Britney Spears disputes flow-through income adjustment and accuracy penalty for 2021
Britney J. Spears v. Commissioner. United States Tax Court. No. 16456-25
Britney Spears is asking the Tax Court to throw out a $600,719 tax deficiency and a $120,144 accuracy-related penalty tied to S corporation income and itemized deductions on her 2021 return.
Key Facts
Petitioner: Britney Spears.
Year at issue: 2021.
Notice of Deficiency date: September 22, 2025.
Deficiency asserted: $600,719.
Accuracy-related penalty asserted: $120,143.80 under §6662(a).
Business entity: Shiloh Standing, Inc., an S corporation in the performing arts and entertainment.
Residence: California.
What the IRS Adjusted
Increased Spears’s pass-through income from Shiloh Standing, Inc. by $1,390,922.
Disallowed $334,372 of itemized deductions on Schedule A.
Imposed a §6662(a) accuracy-related penalty based on negligence, substantial understatement, and valuation overstatement theories.
Spears’s Position
The S corporation expenses were ordinary and necessary and can be substantiated.
Her reported share of income and expenses from Shiloh Standing, Inc. was correct.
The disallowed itemized deductions qualify under the Code and can be substantiated.
No tax underpayment exists for 2021.
The §6662 penalty does not apply because:
There was no negligence or disregard of rules.
There was substantial authority for the return positions.
Adequate disclosure and reasonable basis existed.
She acted in good faith with reasonable cause.
The IRS failed to obtain supervisory approval required by §6751(b).
The burden of proof should shift under §7491(a), and the IRS bears the burden of production for penalties under §7491(c).
She may be entitled to additional deductions or adjustments not previously claimed.
Statutory Framework
§6662(a): Accuracy-related penalty for negligence, substantial understatement, or valuation overstatement.
§6751(b): Requires supervisory approval of penalties before assessment.
§7491(a): Shifts the burden of proof to the IRS when the taxpayer produces credible evidence and meets recordkeeping requirements.
§7491(c): Places the burden of production for penalties on the IRS.
Procedural Posture
Petition filed in the United States Tax Court on December 18, 2025.
Case challenges both the deficiency and the penalty.
No answer or court ruling yet.
Why It Matters
Highlights common audit pressure points for entertainers using S corporations.
Reinforces the importance of substantiation for pass-through expenses and itemized deductions.
Keeps §6751(b) supervisory approval squarely in play for penalty defenses.
Shows how high-income taxpayers frame burden-shifting arguments early in litigation.
Result
Pending. The Tax Court has not issued a decision.
The Takeaway
This case is about documentation, S corporation expense treatment, and whether the IRS followed the penalty rules. The outcome will turn on proof and procedure, not celebrity.