Federal Tax Update – June 2020

By David S. De Jong, Esq., CPA, Stein Sperling Bennett De Jong PC


In Hewitt v. Commissioner, TC Memo 2020-89, the Tax Court held that a donation of a conservation easement did not give rise to a charitable deduction because the deed failed to allocate to the donee a share of proceeds in the event of disposition of the property following any judicial extinguishment of the easement. 

In Plateau Holdings LLC v. Commissioner, TC Memo 2020-93, Lumpkin One Five Six, LLC v. Commissioner, TC Memo 2020-94, and Lumpkin HC LLC v. Commissioner, TC Memo 2020-95, the Tax Court disallowed charitable easements when any post-extinguishment proceeds to the charity would not be applied to the full price but would be minus any increase in value due to improvements.

In Johnson v. Commissioner, TC Memo 2020-79, the Tax Court found a donated conservation easement of all but five acres at a ranch to be a value about midway between that claimed by the taxpayer and that asserted by IRS.

In News Release 2020-130, IRS offered to settle syndicated conservation easement cases by allowing out of pocket acquisition costs and imposing a 10-20 percent penalty on the excess write off.


In Estate of Bolles v. Commissioner, TC Memo 2020-71, the Tax Court found that 23 years of transfers between a mother and son were initially loans but became gifts in the year in which repayment could no longer be expected.

In Notice 2020-51, IRS permitted any taxpayer who received a required minimum distribution in 2020 (including 2020 distributions on account of 2019 for individuals turning 70½ in 2019) to roll over the distribution into the same account or another until August 31, 2020.

In Letter Ruling 202023007, IRS waived the 60-day rollover rule where the financial institution trustee had resigned as IRA custodian but the resignation letter went to an old address. 


Public Law 116-142, the Paycheck Protection Flexibility Act, reverses prior law and permits recipients of forgiven PPP loans to defer the payment of certain payroll taxes as otherwise permitted under the CARES Act.

In Kroner v. Commissioner, TC Memo 2020-73, the Tax Court found that a transfer of almost $26 million between individuals involved in multiple business relationships was income to the transferee and not a gift; the alleged donor did not testify at trial.

In Kechijian v. Commissioner, 125 AFTR2d 2020-________, the Fourth Circuit Court of Appeals agreed with the Tax Court that a taxpayer had to report about $41 million in compensation income when restrictions on stock expired, rejecting attempts by the taxpayer to avoid recognition by surrendering the newly vested shares in exchange for a promissory note.

In Bowers v. Commissioner, TC Summary Opinion 2020-17, the Tax Court disallowed most expenses of a husband-wife consulting business due to lack of substantiation including travel expenses of $9,500 mostly to attend a single conference where no records were produced.

In Brannan Sand & Gravel Co., LLC v. Commissioner, TC Memo 2020-76, the Tax Court disallowed a water rights easement granted to a state agency as Form 8283 had many omissions and the $200,000 valuation was done by an attorney based on his litigation of similar transactions.

In Sellers v. Commissioner, TC Memo 2020-84, the Tax Court found that a CPA with numerous businesses lacked adequate records to show sufficient basis in two of them and to show material participation in another, the Court rejecting unsigned contracts among other self-serving documents.

In Santos v. Commissioner, TC Memo 2020-88, the Tax Court found that a taxpayer’s cleaning business was akin to that of a dispatcher such that workers were independent contractors in that, when a service was sought, she would see who was available and the worker would provide her own supplies and transportation with the ability to utilize others to assist.


In United States v. De Forrest, 125 AFTR2d 2020-2355, a Nevada Federal District Court determined that failure to file an FBAR when required and signing a Form 1040 under penalty of perjury without declaring a foreign bank account is insufficient in and of itself to show willful failure to file FBAR reports.

In Organic Cannabis Foundation LLC v. Commissioner, 125 AFTR2d 2020-________, the Ninth Circuit Court of Appeals agreed with the Tax Court that two petitions were filed late inasmuch as they were sent on the next to last day by “FedEx First Overnight” which at the time was not an acceptable method of delivery (although it was added two weeks later) despite being akin to other FedEx options; it would have been delivered on the last day for filing but FedEx noted that the building was inaccessible at the time of delivery due to a “safety threat” and no subsequent attempt was made until delivery one day too late at 7:30 a.m.

In Strashny v. Commissioner, TC Memo 2020-82, the Tax Court determined that IRS properly rejected a taxpayer’s CDP appeal where they had significant investment assets that could be liquidated to pay the tax liability.

In Rogers v. Commissioner, TC Memo 2020-91, the Tax Court denied innocent spouse relief to a wife who continued to be married and live with her husband of 50 years, a tax attorney who had marketed sheltered investments, finding that she was well educated, intelligent and aware of his activity which resulted in over $8 million owed to IRS.

In Legal Advice issued by Field Attorneys 2020250, IRS found that an examination of a carryforward year of a net operating loss constituted a repetitious audit when an examination of the loss year sustained that the activity of operating a vineyard was carried on for profit.