10th Circ. IRS Summons Ruling Shows Cannabis Biz Dilemma

Law360 (November 5, 2020, 4:46 PM EST) -- It is no secret that Internal Revenue Service audits of state-legal marijuana businesses are leading the courts to reexamine existing areas of tax law in a new light, leading to possible new developments in tax law. Because of the application of Internal Revenue Code Section 280E, which denies marijuana businesses a deduction for any cost other than inventory costs, several disputes have arisen between the IRS and marijuana businesses.

These disputes include: (1) whether IRS audits of marijuana companies should be conducted differently because these state-legal businesses remain illegal and subject to prosecution under federal drug laws; (2) what costs are...

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