In Uncategorized on 10/26/2016 at 17:16

Yes, but he really needs to petition the SNOD if he wants to contest liability.

Here’s The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Indefatigable, Ineluctable, Ineffable, Incontrovertible, Illustrious and Insuperable Foe of the Partitive Genitive, and Old China Hand, Judge Mark V. Holmes, with a prescription for Brent W. Sherwood & Janet K.  Sherwood, Docket No. 18946-15L, filed 10/26/16, a designated hitter.

Oh, and that’s Dr. Brent W. Sherwood, M.D., traveling emergency-room doctor.

IRS hit the moving target with a SNOD. Neither Dr Brent nor Janet K. petitioned same, but when they got the NITL, Dr Brent and Janet K. stepped up.

All they wanted to do was contest liability, but Appeals said sorry, you should’a done that when you got the SNOD.

“The Sherwoods admit with admirable honesty that Dr. Brent Sherwood received the notice of deficiency, but didn’t pay close attention to it because he was studying for his board certification — and we assume with some confidence that this is an exam even harder than the bar or CPA licensing exams. But his perhaps understandable focus on his profession and his simultaneous life-saving employment as a traveling emergency-room doctor doesn’t mean that the settlement officer made either an error of fact or one of law in concluding that the Sherwoods can’t challenge their underlying liability. See IRC § 6330(c)(2)(B).” Order, at p. 2.

And at Appeals Dr Brent and Janet K didn’t ask for an IA, or an OIC.

No matter how hard the exam, petition the SNOD. Or else you fail in Tax Court.


In Uncategorized on 10/26/2016 at 15:53

Well, no old-time theatre buff has ever corrected my assertion that the title hereof derives from George Kelly’ s 1924 comedy The Show-Off, whose lead character Aubrey Piper solemnly intones those words with a flourish of an ebony walking-stick.

But those words should mean a lot to Clyde A. Arashiro, 2016 T. C. Sum Op. 70, filed 10/26/16. And Judge Gale goes to some lengths to tell him why.

Clyde got lassoed by the cattle sheltering of Walter J. Hoyt III. Hoyt III was quite a promoter, eventually getting nailed for “fraud, mail fraud, bankruptcy fraud, and money laundering.” 2016 T. C. Sum. Op. 70, at p. 4, footnote 2.

Clyde kept taking the phony deductions thrown off by Hoyt III even after IRS fired a couple warning shots (hi, Judge Holmes), telling Clyde he was up for some chops.

Clyde got chopped, but is fighting about additions to tax and penalties.

And Judge Gale agrees that the only issue here is the chops.

Clyde puts in a Form 906, Closing Agreement on Final Determination Covering Specific Matters, saying he’ll get a loss for the money he gave Hoyt III, and is off the hook for additions to tax and penalties arising from the Hoyt inflicted upon him (sorry, guys).

Problem: “The copy of the closing agreement in the record is not signed by petitioner or a representative of respondent.” 2016 T. C. Sum. Op. 70, at p. 7.

So Clyde’s reliance on the unsigned copy of the closing agreement is out.

“We reject petitioner’s contention.  The only copy of the closing agreement petitioner produced is not signed by either petitioner or a representative of respondent.  Thus, accepting petitioner’s contention requires us to believe that he signed the closing agreement without making a copy of the signed version and instead–quite implausibly–made a copy of the agreement before signing it and retained that version.  We are unpersuaded by petitioner’s self-serving testimony in this regard… and find that he did not return a signed copy of the closing agreement to respondent.” 2016 T. C. Sum. Op. 70, at p. 13 (citations and footnote omitted, but see the following takeaway).

Takeaway—By Judge Gale in the omitted footnote: “See Rev. Proc. 68-16, sec. 6.07, 1968-1 C.B. 770, 780 (a closing agreement is always signed first by the taxpayer and ordinarily constitutes an offer to agree, while the signature for the Commissioner constitutes acceptance); see also Smith v. Commissioner, T.C. Memo. 1991-412.” 2016 T. C. Sum. Op. 70, at p. 13, footnote 8.

Make three copies, sign all three on the dotted line, keep one, send in the others to IRS, and make sure you get back a fully-signed duplicate original. Keep it in a safe place.


In Uncategorized on 10/25/2016 at 16:34

Often has a Tax Court Judge or STJ intoned the mantra “This is a court of limited jurisdiction. We can only do what Congress allowed.”

Alas the poor Article I judge, bereft of the extensive powers of her Article III colleagues. I remember the late Justice Antonin Scalia visiting haughty disdain on this “inferior court” established under the authority of Article I, Section 8, from his armchair at the post-cenam chat at Duke University, during the last Tax Court Judicial Conference. BTW, when will we be having the next one?

But sometimes even lowly STJ’s, worthily lamenting their inferiority, take that field marshal’s baton from their knapsacks and look longingly at it, before restoring it to the field pack on their weary shoulders.

Today it’s the turn of STJ Lewis (“footsoldier of Tax Court justice”) Carluzzo.

And it’s the next installment of Faith Lynn Brashear & Hendel N. Thistletop, Docket No. 13189-13, filed 10/26/16, a designated hitter. You remember Faith & Hen, no? What, no? Well, try my blogpost “Got To Be There – Part Deux,” 8/26/16. There, now.

Faith & Hen are still battling with their erstwhile attorney, whom I’ll call DJ. Faith & Hen refuse to pay, DJ wants out, Faith & Hen claim DJ is overcharging them. STJ Lew has an urge to sort it out, but forbears.

“In support of his motion, [DJ] submitted his time sheet/billing statement, which we have carefully reviewed. While we question the amount of time charged for some of the seemingly routine activities, there is insufficient evidence in that statement, or otherwise in the record, to support a finding that excess billings operate to violate the fiduciary duty owed to petitioners to such an extent so as to allow for an order of disgorgement. See Restatement (Third), Law Governing Lawyers, sec. 37. The fee dispute between petitioners and [DJ], should either party continue to pursue it, will have to be resolved in a different forum.” Order, at p. 1.

STJ Lew, how do you have jursidication (thanks, Judge Ashford), to decide the billing issue on papers, much less try the issue or order a disgorgement? If the review is to decide whether to let JP out of the case, what he charges or doesn’t charge is nothing to the point. If he claims Faith & Hen owe, and they don’t pay, unless there’s collusion with intent to stall, toss JP, and let Faith & Hen work out their salvation. The billing issue is nothing to do with the main deficiency, unless the legals are a claimed deduction, and even then you can only allow or disallow them.

The fee dispute should go to State court, where it belongs.