The Ninth Circuit Court of Appeals today released an opinion in CIR v. DUNKIN, No. 05-76004, a tax appeal. The panel consisted of Dorothy W. Nelson, Stephen Reinhardt, and Pamela Ann Rymer, Circuit Judges.

D.W. NELSON, Senior Circuit Judge:
The Commissioner of Internal Revenue (”Commissioner”) appeals from a decision of the United States Tax Court allowing John Michael Dunkin (”John” or “appellant”) to reduce his taxable income for the 2000 tax year by $25,511–the amount he paid his former spouse Julie Green (”Julie”) incident to a division of community property assets upon marital dissolution. In 1997, a California Superior Court (”divorce court”) awarded Julie one half of the marital community’s interest in pension benefits provided by John’s employer. However, because John chose to continue working and did not terminate his participation in the plan following divorce, the pension administrator did not begin making distributions . . .

REINHARDT, Circuit Judge, dissenting:
The majority passes over the existence of a significant ambiguity regarding an issue of California state law that has not been addressed by the state’s highest court. The question is whether a portion of a divorced employee’s wages should be treated as community property when it is used solely for the payment of an ex-spouse’s court ordered pension benefits that are community property; in such cases, the former spouse would have received the amount in question as pension benefits (i.e. community property) if her ex-husband had retired at the time he became eligible to do so. Alternatively, the amount of wages that is paid over to the ex-wife as pension benefits could be considered to be exclusively the husband’s wages and he would have to pay full taxes on that income even though he neither uses nor benefits from it. The majority chooses the latter option. I respectfully dissent. I would certify the question of how to treat the money involved under California law to the California Supreme Court. The majority opinion imposes negative tax consequences on a police officer who chooses to work past retirement eligibility age and thus to defer collection of his pension. It requires him to pay full income taxes on the part of his salary that he pays over to his former wife as her community interest in his pension benefits — a result that defies reason, not to mention fairness. If the payment were considered to be what it actually is, a distribution of the ex-wife’s interest in the pension benefits, the husband would not have to pay any taxes on the amount in question. If the question were certified, I think . . .

The Ninth Circuit Court of Appeals today released an opinion in CHARLES SCHWAB COR v. CIR, No. 05-72899, a tax appeal. The panel consisted of Mary M. Schroeder, Chief Circuit Judge, Stephen S. Trott and William A. Fletcher, Circuit Judges.

PER CURIAM:
This dispute concerns when the taxpayer may deduct on its federal return payment of its California state franchise tax. The appellant taxpayer is the Charles Schwab Corporation and its subsidiaries, Schwab Holdings, Inc. and Charles Schwab & Co., Inc. (referred to collectively as “Schwab”). Schwab’s California income has grown greatly since it began doing business in the state in April 1987. It would like to deduct its franchise tax payments earlier than the Tax Court ruled it could. Schwab uses the accrual method of accounting and thus may deduct expenses on its federal tax return for the year in which they accrue. See I.R.C. § 461(a). Pursuant to California law in effect at all times material to this litigation, Schwab’s state franchise tax liability accrued on the last day of the year in which Schwab earned the income forming the basis for the tax assessment (December 31 of the “income” or “measuring” year). See Epoch Food Serv., Inc. v. Comm’r, 72 T.C. 1051, 1054 (1979). Federal law, however, provides that a taxpayer’s accrual date for federal tax purposes may be no earlier than it would have been under state law as it existed at the end of 1960. See I.R.C. § 461(d)(1). Under pre-1961 California law, the franchise tax did not accrue until the first day of the year following the income year (January 1 of the “taxable” year). See Cent. Inv. Corp. v. Comm’r, 9 T.C. 128 (1947), aff’d 167 F.2d 1000 (9th Cir. 1948). We therefore affirm. Background and Analysis Most businesses operating in California, including Schwab, are required to pay a yearly franchise tax the state levies “for the privilege of exercising its corporate franchise[ ]” within the state. Cal. Rev. & Tax. Code § 23151(a); see also Cent. Inv. Corp., 9 T.C. at 131. During the years at issue in this . . .

The Ninth Circuit Court of Appeals today released an opinion in MACIEL v. CIR, No. 04-75716, a tax appeal. The panel consisted of Susan P. Graber, William A. Fletcher, and Richard C. Tallman, Circuit Judges.

W. FLETCHER, Circuit Judge:
George Maciel appeals from a decision of the United States Tax Court, which upheld an Internal Revenue Service (”IRS”) Notice of Deficiency for the 1990, 1991, and 1992 tax years. In a separate proceeding, Maciel pled guilty to criminal tax charges. As part of its sentencing decision in that case, the federal district court found that Maciel had not fraudulently intended to evade the payment of taxes. Maciel contends that, under the doctrine of collateral estoppel, the sentencing court’s finding should have precluded relitigation of the fraud issue before the tax court. Further, Maciel contends that, even if relitigation is not precluded, the tax court erred in finding that he acted fraudulently when he failed to report income from a 1990 business sale. Finally, Maciel challenges the tax court’s denial of various business deductions. We reject Maciel’s preclusion and fraud claims, but we hold that he is entitled to deduct certain bona fide business expenses. I. Background During a routine audit in 1994, the IRS determined that Maciel had significantly understated his income on several tax . . .

