Top Tax Court Cases

Lew and McDougall v. Commissioner

Expert credibility; failure to engage with specific facts; valuation methodology; gift/estate tax

One of the most current (2026) Tax Court authorities on expert credibility in valuation cases. Lew and McDougall stands for the proposition that a technically sophisticated report is worthless if it does not engage with the specific facts that drive value. Practitioners and appraisers must ensure their expert's analysis is anchored to the actual transaction, not a generic methodology applied from a distance.

Loper Bright Enterprises v. Raimondo (Transfer Pricing Implications)

Chevron deference overruled; independent judicial review of §482 Treasury regulations

Overruling Chevron has major implications for §482 regulations — taxpayers can now challenge Treasury's transfer pricing regulations on independent statutory grounds. Combined with the post-Altera landscape, this opens new avenues to contest cost-sharing and other §482 regulations.

Estate of Connelly v. United States

Corporate-owned life insurance — estate tax valuation; stock redemption obligation

Landmark ruling for closely held business succession planning; corporate-owned life insurance used for stock redemptions increases the estate's value, potentially creating unexpected estate tax liability.

Estate of Anne Milner Fields v. Commissioner

Family limited partnership — lack-of-control discount; lack-of-marketability discount; FLP valuation; estate tax

A significant post-TCJA affirmation that properly structured and documented FLP discounts survive IRS challenge at both the trial and appellate level. The Fifth Circuit's 2026 affirmance makes Fields one of the most current appellate authorities on FLP valuation discounts, reinforcing that lack-of-control and lack-of-marketability discounts remain viable when supported by a credible, well-documented appraisal.

Hallmark Research Collective v. Commissioner

Deficiency petition deadline; jurisdiction

Important counterpoint to Boechler for deficiency litigation deadlines.

3M Co. & Subs. v. Commissioner

Blocked-income regulation; foreign-law royalty restrictions do not automatically prevent §482 allocation

A foreign-law restriction on royalty payments does not automatically block a §482 allocation. The blocked-income regulation is valid, and taxpayers cannot rely on foreign restrictions to reduce their U.S. transfer pricing exposure unless the restriction meets the regulation's specific conditions.

Farhy v. Commissioner

IRS authority to assess Form 5471 penalties under §6038(b)

Potentially invalidated thousands of §6038(b) penalty assessments; IRS appealed and the D.C. Circuit reversed, but the case created significant uncertainty.

Bittner v. United States

Non-willful FBAR penalties — per-report vs. per-account calculation

Landmark FBAR ruling; resolved a circuit split and dramatically reduced non-willful FBAR penalty exposure for taxpayers with multiple foreign accounts.

Lardas v. Commissioner

§274 listed property substantiation; vehicle mileage logs required

Vehicle expenses are listed property under §274; contemporaneous mileage logs are required and the Cohan rule does not save unsubstantiated vehicle deductions.

Specht v. Commissioner

Accuracy-related penalty — substantial authority standard

Substantial authority is an objective standard; if there is substantial authority for a position, the accuracy-related penalty does not apply even if the IRS ultimately prevails.

Estate of Cecil v. Commissioner

Estate valuation — liquidation vs. going-concern premise; Biltmore Company; family governance; income and market approaches

Landmark valuation case for iconic family-owned enterprises. Cecil establishes that the liquidation premise is inappropriate when a business has a long, documented history of family stewardship and governance policies that make a sale implausible. Family testimony corroborated by seven years of documented family meetings and governance policies was sufficient to defeat the IRS's asset approach.

Medtronic, Inc. v. Commissioner

Best method selection — CUT vs. CPM for licensed medical-device intangibles; ongoing remand history

A comparable uncontrolled transaction must involve sufficiently comparable IP, functions, risks, and profit potential. Under CPM, companies do not need to make identical products, but they must be sufficiently similar to provide a reliable result. The extended remand history illustrates how contested best-method selection can be for specialized medical-device IP.

Toth v. Commissioner

Foreign pension treaty exemption; timeliness of treaty election under Form 8833

Treaty elections for foreign pension exemptions must be made on a timely filed return; late elections are not automatically accepted.

