Federal Tax Research 11e Roby B Sawyers Steven Gill - Test Bank

Published by Commerce Clearing House

Citation Abbreviation: USTC

Decisions included: Supreme Court tax cases​

Courts of Appeal tax cases​

District Court tax cases

U.S. Court of Federal Claims and Court of Claims tax cases

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Federal Reporter

Published by West Publishing Company

Citation Abbreviation: F. F.2d. and F.3d.

Decisions included: All Court of Appeals decisions​

Pre-1982 Court of Claims decisions​

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American Federal Tax Reports

Published by RIA

Citation Abbreviation AFTR and AFTR2d

Decisions included: Supreme Court tax cases​

Courts of Appeal tax cases

District Court tax cases

U.S. Court of Federal Claims and Court of Claims tax cases​

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The shift of burden under § 7491 is not available to corporations, partnerships, or trusts with net worth exceeding $7 million or more than 500 employees. Section 7491 also leaves the burden with the IRS in instances where income has been reconstructed using statistical information, or when the liability is a penalty or addition to tax. There are a small number of other situations in which the burden of proof remains with the IRS, such as the accumulated earnings tax, expatriation, hobby classification when the three-out-of-five rule of § 183(d) is met, and fraud.

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The burden of proof always remains with the IRS in criminal actions. When reading a published opinion, the tax researcher should note whether the decision was based in part on the IRS’s or the taxpayer’s failure to meet a needed evidentiary burden, or whether the IRS or the taxpayer established the position with sufficient proof. The first situation should be considered a weaker precedent than the second. Understanding the “strength” of a court decision is an important part of tax research.

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A taxpayer would choose the Tax Court if the taxpayer did not want to pay the deficiency first. The Tax Court is the only trial court in which the taxpayer does not have to pay first and sue for a refund. The taxpayer may also want to choose the Tax Court if the issue is highly technical, since Tax Court judges are tax specialists while District Court judges are generalists. If the taxpayer has an “emotional” issue, the taxpayer could request a jury trial in the U.S. District Court where the taxpayer lives or is located. Jury trials can only be brought in the U.S. District Courts.

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A taxpayer would want to bring a case in the U.S. Court of Federal Claims if the Court of Appeals in the taxpayer’s circuit has decided the issue in adversely to the taxpayer but the Federal Circuit Court of Appeals, which establishes precedent for the U.S. Court of Federal Claims, has established a rule favorable to the taxpayer.

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The Tax Court, under the Golsen rule, must apply the rule established in the taxpayer’s Circuit Court of Appeal. If that Circuit has not decided the issue, the Tax Court may make its own decision. Each U.S. Court of Appeals is independent and need not follow the precedents set by other circuits. All courts must follow a Supreme Court precedent.