Estate of Backemeyer v. Commissioner
United States Tax Court
147 T.C. No. 17 (2016)
Relevant factsFree
Steve Backemeyer properly deducted farm-supply expenses on his 2010 taxes, but died in March 2011 before using the supplies; his wife Julie (plaintiff) then operated the farm as sole proprietor, received the supplies through a trust, claimed a stepped-up basis in them, and deducted them again on her own 2011 taxes. The IRS agreed Julie's treatment was correct but argued the tax-benefit rule required Steve's original deduction to be recaptured as income on his final return; Julie challenged that determination.
IssueFree
Whether the tax-benefit rule applies when a spouse takes deductions for goods but is unable to use them before death, and the goods are later also deducted by the surviving spouse.