Merdjanoff v. Commissioner - The Regulation Jungle

U.S. taxpayers can claim a foreign income exclusion on their tax returns; there's a particular form they have to use.  There are also limitations under Treasury Regulations when the form is filed late.  These regulations state that late-filed tax returns claiming the foreign income tax exclusion must have the text "Filed Pursuant to Section 1.911-7(a)(2)(i)(D)" written at the top.  Merdjanoff was a case where the taxpayer filed the proper form, but did not write this text on the tax return.  I was able to get the tax assessment canceled based on the argument that the failure to write the text was an "inadvertent error" (as per the same regulations).  The result was a reduction of about $50,000.

It's amazing how much of a difference a few words can make...

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