In Uncategorized on 05/18/2015 at 15:10

This political lament has been oftentimes moaned abroad, but today we see two examples of judicial activism that get the attorneys focused.

First up, Judge Laro, for the June 1 Calendar Call on that Outlying Island off the Coast of North America, whereon I reside and at which I will eagerly attend.

And Judge Laro wants to concentrate the minds of counsel wonderfully in Guidant LLC f. k. a. Guidant Corporation, and Subsidiaries, et al., filed 5/18/15, with a bushelbasketful of Docket Nos., but you can use 5989-11 for short.

Guidant claims IRS’s eight (count ‘em, eight) notices of deficiency are arbitrary, capricious and unreasonable.

Judge Laro encapsulates the various contentious contentions thus: “Petitioners assert that the applicable regulations require that respondent make specific adjustments to the income of each affected member of the controlled groups at hand and that the adjustments be made in accordance with each type of transaction. Respondent essentially asserts that the regulations require that he use the most reliable method under the facts of these cases and that a method, to be reliable, need not always be applied separately to each member or to each type of transaction.” Order, at p. 1.

In short, did IRS misapply Section 482 and the regulations in nailing Guidant, its family and friends for the deficiencies at issue?

Starting right after lunch, Guidant and IRS each have an hour to duke it out (45 minutes straight and 15 rebuttal).

And to help keep them focused, Judge Laro has given them seventeen (count ‘em, seventeen) paragraphs of questions, comments, citations to cases and regulations, and food for thought.

Here’s just a sample: “5. Petitioners are essentially asking the Court to construe the regulations as setting forth procedures that respondent must follow in every audit of a consolidated group. Respondent essentially argues that he must follow a reasonable approach in making adjustments to the group and that the reasonableness of respondent’s adjustments rest on the unique facts of each case. Should the Court be setting universal rules that respondent must follow in every audit, even an audit where the setting does not allow respondent to follow the rules with any certainty? Assuming that respondent’s argument is correct, is the question of reasonableness a question of fact which is inappropriate for summary judgment? Is it unreasonable for respondent to adjust the income of a parent corporation to account for intercompany transactions for which respondent knows that the subsidiaries were parties thereto but does not know to what extent they were parties? Is it unreasonable to determine adjustments in the aggregate where information to make more specific adjustments is not available?” Order, at p. 3.

Even better is this: “17. The parties have estimated their trial time to be about 9 weeks. If the Court were to grant petitioner’s motion, what impact will that ruling have on estimated trial time?” Order, at p. 5.

Sounds like a real fun afternoon, guys.

Next is Judge Cohen, a stickler for following the rules, in Cindy Lee, Petitioner and Jim Lee, Intervenor, Docket No. 10136-14, filed 5/18/15. Jim has his own case also, Docket No. 10177-14, but it gets the same treatment as Cindy’s, so no biggie. Apparently Cindy’s (and maybe Jim’s attorney too) is a scoche bit casual in Tax Court practice.

Judge Cohen is not amused.

A month and a day before trial date (which was set so all Jim’s and Cindy’s cases could be tried together), said attorney moves for continuance (that’s adjournment in State court lingo). Argue that before the trial on the trial date, says Judge Cohen.

And so counsel stays on message: “…at the hearing counsel for petitioner shall explain: (1) the misstatements in paragraphs 8 and 11 of the affidavit that cases are pending before another Division of the Court when in fact all of the cases are under the jurisdiction of the Division to which the June 15, 2015 calendar is assigned; (2) the inconsistency between the title of the affidavit and the signatory and whether any change of name has been submitted to the Admissions section of the Court; (3) whether petitioners Jim Lee and Cindy Lee have been advised of the conflict of interest when the same counsel represents a party claiming relief under Internal Revenue Code section 6015 and the party not claiming relief; and (4) any reason why the related cases should not be consolidated immediately if they are continued.” Order, at pp. 1-2.

Oh yes, guys, and file a stip of settled issues.

Oh, those activist judges!

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