Facts: A minor received settlement proceeds after suffering a trauma. A guardian was appointed to oversee the proceeds. Later, the minor’s parents became delinquent on their mortgage. The guardian purchased the home for the outstanding balance of the mortgage from the settlement proceeds in the guardian’s own name. The guardian then transferred title to the minor. The guardian claimed, on the minor’s behalf, a first-time homebuyer’s credit on the minor’s federal income tax return.

Claim: The Internal Revenue Service (IRS) sought a tax deficiency from the minor, claiming the minor was ineligible for the first-time homebuyer’s credit since the guardian was merely acting as a conduit for the minor’s purchase of the home from their parents.

Counterclaim: The guardian sought, on the minor’s behalf, the first-time homebuyer’s tax credit, claiming the minor was eligible since they did not purchase the home from the parents, rather the guardian.

Holding: A United States Court of Appeals held the minor owed the tax deficiency for the first-time homebuyer’s credit since, despite the intermediary function of the guardian, the minor ultimately purchased the home from their parents, making the minor ineligible for the credit. [W.E.R. v. Commissioner of IRS (2013) __ F3d__]