Cecile Barker has bad news from the Eleventh Circuit. They have upheld the Tax Court’s disallowance of his multi-million dollar net operating loss deduction (NOL) largely generated by SoBe Entertainment LLC. SoBe Entertainment is a record label that has represented numerous artists included Brooke Hogan, daughter of Hulk Hogan. The indirect Hulk Hogan connection makes Mr. Barker a tangential figure in a fascinating story you can read about in Conspiracy – Peter Thiel, Hulk Hogan, Gawker and the Anatomy of Intrigue by Ryan Holiday. Unfortunately, we have to pretty much stick to the tax story which began with a Tax Court opinion in 2018, which I covered here.
This article will be available on Think Outside The Tax Box.
Am I right in thinking that Mr. Barker (a) needed to keep his old returns, to substantiate whether he’d already used up his net operating loss deductions or not, but (b) didn’t need to keep his old accounting records that in 2002 substantiated that he made losses in 2002 that he could use as a deduction to carry forward or backwards?
This is important for recordkeeping because it’s a lot easier to keep just your old tax return forms forever than to keep all the receipts, etc. that substantiate your old tax returns.
I believe that in principle he could have needed the substantiation from 2002.