Attorney-at-Law

THE SHOEMAKER AND HIS LAST

In Uncategorized on 02/26/2021 at 14:15

I echo today the old phrase “Let the shoemaker stick to his last,” meaning that someone in one line of business should not meddle in another, unless qualified to do so.

I long ago decided to stick to covering US Tax Court. For a while I tried covering FATCA, but I was so often discouraged, when scooped by the trade press and the blogosphere, that I forswore that line.

So when a highly-reliable source asked why I didn’t mention IRS’ increased crackdown on syndicated conservation easements, I replied that the trade press and blogosphere has thoroughly publicized this, and any of my readers who have an interest have plenty of other readily-available sources. Tax Court is another story; most of the blogosphere coverage is weeks behind, as is the trade press.

Instead of running a race I can’t win, I dig out such purely Tax Court waltzes as Estate of Joe E. Sharp, Deceased, Zan Sharp Prince, Sole Remaining Independent Executor, Docket No. 7671-19, filed 2/26/21.

“…petitioner filed a Motion for Leave To File Sur-Reply to Sur-Reply to Sur-Reply to Response to Partial Motion for Summary Judgment. …petitioner further lodged its proposed Sur-Reply to Sur-Reply to Sur-Reply to Response to Partial Motion for Summary Judgment. In its motion for leave petitioner indicates that respondent does not object to the granting of the motion.” Order, at p. 1.

So Ch J Maurice B (“Mighty Mo”) Foley lets the band play on. Let the sur-replies to sur-replies roll down like a river.

Turning to an interesting judicial entrechat, we have Judge Mark V Holmes weaving two records together to make an appealing mélange, in Andrew J. Redleaf & Lynne S. Redleaf, Docket No. 10526-16, filed 2/26/21. I’d cross-reference Andy’s ex Elizabeth’s case, Docket No. 13901-17, except it’s sealed under the new DAWSON rule, apparently invented by the Genius Baristas, that if one document is sealed, the whole case is sealed. We don’t need no Rule 27.

Anyway, here’s Judge Holmes.

“A related case brought by Ms. Redleaf’s former wife Elizabeth, docket number 13901-17, was then assigned to this division of the Court. The key issue in both cases was whether payments that Mr. Redleaf made to Elizabeth were deductible alimony to him and taxable income to her, or nondeductible and nontaxable property distributions.

“Elizabeth then moved for summary judgment on this issue in her case. Because we had consolidated the cases, the issue was fully briefed by the parties in both cases after discovery and on a record that was comprehensive. Today we entered decision in Elizabeth’s case. We also spoke with the parties in this case. All agreed that the issues, evidence, and arguments would be the same if a summary-judgment motion were to be formally made in this case. All also agreed that for the decisions to be consistent, we would need to enter decision for respondent in this case. All agreed, and the Court specifically notes, that the agreement to incorporate by reference the briefing and record in Elizabeth’s case to enable an efficient entry of decision in no way affects petitioners’ right to appeal the decision in this case.” Order, at p. 1.

We don’t need no motion.

TAXPAYER FIRST THINGS FIRST

In Uncategorized on 02/25/2021 at 16:28

All y’all will of course remember that the celebrated Taxpayer First Act of 2019 engrafted subsection (e)(7) onto Section 6015 innocent spousery. That legislative gift kept on giving to the tune of five (count ’em, five) blogposts.

And now Judge Mark V. Holmes gives me another on an opinionless afternoon, so you won’t get another rant from me about DAWSON. But watch this space: I’m working on one.

Instead, here’s Jodell Sample, Docket No. 4394-20, filed 2/25/21. Jodell opposes IRS wild-carding into evidence some post-NOD stuff. But Jodell and IRS do agree that Section 6015(e)(7) is the standard and scope of review under the new régime.

“They agreed that the new provisions of § 6015(e)(7), in which Congress explicitly provided a standard and scope of review in these cases, applied. They explained that they had nearly agreed on what the contents of ‘the administrative record established at the time of the determination’ were, but that respondent also wanted to introduce documents that the IRS created after it issued that determination. Petitioner objects because those documents are not part of the administrative record. It may also be the case that those documents, if they concern the IRS’s procedure in formulating its determination, would be immaterial to the Court under a de novo standard of review.” Order, at p. 1.

