Oria v. Commissioner
United States Tax Court
T.C. Memo. 2007-226 (2007)
- Written by Daniel Clark, JD
Facts
Alex Oria (plaintiff) was the owner and sole shareholder of Medico Medical Services, Inc. (Medico). Oria signed all of Medico’s checks and performed all its business duties. Oria hired Robert Loeser to prepare Oria’s and Medico’s taxes. Loeser was a certified public accountant. Loeser came up with a plan to minimize Oria’s tax liability. Under the plan, Loeser reported on tax filings credits to one of Oria’s accounts attributable to fictitious payments from Oria to Loeser. When Loeser attempted to explain the details of the plan to Oria, including the plan’s reliance on erroneous facts, Oria refused to pay attention, expressing disinterest in “mumbo jumbo numbers.” As a result of the plan, Oria underreported his income to the Internal Revenue Service (IRS) (defendant) by approximately $250,000. The IRS issued a notice of deficiency and sought to impose an additional, accuracy-related penalty against Oria. Oria filed a petition in the United States Tax Court. Oria conceded the validity of the deficiency but challenged the propriety of the accuracy-related penalty.
Rule of Law
Issue
Holding and Reasoning (Halpern, J.)
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