Attorney-at-Law

Archive for May, 2014|Monthly archive page

THE WHISTLEBLOWER BLOWN UP

In Uncategorized on 05/20/2014 at 17:34

It’s Not As Remote As You’d Think

 Warning- this is a rant.

Two whistleblowers get to keep their anonymity, as Judge Kroupa casts the Cloak of Invisibility upon Whistleblower 10949-13W, 2014 T. C. Memo. 94, 5/20/14, and Whistleblower 11332-13W, 2014 T. C. Memo. 92, filed 5/20/14.

There’s a third whistleblower similarly protected by Judge Kroupa today, but the facts there differ sufficiently from the other two cases that I want to concentrate on those.

You sure you want to blow the whistle? It might be seriously hazardous to your health.

“During the whistleblower’s employment, the whistleblower learned of a tax structure involving the whistleblower’s employer and several related entities and subsidiary companies (targets). When the whistleblower raised concerns over the tax structure to the whistleblower’s employer, the whistleblower’s employer used physical force and armed men to intimidate the whistleblower and prevent disclosure. The whistleblower reported the tax scheme to the Government and for several years assisted the Government in its investigation of targets. Based partly on the whistleblower’s information, the Government eventually recovered more than $30 million in taxes, penalties and interest.” 2014 T. C. Memo. 94, at p. 2-3.

So why is the whistleblower in Tax Court? $30 million should yield him/her a nice return. Since Section 7623 allows at least a 10% bonus, $3 million bucks, even if taxable at ordinary rates, isn’t too shabby.

Except the whistleblower probably got the usual “we can’t tell you the reason to protect the privacy of the tax dodgers and their armed buddies, but the information was all public, or it didn’t help us, and anyway this isn’t a determination”. The opinion doesn’t say that, of course, but why petition for an extra couple of bucks if it means spilling your guts? And I mean literally spilling your guts.

So the whistleblower wants to test the validity of IRS’ stonewalling. But to do so, he/she needs to proceed anonymously.

Here’s why: “The whistleblower was aware that the Government investigated targets for potential ties to terrorist groups. Additionally, Department of Justice attorneys informed the whistleblower that targets were connected to organized crime and terrorism and could resort to physical force or harm in connection with their activities. The whistleblower received a death threat from one of the targets through its counsel. On one occasion the whistleblower used armed guards for safety when the whistleblower traveled abroad. Additionally, targets have lodged numerous litigation threats against the whistleblower relating to the whistleblower claims.” 2014 T. C. Memo. 94, at p. 3.

You want more? “The whistleblower asserts that revealing the whistleblower’s identity would result in the risk of retaliation, social and professional stigma, economic duress and personal safety. Specifically, the whistleblower asserts that disclosing the whistleblower’s identity will result in professional stigma and impair the whistleblower’s livelihood by alienating the whistleblower’s potential clients and business contacts. Finally, the whistleblower asserts that the whistleblower is of an age and station in life that necessitates continued employment. The whistleblower filed the motion to proceed anonymously at the same time the whistleblower filed the petition.” 2014 T. C. Memo. 94, at p. 4.

IRS filed no notice of objection to the motion. Big of them, ya think?

Judge Kroupa: “In short, the nature and severity of potential harm that could befall the whistleblower outweigh the societal interest in knowing the whistleblower’s identity.” 2014 T. C. Memo. 94, at p. 6.

2014 T. C. Memo. 92 is even more interesting.

“After learning that the whistleblower was subpoenaed to provide documents to the Government, targets filed multiple retaliatory actions against the whistleblower to determine the whistleblower’s role in the investigation and to silence the whistleblower. The whistleblower incurred significant personal expense, spent time and suffered professional reputational costs defending against these actions that were designed to intimidate and threaten the whistleblower.” 2014 T. C. Memo. 92, at pp. 3-4.

