Attorney-at-Law

ELECTION BLUES

In Uncategorized on 08/07/2020 at 15:29

Though politics is in the air, and philippics and polemics proliferate, this blog remains immune to politics. But today we have elections again, albeit this one is a very basic election.

Craig Douglas Hoglund & Christine Joan Hoglund, Docket No. 18571-19, filed 8/7/20, are petitioning a SNOD for Year A issued solely to Chris. Craig wants in, and claims he and Chris always filed MFJ. Not only that, but Craig & Chris want to throw in tax years B through G, both inclusive.

IRS moves to toss, claiming Craig & Chris tried this move before, but Tax Court kept in only the years specifically addressed by the SNOD.

“The Hoglunds filed a response to the Commissioner’s motion. Their response makes to [sic; I think you meant “two,” Judge] principal arguments. They note that they have filed their returns ‘married filing jointly’ throughout their marriage, implying that this requires the Commissioner to issue a notice of deficiency addressed to them jointly. Citing authorities relating to collection cases, they also argue that ‘years not under consideration for a particular tax year’s hearing are considered in making a ‘Determination.'” Order, at p. 2.

Well, ya gotta check the box for MFJ. See my blogpost “Blowing the Joint,” 6/24/14. Judge Buch does a reprise.

“Under section 6013(a), married taxpayers ‘may make a single return jointly of income taxes,’ which is done by checking a box on an income tax return labeled ‘Married filing jointly.’ Choosing to make a joint return is an election. The statute permitting joint returns refers to it as an election. See sec. 6013(b). As do the underlying regulations. Treas. Reg. § 1.6013-1(a)(1). At the time the Commissioner issued his notice with respect to [Year A], the Hoglunds had not filed a joint return. As a consequence, they had not made an election to file a joint return for that year. As a result of there being no election to file jointly, it was proper for the Commissioner to issue his notice only to Mrs. Hoglund.” Order, at p. 2.

Now as to the out years, Tax Court is bound by Section 6214(b), and the immortal words of the Lieber-Stoller Coasters classic Poison Ivy: “You can look but you better not touch.”

“As this provision make clear, we can only redetermine the deficiency in the year before us, [Year A] in this case. We may look at facts from other years for the purpose of redetermining the [Year A] deficiency, but we cannot determine whether the Hoglunds have overpaid or underpaid their taxes in any year other than [Year A].” Order, at p. 3.

So Craig & Chris lose the election, and Year A is out there on its own.

Practice hint: Note the magic day for election here is the date of the SNOD, because Craig & Chris hadn’t yet filed their return. When you get a nonfiler case pre-SNOD, with spousery implications (innocent or otherwise), you might want to consider sending in a belated MFJ return. And tell ’em Craig & Chris sent ya.

 

 

CATCHING UP – PART DEUX

In Uncategorized on 08/07/2020 at 14:41

With so much going on, both online and in the real word, I hadn’t blogged a bunch orders (hi, Judge Holmes) wherein Ch J Maurice B (“Mighty Mo”) Foley bounced joint stipulated decisions and the like because the IRS’ counsels’ signatures were digital and not wet-ink.

I see today on the new, only-marginally-improved, jazzy Tax Court website that Ch J Mighty Mo, bowing to the unavoidable constraints of the COVID-19 new reality, will allow e-signatures on joint stipulated decisions, sidestepping 15USC§7003(b)(1).

There’s more, so look here: https://ustaxcourt.gov/resources/press/08062020.pdf

Now all we need is for Ch J Mighty Mo to energize Rule 34(a), and allow e-signed petitions and amendments thereto. Too bad he didn’t do so yesterday.

I DEFINITELY WON’T MOURN TEFRA

In Uncategorized on 08/06/2020 at 19:33

I’m sure IRS won’t mourn the passing of TEFRA, either.

Case in point. Even though the partnerships that generated ginormous NOLs for Ritchie N. Stevens and Julie A. Keen Stevens, 2020 T. C. Memo. 118, filed 8/6/20, may be small partnerships for TEFRA purposes, there still have to be partner level determinations. IRS hasn’t done them. The returns Ritch and Julie filed are not oversheltered per Section 6234, except for one year at issue out of the seven (count ’em, seven) years at issue.

Ritch and Julie have BoP that their partnerships are not small, and therefore need FPAAs, and fail to carry the burden. But IRS still has to consider partnership items, even without the FPAA prelude.

IRS’ lumping of all their securities transactions into aggregated sales and aggregated basis is a gift to Ritch and Julie; if IRS did not, they could have hit Ritch and Julie with the entire sales prices as gain, and let Ritch and Julie try to prove basis.

But IRS has problems. Without taking the partnership items into account, their failure to disallow partnership items, coupled with their computations of nonpartnership items, create no deficiencies. IRS can try to scuttle the partnership items and seek to collect the taxes that result from wiping out the losses and NOLs arising therefrom, but SOL may prevent that.

If you want the nitty-gritty from Judge Halpern, and have a craving for 87 (count ’em, 87) pages of his prose, read on.

But I’ve gleaned one point worth stressing from his elaborate deconstruction.

“In Dees v. Commissioner, 148 T.C. at 5, we distilled our prior caselaw into a ‘two-prong approach to the question of the validity of * * * [a] notice of deficiency.’ In the first step of the Dees approach, ‘we look to see whether the notice objectively put a reasonable taxpayer on notice that the Commissioner determined a deficiency in tax for a particular year and amount.’ Id. at 6. A notice that meets that test is valid, without the need for further inquiry. If instead the notice is ‘ambiguous’, we wrote, ‘the party seeking to establish jurisdiction * * * [must] establish that the Commissioner made a determination and that the taxpayer was not misled by the ambiguous notice.” Id.” 2020 T. C. Memo. 118, at pp. 44-45.

OK, so what price all these notices that say “we send you a SNOD” when IRS didn’t, and all the various letters, notices, forms and billets doux IRS unloads that claim a difference between what the return shows and what IRS claims is owing? And when IRS claims no jurisdiction because the document wasn’t a SNOD? I’ve blogged plenty of cases where a document says there’s a difference between return amount and tax due. And a reasonable taxpayer, not an EA, CPA, RRP, or attorney would certainly think they were on notice.

True, I didn’t blog Dees. But I’ll cite it.