I don’t see why much was made about the applicability of the Taxpayer First Act’s rewrite of the Section 6015(e) standard of review.  A quick docket research shows Jodell petitioned 3/4/20, the Congressional Research Service website shows Taxpayer First became effective 7/1/19, and section 1203 of the Act applies to any proceeding filed thereafter. So why do you need to agree that the law is the law?

But more to the point is IRS’ wild-card.

Under the Taxpayer First Act, innocent spouse review de novo is limited to administrative record and newly-discovered evidence; so no new trial with witnesses, unless they’re the newly-discovered or previously-unavailable evidence.

“Petitioner helpfully pointed out that these may turn out to be questions of first impression. Respondent reasonably wants to seek the views of the National Office. All agreed that these questions could be set up in a motion in limine. Once we decide that motion, they would likely be able to agree on a stipulation to submit the case for decision on the merits under Rule 122 or on crossmotions for summary judgment on the basis of a stipulated record. Given the possible importance of this motion to this corner of tax law, the Court will be generous in its briefing schedule.” Order, at p. 1.

Leaving aside the quibble that there are no “crossmotions” in Tax Court (see Rule 54(b); you can’t respond to a motion and move for your own in the same filing), Judge Holmes gives the parties three months to move, respond and reply. And the parties can stip between themselves for more time.

We’re not told what this “additional newly discovered or previously unavailable evidence” might be, or why IRS didn’t have it before now. I wonder why IRS didn’t move to remand back to Appeals, so as to patch up the administrative record. And I wonder why petitioner didn’t move in limine off the bat to toss this stuff, rather than being “helpful.” Giving the IRS an easy escape-hatch?

Plenty of good blogfodder from Taxpayer First.

 

THE CASE OF THE DISAPPEARING NOL

In Uncategorized on 02/24/2021 at 15:55

Ex-Ch J Michael B (“Iron Mike”) Thornton plays Sherlock in today’s mystery story.

George Farley, Docket No. 115-17, filed 2/24/21, is fighting about a NOL which IRS claims was legit but which George exhausted years before the years at issue. George, a retired CPA with a never-give-up attitude, reprises said NOL in various amounts and guises (claiming a capital loss carry over (CLCO) resurrects a used NOL), but, contrary to the typecast CPA, has no calculations or computations.

One would expect mathematical and arithmetical arabesques. Especially since George got a continuance of his trial back in 2019 to consult with counsel. Lo and behold (as a late and much-lamented colleague used to say), George gets no fewer than four (count ’em, four) attorneys on board, including without limitation the Boss of The Jersey Boys. All four bail in less than two months.

You can see George is confronting “a bumping pitch and a blinding light/An hour to play and the last man in.”

George, alas, goes down swinging.

“It is unclear whether petitioner means in this proceeding to press the argument suggested by the attachment to his 2009 return, i.e., that his claimed 2011 NOL carryover results in some ill-defined manner from a freeing up of previously utilized pre-2009 NOLs as the result of a previously unreported CLCO. The record shows, however, that petitioner never reported any capital loss carryover on any of his returns for taxable years 1997 through 2008, although he did report and exhaust all available NOL carryovers for those earlier years. Consequently, insofar as petitioner’s claimed 2011 NOL carryover is based on the hypothetical application of CLCOs to unspecified years before 2009 and the resulting alleged restoration of previously exhausted NOL carryovers, his reporting positions are riddled with inconsistencies. Moreover, insofar as petitioner means to suggest that NOL carryovers and CLCOs can be used interchangeably such that a later-claimed CLCO can free up previously utilized NOL carryovers under section 172, his argument lacks legal basis. Net capital losses are not interchangeable with NOLs under section 172 but instead are governed by a separate carryover regime under section 1212.

“Petitioner has set forth no facts and submitted no documentary evidence to show that he is entitled to any NOL carryover for 2011. In fact, he has repeatedly represented to the Court that he has no additional documentation.” Order, at pp. 8-9. (Footnotes omitted).

George also gets an uncontested Section 6651(a)(1) add-on.