In Uncategorized on 12/01/2016 at 16:05

Innocent spousery is multiform. Today we deal with apportionment, or rather Judge Lauber, recovered from unscrambling defective lodgings and filings, takes up that task in Dwight McDonald and Donna McDonald, 2016 T. C. Sum. Op. 79, filed 12/1/16.

Apportionment falls under Section 6015(c). So let’s go down the checklist. Dwight and Donna filed jointly for years at issue. Check. Dwight and Donna are now divorced and living apart. Check. Donna seeks to bail not later than two (2) years after IRS starts to collect. Check.

So Donna’s cleared the bar.

Now what does she get?

Well, the State tax refunds (unreported) get split 50-50, as the returns that generated same were joint.

And Donna’s unreported wages are all hers.

The biggest items are current losses and carryforwards arising from Dwight’s real estate operation. Though Dwight had a full-time job in RI, both Dwight and Donna owned ten (count ‘em, ten) rental real estate parcels in FL and AL. And Donna did answer the phone when the managing agent called for Dwight’s decisions. She knew Dwight spent a lot of time on the real estate, but he kept all the records in a locked room, to which Donna did not have the key. Donna knows nothing of tax law and relied on Dwight and their CPA.

The CPA figured Dwight was a real estate pro, and told Donna so, but didn’t go over the tax returns with her.

IRS says Dwight “actually participated,” so he gets the $25K of losses, but did not “materially participate,” so loses the rest. Hence Dwight’s tears.

IRS says Donna is innocent, but Dwight disagrees.

Judge Lauber: “The statute does not address burden of proof in the situation we face here, where the IRS supports relief from joint and several liability and the nonrequesting spouse opposes it.  In such cases we ‘inquire whether actual knowledge has been established by a preponderance of the evidence’ presented by all three parties.

“’Actual knowledge’ means ‘an actual and clear awareness (as opposed to reason to know)’ about the item giving rise to the deficiency.  A taxpayer lacks actual knowledge if she ‘is unaware of the circumstances that give rise to error on the tax return.’  In the context of a disallowed deduction, the relevant question is whether the requesting spouse ‘had actual knowledge of the factual circumstances which made the item unallowable as a deduction.’”  2016 T. C. Sum. Op., 79, at pp. 9-10. (Citations omitted, but look them up for your next memo of law).

Quite Cartesian.

Dwight argues Donna knew about the real estate business, answered the phonecalls of the managing agent, and was told by the CPA that either she or Dwight or both were real estate pros. Therefore Donna knew about the dicey deductions.

No, says Judge Lauber. Yes, she knew about the real estate business. But that’s not enough.

Since the distinction between actually participating and materially participating means counting hours, knowing who did what and whether all activities were treated as a single activity (and appropriate election filed), and since Dwight called all the shots and kept the records locked away, no way could Donna know that Dwight was a short-timer. Especially when the CPA said he was.

The accuracy chops will follow the erroneous items.


In Uncategorized on 12/01/2016 at 13:28

I’m only an obscure old-time, beaten-down and beaten-up single-shingle, “with very limited experience and mediocre qualifications,” as a much finer writer than I put it.

But take a look at what an unkind Fate has bestowed upon that Phi Beta Kappa graduate of Yale University, M. A. Clare College Cambridge, and Note Editor of Yale Law Review, now Tax Court Judge Albert G. Lauber.

Here is but one instance wherein he employs his formidable talents and jurisprudential gravitas, namely, viz., and to wit Martha G. Smith & George S. Lakner, et al., 8847-12, filed 12/1/16.

“…the parties filed a First Stipulation of Facts and exhibits. However, in accordance with the Court’s… Order this document should have been lodged, rather than filed. …the parties called the chambers of the undersigned and informed the chambers administrator that the First Stipulation of Facts and exhibits… had errors in the page numbering and the parties intended to lodge an amended copy. … the parties filed a First Amended Stipulation of Facts and exhibits. Again, this document should have been lodged. In consideration of the foregoing, it is

“ORDERED that the Clerk of the Court shall; (1) change the docket entry for the parties’ First Stipulation of Facts and exhibits to reflect that the First Stipulation of Facts and exhibits was lodged…; (2) add a cover sheet to the parties’ First Stipulation of Facts and exhibits that bears an eLodged stamp…; (3) change the docket entry for the parties’ First Amended Stipulation of Facts and exhibits to reflect that the First Amended Stipulation of Facts and exhibits was lodged…; (4) add a cover sheet to the parties’ First Amended Stipulation of Facts and exhibits that bears an eLodged stamp….” Order, at pp. 1-2.

Da capo al fin.


In Uncategorized on 12/01/2016 at 12:48

Today I really need white trousers and a striped shirt, and a loud whistle, so that I might continuously rotate my forearms before me after having deafened all within earshot.

Once again IRS deploys the SNOD-after-petition formation. This deft but slimy move has IRS bombarding taxpayer with a bunch of form letters, which elicit a petition, and then claiming there never was a SNOD (notwithstanding that there is no standard form of SNOD, and don’t hang by anything tender until IRS promulgates such a form), moving successfully to dismiss the petition, and then dropping the real SNOD.

Usually by the time the taxpayer (pro se) gets word of the fake, the 90 days has run on the real SNOD.

See my blogposts “Fake Out,” 12/16/14, and “Fake Out – Part Deux,” 6/23/15.

Today’s victim is Gilson Alexander Tallentire, II, Docket No. 19435-16, filed 12/1/16.

Ch J L. Paige (“Iron Fist”) Marvel kicks Gil to the cliché, without mentioning that Gil has time to refile if he files anew at once, or even sends in a letter, which can be characterized as an imperfect petition from the “real” SNOD.

I call illegal procedure! Tweet!

Footnote- Ch J Iron Fist’s predecessor ex-Ch J Michael B. (“Iron Mike”) Thornton rightly tipped off the taxpayer in the second of my blogposts abovecited.