Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Sunday, December 9, 2012

Forbes Release The Top Ten Tax Cases of 2012

IRS 2Forbes is in the process of completing their list of the top ten tax cases for this past year. Provided below is a link to the article that provides a more detailed explanation of each of the cases that they have already discussed. Here is the list with the citations.

10. Olive v. Commissioner, 139 T.C. 2 (2012).

9. Sophy v. Commissioner, 138 T.C. 8 (2012).

8. Storey v. Commissioner, T.C. Memo 2012-115 (2012).

7. Rolfs v. Commissioner, 135 T.C. 24 (2012)

6. Mohamed v. Commissioner, 2012-152 (2012).

5. Maguire v. Commissioner, T.C. Memo 2012-160.

This weeks top tax case of 2012 is Watson v. Commissioner, 668 F.3d 1008 (8th Cir., 2012). In Watson, the court examined whether an S corporation shareholder-employee was reasonably compensated when he paid himself only $24,000 in salary but $375,000 in distributions for his services. Watson, a CPA and the sole shareholder of an S corporation, "was a 25% shareholder in a view successful accounting firm." His portion of the revenue was sent to the S corporation, which would then pay Watson a salary and distributions. Watson reported any amount that was not considered to be part of his salary as the income that owned in the S corporation. The amount was not subject to the income tax. The district court in that case determined that Watson was not reasonably compensated. In this case, the Eighth Circuit Court of Appeals affirmed the ruling.

See Tony Nitti, The Top Ten Tax Cases Of 2012, #4: S Corporation Shareholder Reasonable Compensation - How Much Is Enough?, Forbes, Dec. 6, 2012.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.


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