No opinions or designated orders out of Tax Court today, 5/14, so I was going to take the day off. But I thought I’d give my loyal readers something, and there was that opinion filed 5/13/13 by The Judge Who Writes Like a Human Being, a/k/a The Great Dissenter, His Honor Mark V. Holmes, Edmond Audrey Heinbockel and Lydia Rose Heinbockel, 2013 T. C. Memo. 125, filed 5/13/13.

Now I skipped those 76 pages of Judge Holmes’ colloquial prose yesterday in favor of Alexander (the Friend) Salvagno (see my blogpost “Quo Usque Tandem Abutare, Alexander, Patientia Nostra?”, 5/13/13) and Judge Kerrigan’s three-page exegesis of the life and miracles of Raul and his next friend son Alexander.

And the tale of E. Audrey and Lydia is the usual story of want-of-documentation, hobby-disguised-as-business (Section 162 meets Section 183) with Section 274 thrown in, and self-serving trial testimony, so that there’s really little to “long detain the tourist”, as Michelin (or was it Baedecker?) used to say.

But for want of better subject for a rant, I again deplore Judge Holmes’ war on the partitive genitive: c’mon Judge, a Harvard Law graduate perpetrating solecisms like “making a couple loans to one’s brother” (2013 T. C. Memo. 125, at p. 32), and “no more than a couple hundred dollars“ (2013 T. C. Memo. 125, at p. 57) crosses the line from colloquial to illiterate.

Do you ask for  “a cup coffee” or “a piece cake”, at the Tax Court cafeteria?

And y’all are capable of better, as witness your dissents in  Randall J. and Karen G. Thompson, 137 T. C. 17, filed 12/27/11(see my blogpost “The Great Dissenter”, 12/28/11), and Tigers Eye Trading, LLC, Sentinel Advisors, LLC, Tax Matters Partner, 138 T. C. 6, filed 2/13/12 (see my blogpost “The Great Dissenter – Part Deux”, 2/15/12).

Now to the opinion. One point worth noting is the burden of proof shift where new matter is introduced, an anti-ambush provision.

Judge Holmes: “After a case has begun, Rule 142(a) places the burden on the Commissioner ‘in respect of any new matter, increases in deficiency, and affirmative defenses, pleaded in the answer.’ However, we distinguish between new matters and new theories. See Hurst v. Commissioner, 124 T.C. 16, 30 (2005). ‘[W]e have held that for respondent to change the section of the Code on which he relies does not cause the assertion of the new theory to be a new matter if the section relied on is consistent with the determination made in the deficiency notice relying on another section of the Code.’ Id. (citation and internal quotation omitted). A ‘new matter’ is one that reasonably would alter the evidence presented. A ‘new theory,’ in contrast, is just a new argument about the existing evidence. Id. Although the notice of deficiency challenged virtually all of Collective Flight’s 2007 expenses, proof that a business is engaged in for profit is reasonably likely to require the presentation of evidence different from that required to prove that expenses should be allowable because they’re ordinary and necessary. We give the benefit of the doubt to the Heinbockels here, and construe the Commissioner’s new argument for 2007 as a new matter (not just a new theory), and therefore shift the burden to him for that year.” 2013 T. C. Memo. 125, at pp. 19-20.

Doesn’t much matter, though; E. Audrey and Lydia get some deductions, but most of what they claimed gets shot down. I won’t tease it all out, but read the extracts of their testimony Judge Holmes quotes, especially Lydia’s.

As the great trial lawyer Henry Miller has said, “when the witness’ testimony sends your client’s case down the drain, smile your most winning smile, as if this is just what you wanted to hear.” It beats putting your head down on the counsel table and sobbing loudly.