IRS Assesses $15.6M Over Cioffi's Italian Hotel

The agency ruled that Michael Cioffi's Tuscany hotel was not a legitimate business and disallowed years of claimed deductions.

Updated on Nov. 5, 2026 in Taxes

Bold flat-color editorial illustration of a lone stone farmhouse on a Tuscan hill with cypress trees receding toward the horizon, evoking a dispute over distant overseas property. — The IRS ruled that Michael Cioffi's Tuscany hotel was not a legitimate business and assessed more than $15.6 million in back taxes and penalties, which Cioffi disputes. AI Illustration. Upload story photo >

The IRS determined that Monteverdi Tuscany, a boutique hotel and spa in Castiglioncello del Trinoro, Italy, does not qualify as a legitimate business and assessed more than $15.6 million in back taxes and penalties against founder Michael Cioffi. Cioffi, a partner at Blank Rome LLP in Cincinnati, disputes the determination.

Why it matters

The ruling shows the IRS scrutinizing whether business deductions tied to a personal or passion venture meet legitimate-business standards. It also highlights how disallowed deductions over several years can compound into large tax liabilities for Cincinnati-area professionals with overseas holdings.

The IRS assessed more than $15.6 million in back taxes and penalties after disallowing business deductions claimed over six years. The source does not report whether Cioffi's appeal or dispute has changed the assessed amount.

The players

Internal Revenue Service (IRS)

The IRS is the U.S. federal agency responsible for tax collection and enforcement, and it determined that the Italian hotel was not a legitimate business.

Michael Cioffi

Cioffi is a Cincinnati-based partner at the law firm Blank Rome LLP who works on mass torts and complex disputes and founded the Monteverdi Tuscany hotel.

Blank Rome LLP

Blank Rome LLP is an international law firm with a Cincinnati office where Michael Cioffi is a partner.

The details

The IRS concluded that Monteverdi Tuscany, which Cioffi founded and operates, did not qualify as a legitimate business, so the millions of dollars in deductions he claimed over six years were disallowed. The resulting back taxes and penalties exceed $15.6 million, and Cioffi contests the agency's conclusion.

Over six years: Cioffi claimed business deductions later disallowed by the IRS.
November 5, 2026: Reporting on the IRS determination and tax assessment was published.

Legal Context

The IRS applies the legitimate-business test under Internal Revenue Code Section 183 to determine whether ventures generate deductible expenses, and this case applies that same test to an overseas hotel. The dispute follows a long-running pattern of agency challenges to deductions claimed by owners of passion-driven or lightly profitable enterprises.

Business owners who claim deductions for ventures with little profit face the risk of disallowance and penalties if the IRS deems the activity not legitimate. Keeping documented business plans and records of intent to profit can help support deductions if they are reviewed.

The takeaway

Deductions tied to passion projects or overseas ventures draw close IRS review, so documenting a genuine profit motive is essential. Taxpayers facing an assessment should consult a tax professional promptly to evaluate appeal options.