In Uncategorized on 04/09/2021 at 13:12

For those coming late to the party, and therefore puzzled by the title first set forth at the head hereof (as my expensive colleagues would say), dig my blogpost “More TEFRA Tohubohu,” 9/12/17. Judge Mark V Holmes will explain.

Today Judge Patrick J (“Scholar Pat”) Urda eschews Genesis 1:2 in the original, but brings order to the random walk that is pretrial document discovery in Janet R. Braen, et al., Docket No. 24929-17, filed 4/9/21.

As is not uncommon, the joust is about what the Braens did or didn’t produce.

Seems this is a conservation easement case, and the original cost of the land is at issue. IRS asked for some documents on the very last permissible day before the pretrial discovery cutoff hit. This was preceded by two (count ’em, two) years’ worth of demands and productions.

The Braens claim that they don’t have, or can’t find, some stuff, and Judge Scholar Pat is down with that.

For the rest, Judge Scholar Pat tosses the problem back to the parties.

“We note that trial is less than a month away and that the Commissioner did not file the motion to compel discovery until the last day of the discovery period. In this circumstance, we will give the Braens a slight reprieve. If documents responsive to request number 2 have already been produced in response to other formal or informal discovery requests, they do not need to produce the documents again (unless they so choose) and may instead identify those documents and the date of previous production in a written response to the Commissioner. Should the Braens fail to comply with this order, the Commissioner may file an appropriate motion.” Order, at p. 2. And Scholar Pat gives the Braens just over a week to do it.

IRS’ counsel is unhappy with the organization of the documents they did get. The Braens claim that’s how they keep records in the ordinary course of their business.

“The Commissioner also takes issue with the organization of the Braens’ document production, faulting them for failing to correlate the response with a request. Our rules do not impose such an obligation. Rule 72(b)(3) provides that ‘[a] party shall produce documents as they are kept in the usual course of business or shall organize and label them to correspond to the categories in the request.’ Here, the Braens have produced the documents as they are kept in the usual course of business, which is a permissible method of production.” Order, at p. 4.

Maybe there should be an embargo on those “win your case at discovery” CLEs. Too much tohubohu, too little progress in resolving the case.


In Uncategorized on 04/08/2021 at 15:43

Combing through the Tax Court orders for blogfodder today, with nary an opinion or press release in sight, I came upon a motion and a name that brought back memories.

Ryszard Sala, Docket No. 3423-21, filed 4/8/21, has an attorney. We all know that attorneys must e-file in Tax Court.


Old Bill Wise is still in there pitching. Having once again moved for such relief, Ch J Maurice B (“Mighty Mo”) Foley graciously allows that “William J. Wise is exempted from efiling requirements for purposes of this proceeding.” Order, at p. 1.

All y’all must surely remember Old Bill, eh what? No? Old Bill has been around practicing law in Tax Court for sixty-two (count ’em, sixty-two) years. See my blogpost “(Old) Technophobes, Rejoice!” 12/18/13.

On a day when my internet crashed and I shot three hours trying to get minimal service restored, I needed something to make me feel so young. Old Bill, thanks. Joe Myrow and Mack Gordon got it right.


In Uncategorized on 04/07/2021 at 20:36

I’ve been looking for a chance to echo Niagara Falls’ gift to the internet gearjammers. I thank Andrew Mitchell Berry and Sara Berry, 2021 T. C. Memo. 42, filed 4/7/21, Andy’s brother Ronald Gene, and their (nonworking) 68 Camaro, for giving me the chance. But ex-Ch J L Paige (“Iron Fist”) Marvel shuts ’em down.

Mostly it’s an indocumentado with the Section 274 overlay. Andy and RG claim that the $250K they got from a client of their construction company to convert an old nursery into condos was trust funds, for which they got oral OKs from said client by telephone to disburse. They did some building, but also disbursed funds to pay for the auto racing.

Except the Camaro never ran in year at issue. So we get the “goofy regulation” hobby loss into the mix.

Andy and RG want a BoP shift, but since they never gave the RA any paper on the audit, they’re out under Section 7491(a)(2).

Andy and RG were sole signatories on the “trust fund” account, there was only a notation on the check that funded the account that it was for the condo project, and ex-Ch J Iron Fist doesn’t buy the telephonic OKs.

At best the racing car was a start-up. The argument that it served to advertise the construction business founders.

“Although petitioners testified that the 68 Camaro featured advertising for [construction business] and that they met business contacts at the racetracks, no company logo or wordmark is visible in the only photograph of the car in the record, and the record lacks any credible evidence that those contacts led to any business for [construction business]. ” 2021 T. C. Memo. 42, at pp. 14-15. (Footnote omitted, but ya gotta love it).

“The photograph was a side view of the car taken at a race Andrew won in [year after year at issue]. Petitioners first testified that there was a [construction business] sticker on the side of the car but, after viewing the photograph, claimed the sticker was on the car’s rear window.” 2021 T. C. Memo. 42, at p. 14, footnote 6.

I’ve been told I write the most entertaining tax blog. Maybe so, but I must give credit to the Tax Court Bench and the litigants who appear before them. I hope they all keep revving their engines for many years to come.