Tuesday, April 3, 2012
Noted criminal defense attorney F. Lee Bailey represented himself in Tax Court in a convoluted $4 million dispute with the IRS. Mr. Bailey won the major issue in the case -- the tax issues arising from his handling of client funds under a verbal agreement with the U.S. Government -- but lost most of the other issues in the case (including his claimed loss deductions for his yacht). The court also approved negligence penalties against Mr. Bailey:
If Mr. Bailey had disclosed to a tax professional the facts underlying the adjustments we have sustained, and if the professional had advised him to report the items as he did, then he might have a colorable claim of reasonable cause based on reliance on advice. However, Mr. Bailey offered no evidence of such informed advice, nor of any other claim of reasonable cause and good faith. This defense is therefore unavailing to Mr. Bailey.
Bailey v. Commissioner, T.C. Memo. 2012-96 (Apr. 2, 2012) (143 pages). For more, see: