Tax Court in Brief: Lord v. Comm’r—Marijuana and COGS

Tax Court in Brief: Lord v. Comm’r—Marijuana and COGS
CANNANNEW REPORT

The Tax Court in Brief – February 28th-March 4th, 2022 Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose. For a link to our podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project. Tax Litigation: The Week of February 28, 2022, through March 4, 2022 Corning Place Ohio, LLC v. Comm’r, T.C. Memo. 2022-12 | February 28, 2022| Lauber, J. | Dkt. No. 12428-20 Clary Hood, Inc. v. Comm’r, T.C. Memo. 2022-15 | March 2, 2022 | Greaves, J. | Dkt. No. 3362-19 Lewis v. Comm’r, 158 T.C. No. 3 | March 1, 2022 | Pugh, J. | Dkt. No. 12930-18 Lord v. Comm’r, T.C. Memo. 2022-14 | March 4, 2022 | Kerrigan, J. | Dkt. No. 19224-18 Opinion Short Summary: In 2012, Mr. Lord owned interests in a limited liability company and an S corporation, both of which were formed in the State of Colorado and both of which were licensed by that state to cultivate, process, and distribute medical marijuana. The businesses did not have audited financial statements for 2012 and were not otherwise required to maintain books and records or financial reports in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The businesses calculated the depreciation included in their cost of goods sold (“COGS”) for the year by using the accelerated cost recovery method in section 168(a), and they claimed bonus depreciation under section 168(k). The businesses used methods under section 168(a) and (k) that did not conform with GAAP. Mr. and Mrs. Lord (“Petitioners”) timely filed a joint Form 1040 for 2012. In a notice of deficiency for that year, the Commissioner determined adjustments to the depreciation deductions that the businesses had claimed. The adjustments…

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