“Former Submarine Commander Torpedoes IRS in Penalty Battle”
Former U.S. Navy nuclear submarine commander Corbin McNeill finally got his chance to go to battle with the IRS over a $4.59 million penalty, and won (McNeill v. United States, D. Wyo., No. 2:14-cv-00172, unpublished order filed 2/24/17).
McNeill had reasonable cause to claim on his tax return a $20 million paper loss from a distressed asset/debt (DAD) tax shelter and did so in good-faith reliance on Ernst & Young, which prepared his tax return, and the law firm of De Castro, West, Chodorow, Glickfield & Nass Inc., which provided him with an opinion letter blessing the tax aspects of the transaction, a federal judge ruled Feb. 24.
Mary A. McNulty, a partner at Thompson & Knight LLP in Dallas, said in a Feb. 27 e-mail, “the court’s findings of fact are more favorable to the taxpayer than is typical in tax shelter cases involving the reasonable cause and good faith defense. The court clearly viewed Mr. McNeil as a credible witness.”