U.S. Tax Court Denies COVID-19 Sick, Family Leave Credits for Lack of Credible Business Activity

The U.S. Tax Court sustained a deficiency determination denying refundable COVID-19-related sick and family leave credits claimed under the Families First Coronavirus Response Act (FFCRA) and the American Rescue Plan Act (ARPA). The court held that the taxpayer, who reported Schedule C income while receiving Social Security disability payments, failed to establish that she was engaged in a trade or business because her activities lacked the required continuity and regularity and were unsupported by credible records. The court found significant inconsistencies in her income and expense reporting and determined that she failed to substantiate eligibility for the credits or demonstrate ...