In Uncategorized on 11/18/2013 at 19:11

And Maybe Woodshedding Your Client

I’ve often discoursed about the need to woodshed your experts: sweat them, find the sweet spot in your case that they must prove, and learn as much of their specialities as you can in the limited time you have.

But what happens when your expert refuses the jump?

That’s the problem in Estate of Diane Tanenblatt, Deceased, Roy L. Greenbaum, Personal Representative, 2013 T. C. Memo. 263, filed 11/18/13. And Judge Halpern isn’t sympathetic.

The Late Diane was (or maybe not) a member of a NY LLC that owned a fully-rented commercial building in the Ladies’ Mile section of Manhattan. But Diane’s stake was a distinct minority, and she couldn’t sell without all the other members’ consents. So Roy values her piece at $1.78 million on the 706, but gets audited and is unhappy with the result.

IRS’ expert comes in enough higher to give the estate a $309K deficiency. The issue of course is the discount for minority and for lack of transferability.

Roy petitions and attaches to his petition a new appraisal (called Tindall), to which he wants IRS to stipulate. IRS only agrees that something is attached to the petition, but they can’t say whether Roy obtained it, or anything else about it.

“Petitioner’s path for attempting to introduce the Tindall appraisal into evidence as expert testimony is, to say the least, unusual. Generally, a party obtains the testimony of an expert witness by calling that witness to testify. See Rule 143(g)(1). Pursuant to that Rule, the expert witness must prepare a written report, which is marked as an exhibit and, after having been identified by the witness and adopted by him, received into evidence as his direct testimony unless the Court determines that the witness is not qualified as an expert. The Rule further provides that, not less than 30 days before the call of the trial calendar on which a case appears, a party calling an expert witness shall serve on each other party and submit to the Court a copy of the expert’s report. Finally, the Rule also provides that, generally, we will exclude an expert witness’ testimony altogether for failure to comply with the Rule. Those requirements are echoed in our standing pretrial order, which was served on petitioner.” 2013 T.C. Memo. 263, at pp. 10-11.

Sounds rather like Sir Paul McCartney’s 1969 hit “She Came In Through the Bathroom Window”, rather than through the front door.

So why not follow the Rule?

Well, counsel had a good reason, responding to IRS’ motion to preclude Tindall: “Petitioner had filed no response to respondent’s motion in limine, and, at the hearing, in response to the Court’s question as to whether petitioner was just relying on his own motions (with respect to stipulating the Tindall appraisal into evidence), petitioner’s counsel candidly responded: ‘Probably. Your honor, because right now my client’s in a fee dispute with the appraiser, so right now I cannot get the appraiser to come in and testify.’ Apparently, counsel’s time is less dear than was Dr. Tindall’s.” 2013 T. C. Memo. 263, at p. 11.

Time to woodshed the client? With $309K on the table, might be well to consider whether Tindall might not be worth the extra.

Because Judge Halpern is the gatekeeper, charged with letting in evidence per the rules, both the Tax Court rules and the FRE.

“Petitioner did not call Dr. Tindall as a witness but asks us to rely on her report (which, under our Rules, would serve as her direct testimony) as her expert opinion. Petitioner has neither qualified Dr. Tindall as an expert entitled pursuant to rule 702 of the Federal Rules of Evidence to give her opinion on technical matters nor has he satisfied our procedural rules for expert testimony, found in Rule 143(g) and in our standing pretrial order. In other words, petitioner has failed to satisfy the preconditions for our receiving Dr. Tindall’s opinion into evidence. Because her report (i.e., the Tindall appraisal) is not in evidence, we may not consider her opinion.” 2013 T. C. Memo. 263, at p. 19-20.

There’s a lot more about IRS’ expert’s appraisal, but the game is over when Tindall refuses the jump.

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