Now get this: “After learning of the individuals and entities involved, the Government offered to place the whistleblower in the witness protection program. The whistleblower declined placement in the witness protection program, but requested and was granted confidential informant status. The whistleblower was also forced to hire counterterrorism experts to advise the whistleblower’s family on safety and protect the whistleblower on trips abroad. This protection cost the whistleblower tens of thousands of dollars. Despite their efforts, targets have not discovered the identity of the whistleblower. They were aware only that the whistleblower was subpoenaed by the Government.” 2014 T. C. Memo. 92, at p. 4.

Leaving aside the fact that if the bandits are not terminally stupid, they’ve figured out who the whistleblower is from this public discussion of the case, I must ask why this person has to go to Tax Court, if he handed the IRS enough to nail these crooks for $30 million.

These opinions should have been sealed, for a start. More to the point, they should never have had to be written.

Exactly what is the Whistleblower Office doing out there, besides watching the Ogden, Utah sunset?

So what’s the point?

If you try to help the IRS collect, and your information gets them $30 million they’d have had no way of getting otherwise, and you have to tell your life story in Tax Court (so there’s an opinion for the world to read), you’re risking your life, and your family’s life, for nothing.

Great public policy, ya think?

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“IT AIN’T OVER TILL IT’S OVER”

In Uncategorized on 05/20/2014 at 16:42

No, not Lenny Kravitz nor Marlo Thomas, nor even that philosopher of the diamond Lawrence Peter Berra, but rather STJ Daniel A. (“Yuda”) Guy, who tells that to Alexander Herwig and Jennifer K. Herwig in 2014 T. C. Memo. 95, filed 5/20/14.

Alex and Jenn were investors in the Great Florida Real Estate Boom that so thoroughly disintegrated in the mid-2000s. Their LLC borrowed from the strangely-named Cincinnati bank known as Fifth Third (“The Curious Bank”), a lender whose name apparently arises from a merger of the Fifth National Bank with the Third National Bank, with spouse and spouse taking both names.

Howbeit, Fifth Third forecloses upon Alex’s and Jenn’s LLC. But Alex and Jenn put in counterclaims (alleging exactly what is unclear), despite which Fifth Third gets its foreclosure sale and takes back the property (dropping a 1099-A, Acquisition or Abandonment of Secured Property, on the LLC, which passes right through to Alex and Jenn).

Alex and Jenn say that the foreclosure sale is the end of the (now admitted, but formerly disputed) passive activity of renting the now-foreclosed real estate. And if it wasn’t, two years later the LLC filed a 1065 marked “Final Return”, so that was the date the activity ended.

Nope, says IRS, you carried the real estate on your next two years’ tax returns, so the foreclosure sale didn’t end the activity, and besides, you didn’t settle the ongoing litigation with Fifth Third (your counterclaim, whatever it was, and Fifth Third’s claim for a deficiency judgment) for another year.

At best, you weren’t finished until then. Likewise, no triggering of suspended passive losses against the cancellation of debt income from the foreclosure. And STJ Yuda agrees.

Although a foreclosure sale is generally (love that word) a disposition, or the end of the activity, except it isn’t when the foreclosed-upon taxpayer is appealing the judgment of foreclosure, and a final determination from the appellate court hasn’t happened. And the end for Alex and Jenn wasn’t until the settlement.

Saying something on a return is a statement of claim only, and doesn’t preclude IRS from challenging anything in any return.

Alex and Jenn didn’t themselves testify on the trial, and the only evidence they put in was an exhibit (particulars not stated). Their attorney tries to claim on the trial that Alex and Jenn never deeded the real estate into the LLC, but as they hadn’t raised that in their petition, or any amendment, or pretrial memo, that’s a loser.

And by not testifying or putting in reliance or good-faith-investigation evidence, Alex and Jenn are sitting fowl for the 20% negligence chop.

They might have a loss carryforward from the year they settled with Fifth Third, but that’s not before the Court.

“GET BACK TO WHERE YOU ONCE BELONGED”

In Uncategorized on 05/19/2014 at 18:01

No, not Sir Paul McCartney’s injunction to Jojo (whoever he was) on the Let it Be album that signaled the break-up of the Fab Four, but rather Judge Nega knocking out Marvin E. DeBough’s Section 121 exclusion when Marv took back his former principal residence from his welshing installment-plan contract vendee.