Patel v. Commissioner

§1031 exchange — boot recognition; 45-day identification and 180-day exchange rules

Boot received in a 1031 exchange is taxable; all exchange proceeds must be reinvested to defer the full gain.

Laidlaw's Harley Davidson Sales v. Commissioner

§6751(b) — revenue agent's report as initial determination; supervisory approval timing

Clarifies that the revenue agent's report is the initial determination for §6751(b) purposes; supervisory approval must precede the RAR.

Castigliola v. Commissioner

Self-employment tax — professional LLC; limited partner exception for active attorneys

Consistent with Renkemeyer; active service providers in professional LLCs cannot claim the limited partner SE tax exception.

Boechler, P.C. v. Commissioner

Collection due process; equitable tolling; Tax Court jurisdiction

Major taxpayer-procedure decision affecting late CDP petitions.

Vitale v. Commissioner

§183 — real estate investment; active management and profit motive

Real estate investment is rarely classified as a hobby when the taxpayer actively manages properties; §183 is more commonly applied to recreational activities.

Exacto Spring Corp. v. Commissioner

Reasonable compensation for shareholder-employees; independent investor test

The independent investor test is the preferred standard in many circuits for reasonable compensation analysis; a high return on equity supports higher compensation.

Maines v. Commissioner

Qualified Opportunity Zone — 180-day reinvestment period for partnership gains

Partners in a partnership that sells property have flexibility in starting the 180-day QOZ reinvestment period; the election to use the partnership's year-end is available.

Toth v. Commissioner

Failure to file penalty — reasonable cause; medical condition defense

Medical conditions can constitute reasonable cause for failure to file, but the condition must be documented and must have actually prevented filing.

Dieringer v. Commissioner

§83(b) election timing — 30-day period from transfer date

§83(b) elections must be filed within 30 days of the transfer of property; the clock starts at transfer, not when restrictions lapse.

United States v. Rum

FBAR willfulness; foreign accounts

Frequently cited FBAR case on willfulness and the duty to review tax returns.

Whirlpool Financial Corp. v. Commissioner

Foreign base company sales income; manufacturing exception under Subpart F

Clarified the manufacturing exception to foreign base company sales income; important for multinationals using contract manufacturing structures.

Patel v. Commissioner

Foreign tax credit basket rules; passive vs. general category income

Foreign tax credit basket rules require careful categorization of income; passive income limitations can significantly reduce the available credit.

Plateau Holdings v. Commissioner

Syndicated conservation easement — listed transaction; inflated appraisal penalties

Syndicated conservation easements are listed transactions; penalties are automatic and the IRS has been highly successful in challenging these arrangements.

Sutherland Lumber-Southwest v. Commissioner

Employer-provided aircraft — SIFL valuation; fringe benefit income

SIFL rates are a safe harbor for valuing employer-provided aircraft use; the IRS cannot require a higher valuation method when SIFL is properly applied.

Coca-Cola Co. v. Commissioner

Intangibles; foreign supply points; §482 allocations

Important modern authority on intangible-property income and the reliability of historical transfer-pricing practices.

Altera Corp. v. Commissioner

Stock-based compensation in cost-sharing pools; Ninth Circuit reversal is the controlling modern rule

The Ninth Circuit's 2019 reversal is the controlling result. Companies with cost-sharing arrangements must include stock-based compensation in the cost pool. This is particularly significant for technology companies with large equity compensation programs.

Taxpayer v. Commissioner (PFIC)

PFIC excess distribution rules; reasonable cause defense for sophisticated investors

PFIC rules apply automatically to foreign mutual funds and ETFs; ignorance of the rules is not reasonable cause for sophisticated investors.

Fackler v. Commissioner

Unrecaptured §1250 gain; 25% tax rate on prior depreciation deductions

Unrecaptured §1250 gain is a common source of unexpected tax liability on real estate sales; the 25% rate applies to all prior straight-line depreciation.

Seaview Trading v. Commissioner

TEFRA partnership audit procedures; statute of limitations extension

TEFRA partnership audit rules extend the statute of limitations; partnerships with more than 10 partners are subject to unified audit procedures.

Altera Corp. v. Commissioner

Cost sharing; stock-based compensation; §482 regulations

Leading authority sustaining the stock-based-compensation cost-sharing regulation.

