Attorney-at-Law

BEING AND NOTHINGNESS – PART DEUX

In Uncategorized on 07/20/2018 at 23:15

There is really an existentialist quality to the Section 6751(b) Boss Hoss penalty sign-off. As Marty Heidegger might have said, “What does it mean to be?” Is the mere existence of the sign-off its whole function? Scott T. Blackburn would seem to stand for that proposition. See my blogpost “Robosigner? – Part Deux,” 4/5/18.

But ex-Ch J L. Paige (“Iron Fist”) Marvel seems to think that, in the Boss Hoss corral at least, being is nothingness until there’s a trial if necessary to find out something or other regarding the section 6751(b)(1) penalty approval requirement and whether it is met in a particular case. See my blogpost “Play Nice At the Graev,” 7/10/18.

Into the fray leaps Judge Gale with a designated hitter and another long-since-tried-and-awaiting-opinion case, George Fakiris, Docket No. 18292-12, filed 7/20/18.

George never raised Boss Hossery, because his case was tried pre-Graev. And since on the trial George didn’t ask, IRS didn’t tell, thinking George had waived. But IRS wants a reopener to make sure that the Boss Hoss sign-off requirement is satisfied. And in furtherance of its motion, IRS hands in three (count ‘em, three) documents, one for accuracy, one for negligence, and one for gross valuation misstatement.

Judge Gale will buy the reopener. It’s discretionary, non-cumulative, nonimpeaching, material, and certainly is a game-changer.

But he won’t buy the wild-carded documents. If any are business records, they need a foundation. And as one is an Office of Chief Counsel billet doux with no showing that the author-attorney got a sign-off from her Boss Hoss, its existence isn’t enough.

So let’s have an informal discovery play-nice, followed by a trial. Or better yet, a settlement.

Is the Boss Hoss’ being nothingness?

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IT’S THE PARTNER, NOT THE PARTNERSHIP

In Uncategorized on 07/20/2018 at 17:44

Judge James S (“Big Jim”) Halpern has another TEFRA silt-stirrer, and it’s all about basis. The silt stirred up by TEFRA through its computational-vs.-deficiency dogpaddle results today in Judge Big Jim finding Tax Court has jurisdiction, that notwithstanding the stipulated decision entered years ago the issue of the nonpartner’s basis in the contributed property (euros; this is another Son-of-Boss mix-and-match dodge) was never determined, so there’s a free kick awarded to Larry S. Freedman & Sheri L. Freedman, docket No. 23420-14, filed 7/20/18.

The partnership Larry got into was a phony, but it got an FPAA and Larry got hammered. The only issue now is the 40% overvaluation penalty. Larry claims good faith, and that the net amount of the liquidating distribution of the euros needs to be determined.

Judge Big Jim agrees. Computational adjustments (no SNOD, straight to assessment) are those related to what the FPAA determined, and don’t need partner facts. IRS “…can collect the penalty he determined in the notice of deficiency as a computational adjustment apart from the present case only if he establishes that the penalty ‘relates to’ our redetermination of the capital contributions made to [phony partnership] and is ‘based on’ our determination that the reported contributions were overstated by at least 400%. Respondent has not made the showing required for us to grant his motion to dismiss the portion of the case involving petitioners’ request for a redetermination of the penalty respondent determined.” Order, at p. 5.

Although Tax Court could have determined Larry’s basis in the euros, Tax Court didn’t. And as it was an agreed decision, neither Larry nor IRS asked them to. So if Larry had any basis, that might offset the overvaluation chop IRS wants to slug him with.

Now if you want to see why TEFRA was the mother of abominations, try this.

