Nancy Louise Field tries telling  Tax Court not to play favorites, but Judge Thornton isn’t joining Nancy Lou’s Constitutional parade in 2013 T. C. Memo. 111, filed 4/18/13.

However, Judge Thornton has that message for Kenneth J. Taggart in 2013 T.C. Memo. 113, filed 4/18/13.

Ladies first, so here’s Nancy Lou’s story. “On July 16, 2008, petitioner and her husband, who is petitioner’s counsel of record, were married. They did not live apart during the last six months of 2009. On her 2009 Federal income tax return petitioner claimed a status of married filing separate and claimed that under section 23(a) she was entitled to a qualified adoption expense credit of $10,144, which exactly offset her reported tentative tax of the same amount.” 2013 T.C.Memo. 111, at p. 2.

The only thing wrong is that one must be in married filing jointly status to take the Section 23(a) credit; see Section 23(f)(1).

When IRS gigs Nancy Lou, she yells “denial of equal protection”. “She alleges that before she married in 2008 she adopted 15 children, that her husband has never adopted any of these children, and that for all practical purposes she has been their only support. Petitioner contends that the effect of the joint filing requirement is to penalize her for having married in 2008. She contends that in ‘this unique situation of hers * * * she should be treated as * * * unmarried’.” 2013 T.C.Memo. 111, at p. 4.

Give her attorney-husband John M. Mooney, Jr., a round of applause. With 15 adopted kids and another rounding third and heading for home, John M. is a man among men for signing aboard.

Judge Thornton: “The Supreme Court recently reiterated its longstanding holding that ‘‘a classification neither involving fundamental rights nor proceeding along suspect lines * * * cannot run afoul of the Equal Protection Clause if there is a rational relationship between the disparity of treatment and some legitimate governmental purpose.’’ See Armour v. City of Indianapolis, __ U.S. __, __, 132 S. Ct. 2073, 2080 (2012) (quoting Heller v. Doe, 509 U.S. 312, 319-320 (1993)).” 2013 T.C. Memo. 111, at pp. 4-5.

The burden Section 23 imposes, Nancy Lou, is tangential, and doesn’t impermissibly interfere with your getting married or adopting as many children as you wish.

“A tax classification is ‘constitutionally valid if “there is a plausible policy reason for the classification, the legislative facts on which the classification is apparently based rationally may have been considered to be true by the governmental decisionmaker, and the relationship of the classification to its goal is not so attenuated as to render the distinction arbitrary or irrational.’” 2013 T. C. Memo. 111, at pp. 5-6 (Citation omitted).

Nancy Lou’s claim that she got away with the married filing separately dodge in another year doesn’t help, as each tax year stands upon its own.

Nancy Lou, meet Navajo tribal elder Lucy Gabey, the star of my blogpost “Losing My Religion”, 1/17/13. Congress can play tax favorites with adoptions.

Now for KenTag and 2013 T. C. Memo. 113. KenTag is fighting a NFTL, lost in Appeals and petitions timely. The underlying taxes are those he himself reported but didn’t pay, so KenTag gets no second bite at the apple.

KenTag has numerous arguments why IRS should not be allowed to lien on him, but they all founder on the fact that while KenTag owed $60K in tax, he refinanced two properties he owned, pulled out cash in excess of $60K, and paid creditors ahead of IRS. He paid IRS nothing.

IRS gets rightly peeved, and accuses KenTag of dissipation. “A dissipated asset, defined as any asset that has been sold, transferred, or spent on nonpriority items or debts in disregard of an outstanding tax liability, may be included in a taxpayer’s RCP. The record indicates that during the Appeals hearing petitioner failed to show that he used the dissipated assets for necessary living expenses so as to make them excludable from RCP. Nor, despite his assertions to the contrary, has petitioner made any such showing in this proceeding.” 2013 T. C. Memo. 113, at pp. 13-14. (Citations omitted).

So KenTag, pay in full.

In short, Nancy Lou and KenTag, Congress can play favorites when it comes to tax, but taxpayers can’t.