Los Angeles Couple Contests IRS Reclassification in Tax Court

A Los Angeles couple recently told the US Tax Court the IRS erroneously adjusted their Schedule C income as Schedule E income, resulting in a $2.1 million tax bill.

Jordan Moelis and Jordan Klein, a married couple, were material participants in a trade or business in 2022 and 2023, they said in their Jan. 20 petition. The couple also asserted the IRS’s faulty reclassification of income for their 2022 and 2023 tax years equated to $2.4 million and $2.7 million, respectively.

Schedule C on Form 1040 is used to report income or losses from a business a taxpayer operated ...