The Ninth Circuit Court of Appeals today released an opinion in BEECHER CIR, No. 05-71894, a tax appeal. The panel consisted of Ronald M. Gould and Milan D. Smith, Jr., Circuit Judges, and Alfred V. Covello, District Judge.

COVELLO, District Judge:
This is an appeal from a decision of the United States Tax Court upholding a tax deficiency determination of the Commissioner of Internal Revenue (”Commissioner”). It is . . .

The Ninth Circuit Court of Appeals today released an opinion in COMMISSIONER OF INTERNAL REVENUE v. PALONE, No. 04-72672, a tax appeal. The panel consisted of Jerome Farris and Sidney R. Thomas, Circuit Judges, and George Schiavelli, District Judge.

THOMAS, Circuit Judge:
This appeal presents the question of whether payments received after the effective date of amendments to 26 U.S.C. § 104(a)(2) based on a defamation settlement agreement executed prior to the effective date can be excluded from gross income. We conclude that the amendments apply to payments received after the effective date of the amendment, and we affirm the judgment of the Tax Court. I Gavin Polone worked as a talent agent at United Talent Agency (”UTA”) from 1989 until April 21, 1996, when he was fired. After terminating Polone, UTA spoke with various entertainment industry trade publications, and made statements about Polone’s termination. Specifically, UTA alleged that Polone was terminated for “inappropriate behavior.” Polone hired counsel, and sent UTA a demand letter on April 22, 1996. The letter alleged that UTA had made defamatory statements about Polone, and requested that UTA “cease and desist from making further defamatory statements.” On April 24, 1996, Polone filed a complaint in the Los Angeles County Superior Court alleging, among other things,wrongful termination and defamation. Polone and UTA settled both claims on May 3, 1996. Polone received $2 million as settlement of the wrongful termination claim, which is not at issue in this case. As part of the settlement of the defamation claim, UTA issued a press . . .

The panel has decided to amend the opinion filed June 5, 2006. The opinion is withdrawn and a substituted opinion is filed concurrently with this order. . . .

The Ninth Circuit Court of Appeals today released an opinion in HANSEN v. COMMISSIONER OF INTERNAL REVENUE, No. 05-70658, a tax appeal. The panel consisted of Mary M. Schroeder, Chief Circuit Judge, Richard C. Tallman and Carlos T. Bea, Circuit Judges.

BEA, Circuit Judge:
Gary and Johnean Hansen (”Hansens”) appeal the judgment of the Tax Court in Hansen v. Commissioner, T.C.M. (RIA) 2004-269 (2004), upholding the Commissioner of Internal Revenue’s (”Commissioner”) imposition of a negligence penalty pursuant to I.R.C. § 6662(a) for claiming losses in 1991 from a cattle partnership in which they had invested. The Hansens claim error, asserting that the Tax Court ignored relevant facts, applied an improper negligence standard, and inadequately considered the Hansens’ own victimization as members of the partnership. We have jurisdiction pursuant to 26 U.S.C. § 7482(a)(1) and affirm the Tax Court’s decision upholding the negligence penalty. I. The Hansens were partners in a total of six cattle-breeding and tax-shelter partnerships promoted and run by Walter J. Hoyt, III (”Hoyt”) from 1987 through 1996. In 1991, the Hansens claimed $32,306 in losses based on their participation in the Hoyt partnership Durham Shorthorn Breed Syndicate 1987-C (”DSBS87-C”). These losses, combined with losses from other Hoyt partnerships, reduced the Hansens’ adjusted gross income (”AGI”) in 1991 from $70,266 to $17,471, thereby lowering the Hansens’ 1991 taxes from $11,852 to $799. In 1995, the Commissioner issued a Notice of Final Partnership Administrative Adjustment for the 1991 tax year of DSBS87-C and made computational adjustments on the . . .

The Ninth Circuit Court of Appeals today released an opinion in JOHNSTON v. CIR, No. 04-73833, a tax appeal. The panel consisted of Dorothy W. Nelson, Johnnie B. Rawlinson, and Carlos T. Bea, Circuit Judges.

