Attorneys-at-Law

WHO LOVES CHENERY?

In Uncategorized on 01/27/2015 at 15:51

Besides Judge Holmes, Of Course

I cannot think too many people, even among the loyal 135 who follow this my blog (a poor thing, but mine own), are hanging breathless on the answer.

But since on this day of the great Snowmageddon, as the media have dubbed NYC’s non-event but Boston’s blizzard, the teletubbies at 400 Second Street, NW, have launched neither opinion nor designated hitter, I am relegated to reading orders yet again.

And I find that Chenery is once more coming to bat. No, not the two-time Supreme Court extravaganza, quoted by Judge Holmes in my blogpost “He Loves Chenery”, 12/17/14. No, this is a similarly-named entity that showed up on my blogpost “‘Oh No, It Isn’t!’ ‘Oh Yes, It Is’”, 6/3/14.

In the latter order, what IRS at first claimed wasn’t a NOD turns out to have been a NOD, and IRS conceded it was. So Chenery gets a hearing, right?

Not quite yet. First Ch J Michael B. (“Iron Mike”) Thornton must take it off the calendar for March 2 in Our Nation’s Capital, and then find some Tax Court Judge to deal with Chenery and its problems, “by trial or otherwise in due course,” Chenery Management, Inc., Docket No. 23888-13L, filed 1/27/15, at p. 1.

Well, you remember Tax Court acquired fresh talent last December, so Ch J Iron Mike looks over the rookies and assigns this case to Judge Tamara W. Ashford, who first appeared in my blogpost “New Kids on the Block”, 12/22/14.

As I said in my blogpost “Even More Impressive”, 1/1/15, “I look forward to posting many scintillating opinions from Judge Ashford.”

Maybe she’ll even love Chenery.

 

 

WHEN YOU’RE IN, YOU’RE IN

In Uncategorized on 01/26/2015 at 17:34

The sixty-buck-ticket-to-justice, if invoked, can lead the invokers down paths not dreamt of when they mailed in the petition for redetermination of deficiency.

Maybe you don’t owe Our Nation’s Treasury at close of play, but if you think Mr. Lew and his coadjutors owe you, you can’t just walk away from 400 Second Street, NW.

Case in point, Neal G. Brower & Deborah A. Brower, Docket No. 22260-14, filed 1/26/15.

Neal & Deb filed the petition all right, but now move to dismiss, attaching a “no change” letter from IRS.

Now maybe their motion should be recharacterized as a motion for entry of decision, because dismissing a petition for redetermination of deficiency, where Tax Court has jurisdiction, means entering decision for everything IRS claimed in the SNOD.

And Ch J Michael B. (“Iron Mike”) Thornton is a master recharacterizer. Not a Tax Court working day goes by without Ch J Iron Mike spinning straw into gold–or whatever.

But IRS is not happy. It seems Neal & Deb submitted an amended return, claiming they’re owed money, and IRS wants to duke it out here and now.

Ch J Iron Mike, exponent of judicial economy, agrees.

Motion to dismiss denied, and “…petitioner shall file an Amendment To Petition setting forth, if so be the case, their claim for overpayment….” Order, at p. 1.

Takeaway– When you petition, more than you think is on the table.

 

 

“BLOW, BLOW, THOU WINTER WIND”

In Uncategorized on 01/26/2015 at 17:15

And all the rest of it, as the Swan of Avon put it in Act II, Scene vii.

Well, we’ve got plenty of winter wind, and it’s blowing pretty good here in The City That Never Sleeps. So I decided to follow the lead of the Federales, including but without in any way limiting the generality of the foregoing, as my canceled-out-of-Com’r-Koskinen’s-lunchtime-remarks-tomorrow colleagues would say, the crowd at 400 Second Street, NW, who can teletubby today if they wish.

I’m teletubbying today my own self. For the benefit of readers seeking a glossary (see my blogpost “Maybe Not So Obvious – Part Deux”, 1/22/15), the Federales call it “telework”; I prefer “teletubby”, as it involves sitting at one’s computer or smartphone as opposed to bestirring oneself and venturing abroad.

Now that the overture is finished, here is the mini-opera. It’s Dennison R. Heuer, Jr., Docket No. 5076-14, filed 1/26/15, an off-the-bencher from Judge Kathleen Kerrigan.

Here’s a fine example of “man’s ingratitude” and indeed the winter sky is not as biting as “benefits forgot.”

Denni plunders his 401(k) to the extent of $69K, but hadn’t reached the 59-1/2 year safe harbor. He did report the income (he got a 1099-R) and prepared his own return, being one of a dwindling band who does.

But Denni left off the 10% Section 72(t) addition or penalty or whatever it is. IRS hits Denni with the 10% plus the 20% five-and-ten substantial understatement chop.

Denni claims hardship.

“Petitioner contends that he made the withdrawal from his 401(k) due to financial hardship. He testified that by making the withdrawal he was able to retain his employees and eventually sell his company. He testified further that the new owners of his company retained the employees. Without making the withdrawal from his retirement account, petitioner believed that he would be unemployed.” Order, at p. 6.

Tough, Denni, says Judge Kerrigan. “We have considered similar claims in the past and have observed that there is no authority in the Code, the legislative history, or caselaw for a general financial hardship exception to the imposition of the 10% additional tax on early distributions. While we are sympathetic to petitioner’s position, the Court may not add an exception to section 72(t) 2 by judicial fiat and we are obliged to apply the law as written.” Order, at pp. 6-7 (Citations omitted).

But Denni’s tale is not solely one of woe.

“Petitioner prepared and filed his own tax returns. This is not a situation of omission of income or an exaggeration of deductions, but rather the proper reporting of income governed by the Code, the regulations, and the interpretation of the relevant statutory provisions by numerous cases. On the record before us, we are satisfied that petitioner acted in good faith and with reasonable cause with respect to that portion of the underpayment relating to the 10% additional tax under section 72(t).” Order, at p. 8. (Citation omitted).

Denni gets hit with the 10% addition, but not the 20% chop.

 

 

 

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