Acquiescence, Nonacquiescence, Memorandum Decisions & Precedential Value
Key Differences for Exam
1. Acquiescence ("Acq.") vs. Nonacquiescence ("Nonacq.")
|
Term
|
Definition
|
IRS Stance
|
Effect
|
|
Acquiescence |
IRS publicly agrees to follow a court decision for similar future cases. |
"We accept this ruling and will apply it to others with identical facts." |
Taxpayers can cite the decision to the IRS. |
|
Nonacquiescence |
IRS rejects the decision and will not follow it for other cases. |
"We disagree and will litigate this issue again." |
IRS may challenge the same issue in other cases. |
Example:
- Tax Court rules: Home office deductions are allowed for gig workers.
- IRS Acq.: Accepts the ruling → Grants deductions to all gig workers.
- IRS Nonacq.: Rejects it → Denies deductions in future audits.
Key Point:
- Acquiescence/Nonacquiescence applies only to Regular Tax Court decisions (not memorandum decisions).
2. Memorandum Decisions vs. Regular Decisions
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Type
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Precedential Value
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Publication
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IRS Response
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|
Regular Decision |
✅ Binding precedent. |
Published in U.S. Tax Court Reports. |
IRS may issue Acq./Nonacq. |
|
Memorandum Decision |
❌ Non-precedential. |
Commercially published (e.g., RIA). |
IRS ignores (no Acq./Nonacq. issued). |
Why It Matters:
- Regular decisions shape tax law; memorandum decisions apply only to the specific case.
Example:
- Regular Decision: Smith v. Commissioner (sets precedent for deducting crypto losses).
- Memorandum Decision: Jones v. Commissioner (similar facts, but no precedent set).
3. Precedential Hierarchy
1. U.S. Supreme Court → Binding on all lower courts and IRS.
2. Circuit Court of Appeals → Binding only in that circuit.
3. Tax Court Regular Decisions → Binding on IRS if acquiesced.
4. Memorandum Decisions → No binding effect.
Cheat Sheet
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┌───────────────────────┬───────────────────────┬───────────────────────┐
│ **Acq./Nonacq.** │ **Regular Decisions** │ **Memorandum Dec.** │
├───────────────────────┼───────────────────────┼───────────────────────┤
│ IRS publicly accepts │ ✅ Precedential │ ❌ Non-precedential │
│ or rejects a ruling. │ (Published officially)│ (Commercial pubs only)│
└───────────────────────┴───────────────────────┴───────────────────────┘
Exam Tips:
- Acquiescence = IRS surrender (follows the ruling).
- Nonacquiescence = IRS defiance (ignores the ruling).
- Memorandum decisions are never precedential.
Mnemonic:
"A-Quit" (Acquiescence = IRS quits fighting).
"Non-Fight" (Nonacquiescence = IRS keeps fighting).
Example of a Memorandum Decision
Case: Smith v. Commissioner (2023)
Issue: Can a taxpayer deduct home office expenses for a side gig (dog-walking business) under IRC § 280A?
Facts:
- Taxpayer claimed $5,000 in home office deductions.
- IRS denied the deduction, arguing the space wasn’t "exclusively and regularly" used for business.
Tax Court’s Memorandum Decision:
- Applied existing law (§ 280A) to Smith’s facts.
- Ruled for the taxpayer because:
- Smith kept detailed logs proving exclusive business use.
- The space was clearly identifiable as a home office.
Why It’s a Memorandum Decision:
- The court did not create new law – It simply applied § 280A to Smith’s facts.
- The ruling only applies to Smith – Other taxpayers can’t cite it as binding precedent.
Example of a Memorandum Decision
Case: Smith v. Commissioner (2023)
Issue: Can a taxpayer deduct home office expenses for a side gig (dog-walking business) under IRC § 280A?
Facts:
- Taxpayer claimed $5,000 in home office deductions.
- IRS denied the deduction, arguing the space wasn’t "exclusively and regularly" used for business.
Tax Court’s Memorandum Decision:
- Applied existing law (§ 280A) to Smith’s facts.
- Ruled for the taxpayer because:
- Smith kept detailed logs proving exclusive business use.
- The space was clearly identifiable as a home office.
Why It’s a Memorandum Decision:
- The court did not create new law – It simply applied § 280A to Smith’s facts.
- The ruling only applies to Smith – Other taxpayers can’t cite it as binding precedent.