BEA, Circuit Judge:
This case presents an attempt at “post-deal negotiation.” It doesn’t usually work in business. Why should we treat the tax collector differently? Specifically, we address the following question: when a taxpayer offers to pay the Internal Revenue Service a sum certain to “fully resolve all adjustments at issue” for certain tax years, and the Commissioner accepts his offer, may the taxpayer then apply net operating losses (”NOLs”) to reduce his agreed payments under the settlement? Here, the answer is no. The taxpayer did not reserve the right to use NOLs in the settlement agreement, nor did he raise the issue of using the NOLs before the Commissioner accepted his settlement offer. A deal is a deal, even with the tax man. Therefore, we affirm. Facts Thomas E. Johnston, on his own behalf and as the successor-in-interest to his late wife’s estate, appeals the order of the tax court granting summary judgment for the Commissioner of Internal Revenue (”the Commissioner”). Beginning in the 1970s, Johnston conducted a real estate business in Southern California. His business was successful for many years, but, in 1988, it turned for the worse when the local real estate market crashed. Consequently, Johnston reported large tax losses for most of the tax years between 1988 and 1995, including the three years at issue here. Disputing these claimed losses, the Commissioner assessed tax deficiencies of $1,546,160 for 1989, $289,396 for 1991, and $341,908 for 1992, plus penalties. . . .

The Ninth Circuit Court of Appeals today released an opinion in JANIS v. COMMISSIONER OF INTERNAL REVENUE, No. 04-74624, a tax appeal. The panel consisted of Stephen Reinhardt, Stephen S. Trott, and M. Margaret McKeown, Circuit Judges.

McKEOWN, Circuit Judge:
Conrad Janis and his wife Maria G. Janis (”Petitioners”) appeal the Tax Court’s holding that they are liable for deficiencies in their joint income tax returns from 1995 through 1997. These deficiencies resulted from Conrad taking inconsistent positions as to the value of an expensive art collection included in his father’s estate. On the premise that flooding the market with a large collection of works from significant artists, ranging from Piet Mondrian to Jean Arp and Grandma Moses, would depress the value of the works, Conrad and his brother Carroll Janis, as co-executors and the sole beneficiaries of the estate, calculated a discounted value for the collection. Conrad and Carroll ultimately agreed with the Internal Revenue Service (”IRS”) on a discounted valuation of the collection. Some years later, in valuing the gallery’s inventory, Petitioners claimed a higher, undiscounted market value as the tax basis for the collection in their joint tax returns. The Tax Court held that Petitioners were bound by the duty of consistency and could not report on their individual tax returns a value different than that stipulated to for the estate tax return. We agree and affirm. BACKGROUND Sidney Janis owned and operated, as a sole proprietorship, the Sidney Janis Art Gallery in New York. The gallery owned almost 500 works of art, many of them by well-known artists. In April of 1988, Sidney transferred the gallery, including the art collection, into a trust, with himself and his children, Conrad and Carroll, as trustees. Upon his death, the remaining trust assets were to be distributed to Conrad and Carroll in equal shares. Sidney died in November of 1989. Conrad and Carroll were named co-executors and the sole beneficiaries of his estate. . . .

The Ninth Circuit Court of Appeals today released an opinion in WESTPAC PACIFIC FOOD v. CIR, No. 02-71041, a tax appeal. The panel consisted of James L. Oakes, Andrew J. Kleinfeld, and Consuelo M. Callahan, Circuit Judges.

KLEINFELD, Circuit Judge:
We must decide whether cash paid in advance by a wholesaler to a retailer, in exchange for a volume commitment, is “gross income” under 26 U.S.C. § 61. In the grocery trade, these are called “advance trade discounts.” It is hard to think of a way to make money by buying things. A child may think buying things is how one makes money: he sees his father give a clerk a single piece of paper money, and receive in exchange the goods purchased, several pieces of paper money, and a number of coins. And a person may jokingly say to a spouse “I made $100 today” after buying something on sale for $100 off. But everyone knows these are merely amusing remarks, not real ways to make money. . . .

The Ninth Circuit Court of Appeals today released an opinion in GOROSPE v. CIR, No. 04-73277, a tax appeal. The panel consisted of Jerome Farris, Ferdinand F. Fernandez, and Sidney R. Thomas, Circuit Judges.

THOMAS, Circuit Judge:
The appeal presents the question of whether the United States Tax Court has plenary jurisdiction to hear all appeals from collection due process (”CDP”) proceedings before the Internal Revenue Service (”IRS”). We reaffirm the principle that the Tax Court’s jurisdiction over appeals from CDP determinations is limited to issues over which the Tax Court would have had jurisdiction to consider the underlying tax liability. I When a taxpayer fails to pay his federal taxes, after the IRS demands payment, the amount due becomes a “lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.” 26 U.S.C. § 6321. The lien attaches immediately to the taxpayer’s property, 26 U.S.C. § 6322, and becomes effective against certain third parties after the IRS has filed notice, 26 U.S.C. § 6323(f). The IRS may enforce the lien by levying the property of the delinquent taxpayer. 26 U.S.C. § 6331(a). The IRS must also notify a taxpayer before imposing a levy. 26 U.S.C. § 6331(d). Once the IRS has notified a taxpayer of its intent to file a notice of lien or to impose a levy, the taxpayer has the right to a CDP hearing before the IRS Office of Appeals, and is entitled to raise defenses and to contest the levy or lien. 26 U.S.C. § 6330(c)(2)(A). After receiving a determination from. . .