Court grants anonymity to whistleblower, but it might not last

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The U.S. Tax Court granted a whistleblower’s motion to proceed anonymously in his whistleblower case. The basis: The social interests of protecting his identity as a confidential informant exceeded those of the people’s right to know. But the Court said that, as the whistleblower action proceeds, the balance of social interests may change and his anonymity could be lost. The IRS Whistleblower Office pays awards to people who provide “specific and credible information” on tax cheaters. (148 TC No. 7)

Court: Form 1099 wasn’t fraudulently filed.

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In a complex dispute between two businessmen, one (the payor) wrote a check to the other for the amount he believed was owed. The payee didn’t cash it. The payor filed a Form 1099 with the IRS for the amount and sent a copy to the payee. A U.S. District Court held the 1099 filing was fraudulent because the check wasn’t cashed. But the 7th Circuit Court of Appeals reversed the decision, ruling that, because the payee never communicated a rejection of the check, the payor wasn’t willfully fraudulent. (3/16/17, 2017-542)

Travel deductions denied

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Taxpayers traveling “away from home” can deduct ordinary and necessary expenses incurred in a trade or business. But when nonresident alien students at foreign universities, who participated in a summer work-travel program, deducted travel costs to and from the U.S. and certain living expenses while here, the IRS denied the deductions. The U.S. Tax Court agreed, stating that the students weren’t “away from home in pursuit of a trade or business,” so their travel and living expenses weren’t deductible. (Liljeberg, 148 TC No. 6)