Moreno v. Commissioner

§183 — winery on residential property; personal use and lack of expertise

Winery and vineyard operations on residential property face heightened scrutiny; personal use of the property is a significant negative factor.

Belanger v. Commissioner

Real estate professional status — 750-hour requirement; contemporaneous time logs

Contemporaneous time records are the key to establishing real estate professional status; detailed logs that are credible and consistent with the taxpayer's activities are upheld.

Dynamo Holdings v. Commissioner

§6707A listed transaction disclosure penalty; mandatory penalty structure

Failure to disclose listed transactions carries mandatory penalties; the IRS does not have discretion to reduce §6707A penalties below the statutory minimum.

Amazon.com, Inc. v. Commissioner

Cost-sharing buy-in valuation — no aggregation of entire business value; only actually transferred intangibles

Valuation must correspond to the property actually transferred and its realistic useful life. The IRS cannot aggregate an entire business's future value into a cost-sharing buy-in; only the intangibles actually transferred are subject to the buy-in payment.

Rutter v. Commissioner

Appropriate economic unit for rental property grouping; geographic and management factors

Geographic proximity and common management support an appropriate economic unit determination for rental property grouping.

Graev v. Commissioner

§6751(b) supervisory approval — timing of penalty determination

Landmark ruling on §6751(b) supervisory approval requirement; IRS must obtain written supervisory approval before the first communication proposing a penalty.

Laidlaw v. Commissioner

Guaranteed payments — services vs. capital; self-employment tax

Guaranteed payments for services are subject to self-employment tax; only guaranteed payments for use of capital are exempt.

Chai v. Commissioner

Penalty approval; §6751(b); burden of production

Leading appellate authority on §6751(b) procedural penalty requirements.

Estate of Powell v. Commissioner

Family limited partnership; §2036(a)(2); retained control

Important modern authority on retained powers in family limited partnerships.

Moss v. Commissioner

Real estate professional status — 750-hour requirement; contemporaneous time records

Contemporaneous time records are essential for real estate professional status; reconstructed logs are routinely rejected.

Fleischer v. Commissioner

Clothing deduction — unsuitable for everyday wear requirement

Clothing deductions require that the clothing be unsuitable for everyday wear; required work attire that can be worn outside of work is not deductible.

Estate of Holliday v. Commissioner

Life insurance estate inclusion — incidents of ownership; ILIT requirements

Life insurance transferred to an ILIT must be done more than 3 years before death; the decedent must not retain any incidents of ownership.

Estate of Woelbing v. Commissioner

IDGT promissory note sales — gift tax; GRAT adequacy of consideration; §2702

One of the most closely watched estate planning cases of the decade. The IRS challenged a $460 million estate plan built around IDGTs and GRATs. The favorable settlement confirmed that properly structured sales to IDGTs for promissory notes can transfer enormous wealth transfer-tax free.

Wachter v. Commissioner

§121 home sale exclusion — temporary absence and use test

Temporary absences from a principal residence do not interrupt the use period for the §121 home sale exclusion.

Metz v. Commissioner

Horse activity; §183 profit motive

Illustrates the importance of businesslike records, operational changes, and credible profit planning in equine cases.

Estate of Elkins v. Commissioner

Fractional interest discount — artwork valuation; estate tax

Fractional interests in artwork and other property are entitled to valuation discounts; the discount should be based on the cost of partition and the difficulty of selling a fractional interest.

Steinberg v. Commissioner

Conservation easement valuation — highest and best use; before-and-after appraisal

Conservation easement appraisals must account for all development possibilities; failure to consider the highest and best use before the easement results in an understated before-value.

Bronson v. Commissioner

§183 — dog breeding and showing; profit motive factors

Dog breeding and showing is a recurring hobby loss target; consistent losses without a business plan are nearly always fatal.

Dunlap v. Commissioner

§280A vacation home rules; 14-day personal use threshold

The 14-day personal use threshold under §280A is strictly applied; exceeding it limits rental deductions to the proportion of rental days.

Watson v. United States

S corporation reasonable compensation; recharacterization of distributions as wages

S corporation shareholder-employees must receive reasonable compensation; the IRS can recharacterize distributions as wages when salary is unreasonably low.