Read all about it in 142 T. C. 17, filed 5/19/14.

Marv and spouse bought the homestead in 1966, and Marv and spouse unloaded forty years later for a huge capital gain. They took the Section 121 $500K exclusion on the Year One cash, and did a Section 453 installment sale for the rest.

Spouse deceased in the interim, and Marv got a stepped-up basis thereby. But then the purchasers defaulted on the contract for deed (what we call a land sale contract), and Marv took back the property.

Marv reports all his gain on the sale over the course of years that the purchaser paid up, but not the $500K exclusion, claiming Section 1038 (reacquisition of property sold on installment) doesn’t trump Section 121. And Marv didn’t resell within a year after reacquisition, so no triggering of Section 1038(e), which would have given Marv an explicit bye.

Marv argues that Congress should have expressly nullified Section 121 if they intended that any repossession of a principal residence sold on the installment method would require recognizing the $500K excluded, if the property weren’t resold within one year.

But, say IRS and Judge Nega, Section 1038 expressly deals with reacquired installment sale property, and Section 1038(e) is the only safe harbor.

The aim is to put the selling principal resident back to where he once belonged, as Sir Paul so eloquently put it. And that means paying tax on whatever he didn’t pay tax before, unless he slides under the one-year tag.

Judge Nega: “Sellers fulfilling the requirements of section 1038(e) are essentially allowed to collapse the initial sale and subsequent resale into one transaction. The legislative history behind the section 1038(e) exception is unclear as to why Congress limited the exception to sellers who resell property within one year of reacquisition. Whatever the reasoning behind the exception, the relief offered by section 1038(e) is clearly limited to those sellers who resell their principal residences within one year of reacquisition. Since petitioner did not resell the property within one year of reacquisition, he is ineligible for the section 1038(e) exception and must recognize gain in accordance with the general rules of section 1038.” 142 T. C. 17, at p. 15.

Judge Nega sees nothing unfair in taxing Marv on his $500K exclusion, as he would be better off after the reacquisition, and the aim is to put him back where he was before the sale was made.

Get back, Marv.

MEIN! WAS IST DAS?

In Uncategorized on 05/16/2014 at 16:57

Richard Wagner fans will remember the outraged outburst of the Meistersinger von Nürnberg in Act III, Scene V of the “song in praise of song”. I myself cited it in my blogpost “Va T’En, Enfants de la Patrie”, 4/2/14, when befogged by the totalization agreement between France and the United States of America.

But Judge Marvel wants enlightenment from petitioner and IRS on an interesting question, which so far as Judge Marvel and I know has never been decided. And she asks “was ist das?” in Ralim S. El, Docket No. 19012-12, filed 5/16/14.

”Das” is the Section 72(t) 10% chop for early retirement withdrawals. OK, the statute says that, if a taxpayer gets an early distribution “…the taxpayer’s tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross income.” Section 72(t)(1).

But while the taxpayer’s tax is increased, is the increase a “penalty, addition to tax, or additional amount”? And why should Judge Marvel care?

Well, first because there’s no evidence how old Ralim was when he (or she) got the distribution.

OK, that’s no problem. But who has to prove how old Ralim was?

Enter Section 7491(c), and that’s why Judge Marvel (and I) wants enlightenment.

Section 7491(c) says that “(N)otwithstanding any other provision of this title, the Secretary [IRS] shall have the burden of production in any court proceeding with respect to the liability of any individual for any penalty, addition to tax, or additional amount imposed by this title.”

Therefore, if the 10% chop is one of the Section 7491(c) three, there’s a burden on IRS to show something about how old Ralim was on the date in question.

So, IRS, which is it? Or is the answer “none of the foregoing”? And why?

And Ralim, you get a chance to reply.

Stay tuned.

