Bryan Camp has published an article on the TaxProfBlog, titled “Lesson From The Tax Court: Of Distributive Shares And The CDP Mashup”, which discusses the lessons learned from Taryn L. Dodd v. Commissioner. The article begins as follows:
Sometimes our biggest problems are self-created. In Taryn L. Dodd v. Commissioner, T.C. Memo. 2021-118 (Oct. 5, 2021) (Judge Lauber), the taxpayer was attempting to repudiate a tax liability she had self-reported but had not paid. Her multi-year slog through Collection Due Process (CDP) involved three trips to the Tax Court. Only in the third trip do we learn this basic lesson about passthrough entities: a partner must report as income her distributive share of partnership income, whether or not that share is actually received. So now Ms. Dodd not only has her 2013 liability to pay off, she also has all the additions to tax and interest that continues to accrue.
We also learn a second lesson, a lesson about the structure of CDP. The difference between Appeals Officers (AOs) and Settlement Officers (SOs) is more than just the title. Each has different subject matter competencies but only SO’s conduct CDP hearings, which are generally all about collection issues. Sometimes, however, taxpayers can raise substantive tax issues, creating a CDP mashup. When a taxpayer uses CDP to contest the merits of a liability, the lesson here is to be sure to ask the SO to confer with an AO. Otherwise you get stuck like Ms. Dodd. Details below the fold.
Click here to see the full article: “Lesson From The Tax Court: Of Distributive Shares And The CDP Mashup”
Posted by Isabella King, Associate Editor, Wealth Strategies Journal.