Pot Co. Faces $4.2M Tax Bill After Breaks Barred By Tax Court

Law360 (February 17, 2021, 6:38 PM EST) -- A California medical marijuana business is liable for nearly $4.2 million in taxes after the U.S. Tax Court determined Wednesday it cannot claim depreciation and charitable contribution deductions because they are barred by a federal tax provision.

The Internal Revenue Service properly denied San Jose Wellness' claims for charitable giving and depreciation deductions because they were associated with the business's activities, and Internal Revenue Code Section 280E generally prohibits deductions for businesses that buy or sell federally controlled substances, U.S. Tax Court Judge Emin Toro said in the opinion.

"The requirements of Section 280E are clear," Judge Toro said.

San Jose...

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