 

IT’S TOO LATE BABY, NOW IT’S TOO LATE

In Uncategorized on 05/15/2014 at 16:43

Carole King’s 1971 lament echoes for Amazon.com Inc. & Subsidiaries, Docket No. 311997-12, filed 5/15/14, as Judge Lauber shuts down Amazon.com and friends when they try to wild-card a change in their RAB from a Revenue RAB to a Gross Profit RAB on the eve of trial, by way of a motion to amend their petition.

For those unfamiliar with offshoring profits to captive subs and increasing deductions to onshore parents, take a look at Reg. 1.482-7A. When Amazon.com and its playmates entered into their qualified cost sharing arrangement (QCSA) nine years ago, the Reg. was 1.482-7, but the changes made by the shift don’t affect the years at issue.

The Reg. allows a menu of methods for determining the share of expenses allocated to the onshore and offshore components (and thus deductions arising from shared costs). Those are called Reasonably Anticipated Benefits (thus RAB). Deductions follow what goodies each party to the QCSA expects to get out of the deal, and they must “buy-in” to the deal based on the FMV of what intangibles they are contributing.

Amazon.com didn’t pick one explicitly at the get-go, but Judge Lauber finds they were using Revenue RAB when the deal was done.

And both Amazon.com and its playmates, and IRS, always went with Revenue RAB from the beginning nine years ago until last year, when Amazon.com and its playmates decided that Gross Profits RAB was the way to go, and earlier this year amended their QCSA so to state.

Judge Lauber sorts out the contentions: “Petitioner contends that this amendment is appropriate because the Gross Profit RAB is superior to the Revenue RAB and because “[a] controlled participant’s anticipated benefits must be measured on the most reliable basis, whether direct or indirect.” See Treas. Reg. § 1.482-7(f)(3)(ii). Petitioner alleges that switching to the Gross Profit RAB as the formula for allocating development costs would decrease its taxable income for 2005-06 by $27.8 million. Respondent has informed the Court that ‘at no time before March 7, 2014, did petitioner indicate even informally that its Revenue RAB tax reporting was incorrect or that it was reconsidering its position on RAB shares.’” Order, at p. 3.

And Amazon.com and playmates haven’t said whether they’re amending their “buy-in” price for the intangibles contributed.

Judge Lauber isn’t impressed with this audible at the line of scrimmage: “Petitioner seeks to revise its RAB formula for 2005-06 eight years after those years ended and 15 months after it filed its petition. We agree with respondent [IRS] that petitioner’s delay in raising this issue is unjustified. On occasion, we have allowed a party to raise a new matter despite prejudice to the opposing party upon a showing of good cause for the delay, for example, where the party seeking to amend lacked an opportunity to raise the matter sooner.” Order, at p. 4.

But Amazon.com and playmates say they reach the Gross Profits RAB conclusion by examining data they had in 2005-2006. So, says Judge Lauber, if you had it, what were you waiting for?

“The Court also finds that allowing petitioner to raise this issue now would unfairly prejudice respondent. This case involves complex, fact-intensive issues that the parties anticipate will take a month to try. Discovery is nearing completion, and trial is set for November 3, 2014. During the examination phase, the IRS accepted the Revenue RAB, and petitioner repeatedly reaffirmed it. As a result, respondent has neither prepared for trial on this issue nor conducted discovery concerning it. Respondent had no reason to anticipate that petitioner would attempt to discard its Revenue RAB at this late stage of trial preparation.” Order, at p. 5 (Citations omitted).

Amazon.com and playmates claim only minimal discovery would be needed, but Judge Lauber buys into IRS’ argument that it would be a whole new ballgame, involving complex economic, regulatory and factual issues, and might even need expert testimony.

So Amazon.com and playmates, play it as you started it. It’s too late baby.

EVEN IF YOU COVER YOUR REAR

In Uncategorized on 05/14/2014 at 17:18

It won’t help you. That’s Judge Goeke’s lesson to Logan M. Chandler and Nanette Ambrose-Chandler, in 142 T. C. 16, filed 5/14/14.

Strike up the band, Sir Billy Walton, and shout it out, Dame Edie Sitwell, it’s time for more Façade.

