Sta-Home Health Agcy v. CIR

The Commissioner of Internal Revenue issued deficiency notices requiring the taxpayers, three privately held home-healthcare agencies and the family that owns and operates them, to pay over $250 million in excise taxes under 26 U.S.C. § 4958. The Commissioner based the deficiency notices on an internal valuation of assets and liabilities transferred when the agencies converted from exempt to nonexempt status, finding that the taxpayers received a “net excess benefit” in the amount of $18.5 million. The taxpayers challenged the deficiency notices in the Tax Court. During a two-year audit and…