Olive v. Commissioner
United States Tax Court
P operates a sole proprietorship whose principal business is the retail sale of medical marijuana pursuant to California law. The business also provides minimal activities and services incident to the sales. P failed to maintain sufficient records to substantiate the business' income or expenditures. Held: P underreported the business' gross receipts in amounts R alleges in an amendment to answer.
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P operates a sole proprietorship whose principal business is the retail sale of medical marijuana pursuant to California law. The business also provides minimal activities and services incident to the sales. P failed to maintain sufficient records to substantiate the business' income or expenditures. Held: P underreported the business' gross receipts in amounts R alleges in an amendment to answer. Held, further, P may deduct cost of goods sold for the business in amounts greater than those R allows. Held, further, I.R.C. sec. 280E precludes P from deducting any expense related to the business…
1Opinion of the Court
Kroupa, Judge:
This case stems from the operation of petitioner’s sole proprietorship, the Vapor Room Herbal Center (Vapor Room). The Vapor Room’s principal business is the retail sale of marijuana (medical marijuana) pursuant to the California Compassionate Use Act of 1996 (CCUA), codified at Cal. Health & Safety Code sec. 11362.5 (West 2007). 1 The Vapor Room provides minimal activities and services as part of its principal business of selling medical marijuana.
Respondent determined deficiencies of $367,531 and $1,146,633 in petitioner’s Federal income tax for 2004 and 2005, respectively,…
2Cases cited38 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
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- Cohan v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1930
- HIGBEE v. COMMISSIONER OF INTERNAL REVENUEUnited States Tax Court · 2001
- Helvering v. TaylorSupreme Court of the United States · 1935
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