Attorney-at-Law

LETTER TO THE EDITOR

In Uncategorized on 11/19/2013 at 19:27

The latest issue of our State’s Bar Association Journal carried a story with the fetching title “Jackson Estate Says, ‘Beat It, IRS’.”

I fired off a letter to the editor, but my e-mails kept bouncing because the e-address given is inactive.

So I posted this to the Association’s LinkedIn page. And if that doesn’t give it sufficient publicity, here it is again.

Sir, Robert W. Wood, Esq., is rather more sanguine than I about the outcome in Estate of Michael J. Jackson, Deceased, John G. Branca, Co-Executor and John McClain, Co-Executor v. Com’r., Docket No. 017152-13, in his article “Jackson Estate Says ‘Beat It, IRS’.”, Nov/Dec 2013.

While I haven’t any hard statistical evidence to give independent support to this conclusion, I must agree with James Edward Maulewho stated the case almost 15 years ago in Instant Replay, Weak Teams, and Disputed Calls: An Empirical Study of Alleged Tax Court Judge Bias, 66 Tenn. L. Rev. 351, 353, 401 (1999). According to Mr. Maule, the IRS rarely loses in Tax Court, opinions are rarely appealed (in Tax Court, an opinion states the law, or what non-Tax Court practitioners would call a decision; a Tax Court decision fixes the amount of tax due, if any, or what the non-Tax Court practitioner would call a judgment), and even if appealed, are rarely overturned in the Circuit Courts of Appeal.

Few courts see more valuation cases than Tax Court. And the sums involved run into the hundreds of millions. See, for example, Eaton Corporation (transfer pricing; arms’-length valuation), 140 T. C. 18, 6/25/13 ($368 million, plus interest); and the plethora of façade easement cases (e.g., Dunlap; Scheidelman; Gorra). Although Second Circuit did overturn Scheidelman I, taxpayer lost in Scheidelman II.

And of course a case that settled, but excited considerable interest in the art world, Estate of Ileana Sonnabend, Docket No. 649-12, which settled a $65 million deficiency for $1.3 million, the case of the prohibited eagle. There the issue for trial would have been the worth of a work of art that could not be sold, bartered or exchanged without incurring criminal penalties.

Moreover, Tax Court is no stranger to valuing a person’s image. See Retief Goosen, 137 T. C. 1, 6/9/11; cf. Sergio Garcia, 140 T. C. 6, filed 3/14/13. Garcia is interesting for its contrast with Goosen, a “global icon” as contrasted with a “brand image”.

I will await the outcome of Jackson with interest, but much less certainty than Mr. Woods’ article suggests.

The cases cited can all be found on the Tax Court website, www.ustaxcourt.gov. Use either the link for Opinion Search or Docket Search. Tax Court’s website is user-friendly.

 

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