United States v. Home Concrete & Supply, LLC

Statute of limitations; basis overstatement

Important limitations-period authority later addressed by statutory amendment and regulations.

Bogue v. Commissioner

Deductibility of legal fees — origin of the claim test

The origin of the claim test determines deductibility of legal fees; fees arising from business disputes are deductible, fees arising from personal matters are not.

Dagres v. Commissioner

Bad debt deduction — business vs. non-business; ordinary vs. capital loss

To deduct a bad debt as an ordinary loss, the taxpayer must be in the business of lending money; isolated loans result in capital losses.

Estate of Petter v. Commissioner

Defined-value formula clause — gift tax; charitable savings clause; LLC interest valuation

Landmark victory for defined-value clause planning. Together with Wandry v. Commissioner, Petter confirmed that formula clauses allocating excess value to charity are valid and enforceable — a critical tool for transferring hard-to-value assets like LLC interests without gift tax risk.

Xilinx, Inc. v. Commissioner

Stock-based compensation under older cost-sharing regulations; practical reach narrowed by Altera

Xilinx applied to the older cost-sharing regulations. Under the current regulations upheld in Altera, stock-based compensation must be included in cost-sharing pools. Practitioners must distinguish which regulatory regime applies to the years at issue.

Goolsby v. Commissioner

Conservation easement valuation; qualified appraisal requirements under §170

Conservation easement deductions require a qualified appraisal with a credible before-and-after valuation; inflated appraisals are a primary IRS audit target.

Garnett v. Commissioner

LLC interests vs. limited partnership interests under §469 passive activity rules

Landmark ruling distinguishing LLC interests from limited partnership interests under §469; opened the door for LLC members to establish material participation.

Menard, Inc. v. Commissioner

Reasonable compensation — founder/CEO; independent board process required

Reasonable compensation requires an independent process; compensation set by the recipient without board oversight is vulnerable to IRS challenge.

Engdahl v. Commissioner

§183 — motorsports racing; sponsorship revenue and profit motive

Motorsports can qualify as a business when the taxpayer actively pursues commercial revenue streams such as sponsorships.

Topping v. Commissioner

§183 — horse racing; expert consultation and business-like conduct

Demonstrates that horse racing can qualify as a business when conducted with genuine business discipline, even with sustained losses.

Succession of McCord v. Commissioner

Defined-value formula clause — gift tax; limited partnership interest; charitable allocation; public policy

Pivotal Fifth Circuit decision validating defined-value clauses in gift planning. McCord, together with Petter, established the two-circuit foundation that formula allocation clauses are enforceable tools for transferring partnership and LLC interests without gift tax exposure when paired with a charitable recipient.

Commissioner v. Banks

Litigation recovery; contingent attorney fees

Important for settlement planning, including real-estate and business disputes.

Estate of Bongard v. Commissioner

Family entity; §2036; bona fide sale exception

Seminal Tax Court framework for the §2036 bona fide sale exception in family entities.

Commissioner v. Groetzinger

Trade or business; continuity; profit motive

Foundational test used in profit-motive and trade-or-business disputes.

Dreicer v. Commissioner

Writing activity; objective profit motive; §183

Classic §183 authority emphasizing objective facts over a taxpayer's stated intent.

Estate of Franklin v. Commissioner

Economic substance; nonrecourse financing; depreciation

Classic economic-substance authority in leveraged real-estate transactions.

United States v. Estate of Grace

Reciprocal trusts; estate inclusion

Leading reciprocal-trust doctrine case for estate planning.

Commissioner v. Tellier

Legal fees; criminal defense; public policy

Leading authority on deductibility of business-related criminal-defense fees.

United States v. Gilmore

Legal fees; origin of the claim

The origin-of-the-claim doctrine remains central to legal-fee deductibility.

Commissioner v. LoBue

Employee stock options; compensation income

Foundational authority for employee equity compensation.

Crane v. Commissioner

Nonrecourse mortgage; basis; amount realized

Cornerstone case for debt-basis treatment in real-estate taxation.

Lucas v. Earl

Assignment of income; earned compensation

Foundational assignment-of-income doctrine.