Logan and Nanette owned two buildings in Boston’s now-ritzy South End. They sold one, but had put historic façade easements on both, and claimed heavy-duty Section 170 charitable deductions for both. They even followed the advice of the National Parks Service, who were advocating this sort of thing. IRS agreed they followed the rules, except that their appraisal didn’t prove either building lost any value.

Note that the vendor of these dodges, our old chums National Architectural Trust (NAT) provided surveillance (which Boston’s own municipal landmarks authority didn’t do, the Beantown landmarkniks relying on local whistleblowers), annual inspections to make sure the properties remained in their original state, and had an easement that covered the rear as well as the façade.

See my blogpost “Cover Your Rear”, 11/12/13.

No dice, says Judge Goeke. “We must determine the value diminution resulting from these additional restrictions. We recently performed this analysis under identical circumstances. In Kaufman v. Commissioner, T.C. Memo. 2014-52, we reviewed a NAT easement on a property in the South End Historic District. There we determined that the differences outlined above do not affect property values, because buyers do not perceive any difference between the competing sets of restrictions. Id. at *57. We see no reason to break with that result here. Mr. E’s report, which petitioners exclusively rely on to demonstrate their easements’ values, was not credible. Respondent has persuasively argued that a typical buyer would perceive no difference between the two sets of applicable restrictions here. We recognize technical differences between the easements and local law, but we agree with respondent’s conclusion that the restrictions were practically the same. Because petitioners have not proved that the easements they donated had value, we sustain respondent’s disallowance of the charitable contribution deductions they claimed.” 142 T. C. 16, at pp. 19-20 (name omitted).

Now since the deductions were greater than would be allowed to offset taxable income in any one year, Logan and Nanette spread them over three years. IRS wants the 40% chop for all, but Logan and Nanette argue they have reasonable cause, and the drop in overvaluation from 400% to 200% in 2006, and the elimination in that year of a good faith defense, cannot be applied retroactively.

Judge Goeke blows retroactivity away: “Under either version of section 6662(h) the valuation misstatements are ‘gross’ and trigger the 40% penalty. However, the facts raise a novel issue concerning petitioners’ right to raise a reasonable cause defense for their 2006 underpayment. Petitioners note that a portion of the underpayment resulted from the carryover of charitable contribution deductions they first claimed on their 2004 return, which they filed before the PPA’s effective date. Accordingly, they argue, denying their right to raise a reasonable cause defense would amount to retroactively applying the PPA [Pension Protection Act, which changed the rules].” 142 T. C. 16, at pp. 24-25. “When taxpayers file a return that includes carryforward information, they essentially reaffirm that information. The amended reasonable cause rules were in effect when petitioners filed their 2006 return, which reaffirmed the … easement’s grossly misstated value. Applying those rules does not amount to retroactive application. The plain language of the statute makes the rules applicable for all returns filed after July 25, 2006. Petitioners filed their 2006 return after that date and consequently may not raise a reasonable cause defense for their 2006  underpayment, which resulted exclusively from gross valuation misstatements.” 142 T. C. 16, at pp. 25-26.

Notwithstanding the foregoing, as my high-priced colleagues would say, Judge Goeke lets Logan and Nanette off the penalty for the two years when reasonable cause was a defense to the 40% chop. Logan is a lawyer and an MBA, and Nanette is a self-employed interior decorator. But that doesn’t mean they know about valuing easements.

Most people can form some hazy idea of the value of regular real estate, but even the experts come seriously unglued when it comes to historic façade easements (and how!). After all, Judge Goeke bounced both Logan’s and Nanette’s appraiser and IRS’ appraiser, finding fault with both. And Logan and Nanette followed the National Parks Service guidelines. Unlike the Kaufmans in the cited case (and in my blogpost “A Joy Forever? Not Hardly”, 3/31/14), neither Logan nor Nanette evinced the misgivings that sent Gordo Kaufman to ask Mory Bahar of NAT whether the easement would really depress the value of Lorna’s mansion, and get the reply that sinks the Kaufmans without trace.

