In This Chapter:

Tax Law: Annual Survey of Wisconsin Law -

- Case Law

- Statutory Developments

- Administrative Developments

- Excerpt from Case Law:

Individual and Fiduciary Income Tax -

Withdrawal from 401(k) Account by Agent Is Still Income -

The tax appeals commission held that a taxpayer must pay income tax on amounts withdrawn from his 401(k) retirement account by his agent, even though he never received the funds because they were allegedly taken from his agent by fraud or coercion. Bvocik v. Wisconsin Dep’t of Revenue, No. 13-I-720 (Wis. Tax App. Comm’n Nov. 12, 2014). Petitioner Clifford Bvocik gave his former wife Brenda Bvocik power of attorney over his financial affairs. Pursuant to that power of attorney, Mr. Bvocik authorized Ms. Bvocik to withdraw funds from his 401(k) retirement account. The petitioner did not claim these amounts on his 2009 income tax return. When the Department of Revenue (DOR) audited the petitioner’s income tax return, he claimed he should not be taxed on the funds because Ms. Bvocik was duped or coerced into transferring those funds to another person. The tax appeals commission held that even if the petitioner’s claim were true, the theft of his 401(k) funds occurred after they had been distributed via his attorney-in-fact. The funds still constituted income to the petitioner.

Earned Income Tax Credit -

The tax appeals commission held that a married taxpayer was not eligible to receive the earned income credit because, although the taxpayer filed a separate return, she was not treated as single under I.R.C. § 7703(b). Thomas v. Wisconsin Dep’t of Revenue, St. Tax Rep. (CCH) ¶ 401-857 (Wis. Tax App. Comm’n July 8, 2014). The petitioner met the first two requirements of I.R.C. § 7703(b) by filing a separate tax return from her husband and furnishing more than one-half of the cost of maintaining the household. However, the petitioner’s husband lived at the household intermittently throughout the tax years at issue, failing the requirement that the individual’s spouse not be a member of the taxpayer’s household during the last six months of the taxable year.

Originally published in Annual Survey of Wisconsin Law - June 2015.