Benenson v. Commissioner of Internal Revenue, No. 16-2066 (1st Cir. 2018)Annotate this Case
The First Circuit reversed the decision of the Tax Court ruling that Appellants owed an excise tax for contributions made to their Roth individual retirement accounts (Roth IRAs) in violation of contribution limits, holding that a transaction Appellants entered into to reduce their federal taxes violated neither the letter nor purpose of the relevant statutory provisions.
Specifically, the Tax Court found that the Commissioner of Internal Revenue appropriately recharacterized the transaction at issue under the common-law substance over form doctrine because the transaction’s sole purpose was to “shift millions of dollars into Roth IRAs in violation of the statutory contribution limits.” The First Circuit reversed, holding that the Commissioner did not have the power to call Appellants’ transaction a violation of the Tax Code where the transaction did not violate the plain intent of the relevant statutes.