So Logan and Nanette avoid two years’ worth of 40% chop, but get nailed for the last. Looks like covering your rear is insignificant when facades are in play. at least in Judge Goeke’s courtroom. Hit it, Edie and Sir Billy!

REUNION

In Uncategorized on 05/13/2014 at 18:08

My sister is going to her 50th college reunion soon, and it seems like yesterday I was at her graduation.

So, since it’s getting toward college graduations and reunions, I see The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being and implacable foe of the partitive genitive, His Honor Mark V. Holmes, is hosting his own reunion of familiar faces from my past few years of blogging. It’s all about The Markell Company, Inc., 2014 T. C. Memo. 86, filed 5/13/14.

We have a family PHC, holding a ton of stock with built-in gain (remember the late Helen P. Richmond and her hapless executrix Amanda Zerbey? Well, see my blogpost “Win Your Case” , 2/11/14); we have The Skull Valley Band of the Goshute Indians and their one-time tribal chairman Leon Dale Bear (“Chair Bear” to Judge Holmes), innocent bystanders (but see my blogpost “Don’t Ambush The Indians”, 4/7/11); and starring in this drama is none other than the Great Immunologist, James (“Little Jim”) Haber, CPA, mixmaster of digital European-style options which produce monumental paper losses.

We get all of Little Jim’s prior appearances here, from Ironbridge to Humboldt Shelby, with glances at Getting Shifty and Immunology.

And there are cameo appearances by James Rogers of Superior Trading fame, and Refco, the options dealer that went belly-up amidst allegations of massive fraud.

Historic Boardwalk Hall has a walk-on role as a non-existent partnership (like the one masterminded by Little Jim), supported by Jimastowlo Oil, LLC.

Little Jim grapples the Fifth Amendment to his soul with hoops of steel, with Judge Holmes’ blessing, but adverse inferences can be used in civil proceedings, and much adversity follows Little Jim’s Constitutional stroll.

The partnerships and maneuverings (with three diagrams to show the wheeling-and-dealing) have but one aim–tax avoidance. No business was done, just a single in-and-out basis-builder, matching long and short to zero out economically, but using the old Section 752 dodge to build basis and cover the built-in gain on the sale of all that stock Grandpa had stashed all those years ago.

Judge Holmes does give retroactive application to Section 1.752-6T, the loophole plugger subsequently made permanent, relying on Section 7805(b)(6) and various court cases, although these don’t uniformly support retroactive application. Moreover, Judge Holmes finds Congress gave Treasury explicit authority to apply the loophole plugger retroactively. For one case not applying the loophole plugger retroactively, see my blogpost “Woodshedding Your Experts – Stobie Creek Part Deux”, 1/10/11

So no partnership, but plenty of tax, and a 40% substantial overvaluation chop.

AND NOW FOR SOMETHING COMPLETELY DIFFERENT – REDIVIVUS

In Uncategorized on 05/12/2014 at 18:11

Nothing exciting from Tax Court, Treasury or IRS today, and even if there had been, my mind is elsewhere. Arrived this morning 5/12/14, at 9:22 a.m., CDT, my granddaughter Natasha.

Image

 

THE PRICE OF INACTION – PART DEUX

In Uncategorized on 05/09/2014 at 17:14

Well, in the words of the old Toyota commercial, “you asked for it, you got it”; I wanted some good designated hitters, and The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, Mark V. Holmes, delivers one.

And it’s a one-sentence course in standard of review out of a NOD from a CDP. See infra, as my two-yacht colleagues would say.

Mark Melfa, Docket No. 17536-11L, filed 5/9/14, sets the stage. And Mark the petitioner (hereinafter “MTP”, to distinguish him from Mark The Judge, hereinafter “MTJ”) sets the stage by doing nothing until he gets to Tax Court, whereat he claims (a) he never got the chance to contest the underlying liability, so he’s entitled to de novo review, and (b) he was entitled to a face-to-face at the CDP.

