan: the Ultimate Tax, Estate and Charitable Plan." That same day Petitioners executed an engagement agreement with Mr. Meyer. He agreed to form a "Charitable Limited Liability Company" (CLLC) as a charitable giving vehicle. He agreed to create documents that would transfer assets to the CLLC, to create documents that would transfer CLLC units to a charity, and to supply an appraisal supporting the valuation claimed for the gift. He also agreed to represent Petitioners before the IRS and the Tax Court if the tax return on which Petitioners reported the gift was selected by the IRS for examination. Mr. Meyer's fee would be the greater of $25,000 or a percentage of the "deductible amount" of assets. The assets transferred to the CLLC would consist of five promissory notes with total face amount of $2,008,500.

The Charitable LLC. That same day Mr. Meyer created ABC Foundation Legacy, LLC (ABC), as the CLLC. ABC was a single-member LLC incorporated in Indiana. On December 30, 2016, Petitioners and Integra executed an agreement prepared by Mr. Meyer (ABC agreement). The ABC agreement named Petitioners as ABC's managers, Integra as ABC's single member, and Mr. Meyer as its registered agent. Attached to the ABC agreement were the five promissory notes. Each note was dated December 31, 2016. By these notes Petitioner (wife), as payor, promised to pay ABC a total of $2,008,500 in seven years. Petitioner (wife) signed each note as payor, and both Petitioners signed each note (on behalf of ABC) as payees.

Charitable Donation. The charitable recipient was to be the Indiana Endowment Foundation, Inc. (Foundation). The Foundation was an Indiana corporation...