District Judge Lawrence E. Kahn

Click here to see Judicial Profile

Read Full- Text Decision

Both plaintiff and the government sought summary judgment in plaintiff's 2015 action to recover more than $1.3 million in tax refunds for 2004 and 2005 attributable to net operating loss (NOL) carrybacks from 2009 and 2007, respectively. The court dismissed, for lack of jurisdiction, plaintiff's claim regarding the 2009 NOL carryback for the 2004 tax year. He did not file a formal or informal claim for refund as required by 26 USC 7422(a). The court granted the government judgment as to the requested refund from plaintiff's 2005 taxes. He put his 2005 income taxes at issue by seeking a refund from the taxes he paid for 2005. The government raised two deficiencies with regard to plaintiff's 2005 tax return. His 2005 income taxes were underreported based on the inclusion of $4.51 million in cost-of-goods expenses on his 2005 Schedule C for the mortgage consulting business he operated at the time. Although the IRS is time barred from assessing that deficiency, it may be used to offset any refund to which plaintiff is entitled. Even if plaintiff were found to be entitled to carryback $1.4 million in net operating losses from 2007 to 2005, the deficient $4.51 million in gross income would negate any refund to which plaintiff would be entitled.