Case: Tax Court Upholds IRS Ruling, Finds Couple Liable for Unreported Income, Penalties (T.C. Memo)

The U.S. Tax Court held that taxpayers were liable for unreported income and accuracy-related penalties, affirming the IRS’s determinations. Taxpayers, a married couple, failed to report discharge of indebtedness income and business income from the husband’s tax preparation business for tax years 2020 and 2021. The IRS performed a bank deposit analysis showing underreported gross receipts. Taxpayers argued the deposits were charitable donations they passed along to others, but provided no contemporaneous records to support this claim. The court found that taxpayers failed to maintain adequate books and records as required by IRC §6001. The court also held taxpayers liable ...