“It may be that, in asking us to redetermine to be zero the capital contributions made to Pinnacle in the decision entered in [phony partnership]’s partnership case, the Commissioner was referring not to the capital account credits allowed for the contributions (and reported on Schedule M-2 of its Forms 1065), but instead to the partnership’s ‘inside’ basis in the contributed property. Even under that interpretation of our Order & Decision in Pinnacle’s partnership case, however, it would not follow that the penalty respondent determined in the notice of deficiency was based on our Order & Decision. Because a partnership’s inside basis in contributed property and the outside basis of a partnership interest issued in exchange for the property are both determined by reference to the partner’s precontribution basis in the property, secs. 722, 723, a determination that the partnership overstated its inside basis in the property would indicate that the partner’s initial outside basis was also overstated. If Mr. Freedman overstated his initial outside basis in his interest in [phony partnership], it would tend to follow that he also overstated the basis of the euros he received from the partnership in liquidation of that interest. But Mr. Freedman’s correct basis in the euros (in contrast to the redetermined capital contributions and partnership inside basis) was almost certainly higher than zero. Therefore, a determination that [phony partnership]’s basis in the property Mr. Freedman contributed was zero (or, more precisely, did not exist) would not establish that Mr. Freedman’s claimed basis in the distributed euros was overstated by at least 400%.” Order, at p. 7.

 

 

STAMMTISCH

In Uncategorized on 07/19/2018 at 16:34

I remember admiring, years ago, on a table in a cozy corner of an old-fashioned wirtschaft, reserved for the long-time regulars, with their fragrant pipes and large steins of local brew, the shining brass base with the black-letter brazen placard.

Well, I once threatened, on this very blog, that if ever I retire I might just open up a pub and call it The Jolly Rounder; see my blogpost thus entitled, 3/16/15.

And if I do open the pub, it will have a stammtisch. And the regulars will feature such as Christopher R. Chapman & Pamela J. Chapman, Docket No. 3007-18, filed 7/19/18. Now I’m not starting a pub or issuing invitations, but The Jolly Rounder is an appealing idea.

Chris & Pam are definitely candidates for the title. They’re long-time nonfilers, they’ve twice in the past petitioned SFRs, claiming these weren’t returns, and lost at every turn. Nothing daunted, they’re trying again.

IRS claims there’s neither SNOD nor NOD, so no jurisdiction, and move to toss Chris & Pam. But so that they don’t leave with nothing, IRS moves to hand Chris & Pam a $3K Section 6673 chop.

Chris & Pam have drawn STJ Daniel A (“Yuda”) Guy, who chooses to designate this tale, for which I thank him. STJ Yuda is a pleasant person among friends and family, I am told, but is rather testy with those who waste time and resources with protester blather.

“Although respondent correctly points out that the Court’s jurisdiction typically depends on a determination by the Commissioner and a timely filed petition, see secs. 6213(a) and 6330(d), we need not focus on those requirements in this case. Rather, we look to the doctrine of res judicata which bars repetitious suits on the same cause of action. See Koprowski v. Commissioner, 138 T.C. 54, 59-60 (2012). This doctrine serves a dual purpose of protecting litigants from the burden of relitigating the same cause of action and promoting judicial economy by preventing unnecessary or redundant litigation. Meier v. Commissioner, 91 T.C. 273, 282 (1988). In short, once a court of competent jurisdiction has ruled on the merits of a cause of action, the parties may thereafter be barred from relitigating every matter which was offered in the prior suit, as well as any matter which might have been offered in the prior suit. Koprowski v. Commissioner, 138 T.C. at 60; see Commissioner v. Sunnen, 333 U.S. 591, 598 (1948).” Order, at p. 4.

In short, Chris & Pam, you had your chance and you blew it.

And STJ Yuda is clearly annoyed.

“Petitioners argue that the Court should not impose a penalty because they have raised a novel question as to whether they are properly characterized as ‘taxpayers’ subject to Federal income tax where they have not filed Federal income tax returns and their tax liabilities arise from substitutes for return made by the Secretary under section 6020(b).

“The Court informed petitioners in their collection cases at docket Nos. 30014-15L and 30031-15L that section 6330(c)(2)(B) barred them from challenging the existence or amount of their tax liabilities for the years in issue. Petitioners were reminded of that fact again in connection with the agreed dismissals of the petitions that they had filed at docket Nos. 22516-17 and 22520-17. Against this backdrop, it is clear to the Court that petitioners’ latest attempt to challenge their tax liabilities represents a delay tactic and that their argument amounts to nothing more than time-worn tax protestor rhetoric that is both frivolous and groundless. Addressing this matter has resulted in a needless waste of the Court’s resources. Accordingly, the Court will grant respondent’s motion and impose a penalty of $3,000 on petitioners pursuant to section 6673(a).” Order, at p. 5.