Well, MTP obviously never read my blogpost “Stipulate, Don’t Capitulate”, 9/23/11, or either of my two follow-ups, “Stipulate, Don’t Capitulate – Part Deux”, 5/24/13, and “Stipulate, Don’t Capitulate – Redivivus”, 9/19/13, because he and IRS stipulate that the administrative record is true and complete.

Of course, the admin record sinks MTP. Here’s MTJ: “Mr. Melfa now argues that he didn’t receive any notice of deficiency. His problem is that when his case was before the IRS, he not only didn’t put that argument on his Form 12153 (the official IRS CDP-hearing request form), which is an informal administrative pleading, but he never once in the administrative record as a whole asserts anything other than that “I do not recall ever receiving a statutory notice of deficiency . . . .” Letter from Mark Melfa to IRS Memphis Appeals Campus (June 10, 2011). We cannot fault the officer for not responding to an unmade argument.” Order, at p. 2 (Citation omitted).

Now we know that non-receipt of a SNOD doesn’t help for the 90-day limit on petitioning the deficiency, if same was properly and provably mailed to last-known address. But it does help on a CDP, as non-receipt is a basis for de novo review of the underlying liability. Except “(M)r. Melfa didn’t put his supposed nonreceipt into his request for a CDP hearing, didn’t attend that hearing, and didn’t even mention it in any of his correspondence with the officer who ran the hearing.” Order, at p. 3.

And he stipulated to the administrative record. Game over on that one.

That leaves face-to-face. But face-to-face isn’t required by law or regulation or the IRS Manual.

“The regulation [Sec. 301.6330-1(d)(2) A-D8, Proced. & Admin. Regs.] says that a taxpayer who challenges his underlying tax liability with irrelevant or frivolous issues doesn’t get a face-to-face hearing…; we see no error, and no abuse of discretion, in similarly denying a face-to-face hearing to someone who raises no issues about liability at all.” Order, at pp. 3-4.

The one-sentence gem in all this? Standard of review when abuse-of-discretion is in play: MTJ: “A handy shorthand for abuse-of-discretion review is that it looks for an error of law, a clearly erroneous finding of fact, or an irrational chain of reasoning.” Order, at p. 3.

How’s that for a gem? You can use it in all of your memoranda of law, free of charge.

“AND WASTE ITS SWEETNESS ON THE DESERT AIR”

In Uncategorized on 05/08/2014 at 16:37

Ol’ Tommy Gray, son of a scrivener, got it right in his 1751 masterpiece. There’s a lot of blushing flowers in Tax Court, legal and practical roses wasting their sweetness amidst the daily dross of orders.

Now there is a way a Judge can rescue these gems of purest ray serene from the dark unfathom’d caves of the Orders link on the Tax Court website.

They can elevate these to designated hitter status, by the simple act of tipping off the hard-laboring clerks at 400 Second Street, N. W., directing the said clerks to ennoble their coruscations above the common herd.

And some Judges do. STJ Lewis (“Love That Spelling”) Carluzzo is a great exponent of the designated hitter, sometimes overdoing it in his zeal to help his homonymical pal here at the blogger’s keyboard. And Judge Gustafson, whose off-the-benchers are often illuminating, will send up a smoke signal when he’s delivered something useful.

But too many Judges are wont to issue orders to fortune and to fame unknown. And I’ve blogged these.

By patient and unremunerated toil, I’ve waded through multitudinous seas, if not exactly incarnadine then murky with the silt stirred up by Judge Holmes’ colleagues, reading volumes of “the Court held a conference call with the parties to the above-docketed cases. During the call, the parties represented that they would be submitting a stipulation of settled issues shortly.” And “ORDERED that, on or before May 22, 2014, petitioner shall file a response to respondent’s motion to dismiss for lack of jurisdiction and to strike as to the taxable year 2006.” Soporific isn’t the word for it.

I’m rather like the pig who hunts out the truffles, rootling round in the underbrush until my snout picks up the sweetness in the desert air, unearths that gem of purest ray serene aforesaid, and deposits same on the Internet, to the delectation of the battle-weary, hard-bitten, in-the-trenches practitioner.

It’s a tough job, but somebody has to do it.

Thanks for reading.