In Uncategorized on 03/06/2012 at 17:34

Judge Wherry, Of All People

Who says Tax Court cases, and Tax Court judges, can’t be whimsical? Judge Wherry struts his whimsical stuff in Tonda Lynn Dickerson, 2012 T.C. Mem. 60, filed 3/6/12.

Tonda was a Waffle House waitron whose dream came true. She hit the FL lottery for $10 million without even buying a ticket. While Tonda was table-hopping one fine day in her hometown, Grand Bay, AL, a Mr. Edward Seward, himself a whimsical gentleman who would go off to FL to buy fistfuls of lottery tickets and give them to his favored waitstaff (gambling being illegal in AL at the time), left her a ticket in a plain sealed envelope. Neither Mr. Seward nor anyone else knew the ticket was worth a lot more than I or the greatest number of my readers will ever see, in this world or the next. Like the aforesaid $10 million.

Tonda checked the number and had her Daddy confirm it: she was wealthy beyond the dreams of any but a Wall Street hedgefundie. Tonda claims she had an agreement with her family to split the proceeds of any such windfall, so she and Daddy, with the help of a local abogado, form an S Corp, hand out shares to the famiglia, and go off to FL to grab the booty.

Don’t be shocked, but Tonda’s fellow waitrons claim they had an agreement to split if ever Seward’s Folly hit, and try to enjoin FL from handing over anything to anybody. The waitrons win below, but ALSC (Alabama Supreme Court) tosses them, because contracts bottomed on gambling are illegal in Alabama, suh.

Then the inadvertent bestower of unguided largesse, Mr. Seward, demands a piece of the action, but he, too, is sent empty away, courtesy of ALSC.

So FL disgorges to Tonda et famille. Happy ending? Not so fast. Comes now Toya Sue Washington, Esq. Toya Sue, an attorney in the IRS Estate Tax Division, demands a 709 from Tonda. Tonda to Toya: no tax due. Toya to Tonda: wrong, bitsy, y’all owe Oncle Sam’l $771,570, plus interest. Gift tax, y’know.

Daddy files petition for Tonda, and we’re off to the races. Judge Wherry, under such delightful captions as “I. She’s Got a Ticket to Ride”, “II. Family Values”, “III. Inc.-ing the Deal”, “IV. Eye on the Booty” (good one, Judge!), “V. House of Waffling”, and “VI. Looking a Gift Horse in the Mouth”, unpacks the facts.

Now the humor ends. Tonda, while she may be a loyal child, can’t prove there was a contract to share. While the family were generous toward one another, there was no writing, no systematic chasing after lottery gold, and anyway the booty was split otherwise than equally this time, unlike the other times when there was joy to share.  And you did no business, so there was no partnership. In any case, the law of the Sovereign State of Alabama says it’s illegal to make contracts based on gambling, and that’s what got the Waffling Waitrons and the generous Mr. Seward tossed.

Pay up, Tonda.

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