by Structured Settlement Watchdog
Client First Settlement Funding Founder Hit for Accuracy Related Tax Penalties by Tax Court
More bad news for Burt Kroner, who suffered a torrential tax hit in 2020 on a $24.77MM transfer. After the Tax Court held that Kroner was not liable for accuracy related penalties on the transfer, upon appeal, the 11th Circuit Court of Appeals reversed and remanded. Now the Tax Court has delivered the caboose to the 2020 tax freight train to Mr. Kroner.
“MARVEL, Judge: In Kroner I, we upheld respondent’s determination that transfers of funds to petitioner, Burt 
Kroner, during 2005-07 (years at issue) did not constitute gifts under IRC Section 102 and that Mr. Kroner improperly excluded them from gross income. We also held that Mr. Kroner was not liable for accuracy-related penalties under IRC Section 6662(a) because respondent failed to meet his burden of production under section 6751(b) to show that the penalties received [*2] timely supervisory approval. After an appeal by respondent, however, the U.S. Court of Appeals for the Eleventh Circuit held that we “improperly concluded that Kroner’s penalties were procedurally invalid for failure to comply with Section 6751(b)” and reversed the portion of our decision disallowing the accuracy-related penalties. See Kroner II, 48 F.4th at 1281. The remaining issues for our decision are (1) whether Mr. Kroner is liable for accuracy-related penalties for the years at issue and (2) whether the IRS Section 6664(c) reasonable cause exception to accuracy-related penalties applies. We hold that Mr. Kroner is liable for accuracy-related penalties for the years at issue and that the Section 6664(c) reasonable cause exception is inapplicable under the circumstances here”.
Source: Tax Court, Following Eleventh Circuit Reversal, Upholds Penalties | Tax Notes April 8, 2024
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