Northern California Small Business Assistants Inc. v. Commissioner
United States Tax Court
153 T.C. 65 (2019)
- Written by Jamie Milne, JD
Facts
Northern California Small Business Assistants Inc. (dispensary) (plaintiff) was a medical-marijuana dispensary operating legally under California law. On its federal tax return for 2012, the dispensary deducted certain business expenses incurred during the tax year from its gross income when calculating its tax liability. However, the commissioner of internal revenue (commissioner) (defendant) concluded that the deductions were not proper because marijuana sales remained illegal under federal law and Internal Revenue Code § 280E disallowed deductions for business expenses incurred in trafficking controlled substances. The commissioner issued a deficiency notice, claiming that the dispensary owed additional taxes. The dispensary filed suit in the United States Tax Court to challenge the commissioner’s determination. The dispensary argued that applying § 280E to prevent deductions by the dispensary when the dispensary’s operations were legal under state law violated the Eighth Amendment by imposing an excessive penalty on the dispensary.
Rule of Law
Issue
Holding and Reasoning (Goeke, J.)
Concurrence/Dissent (Gustafson, J.)
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