California Firm Knocks Tax Code Restrictions on Marijuana Sales

A California company argues the IRS misunderstands its business after the agency imposed over $10 million in taxes and penalties.

Edible Management LLC petitioned the US Tax Court after receiving an IRS notice that asserted it underpaid its taxes by $8.33 million and asserted another $1.67 million in penalties. The IRS refused to allow the company to claim several deductions for salaries and licensing expenses while increasing its net earnings from self-employment and qualified business income for the 2019 tax year.

Edible Management said it is “a management company that manages the activities of a collective group of affiliated companies ...