Tax Court Determines Couple’s Deductions, Cancelled Debt Income

Tax Court Determines Couple’s Deductions, Cancelled Debt Income

U.S. Tax Court

The Tax Court held that a couple wasn’t entitled to the loss they claimed from the sale of property and they didn’t realize discharge of indebtedness income from the sale; their income from the cancellation of another debt is limited; they were entitled to an ordinary loss from the husband’s partnership; other losses were properly disallowed; and the husband was liable for some self-employment tax. The court did not impose accuracy-related penalties because the IRS did not show compliance with section 6751 supervisory approval.

The Tax Court held that a couple wasn’t entitled to the loss they claimed from the sale of property and they didn’t realize discharge of indebtedness income from the sale; their income from the cancellation of another debt is limited; they were entitled to an ordinary loss from the husband’s partnership; other losses were properly disallowed; and the husband was liable for some self-employment tax.

The Tax Court held that a couple wasn’t entitled to the loss they claimed from the sale of property and they didn’t realize discharge of indebtedness income from the sale; their income from the cancellation of another debt is limited; they were entitled to an ordinary loss from the husband’s partnership; other losses were properly disallowed; and the husband was liable for some self-employment tax. The court did not impose accuracy-related penalties because the IRS did not show compliance with section 6751 supervisory approval.

Sec. 108 Income from discharge of indebtedness

Sec. 165 Losses

Sec. 469 Passive activity losses and credits limited

Sec. 704 Partner's distributive share

Sec. 6662 Imposition of accuracy-related penalty on underpayments

Sec. 6751 Procedural requirements

United States

Basis

Cancellation of debt income

Exemptions and deductions

Individual income taxation

Partnerships

Penalties

James S. Halpern

United States Tax Court

DOC 2020-26729

2020 TNTF 134-22

Search Connectors

Retrieving Documents With a Tax Analysts’ Citation:

Field Restricted Searching:

Tax Court Determines Couple’s Deductions, Cancelled Debt Income