Attorney-at-Law

PARDONING THE SUMNER

In Uncategorized on 12/09/2015 at 17:17

Sumner Redstone, the Viacom King, gets a better deal from Judge Lauber over his gift tax deficiency from 1972 than Geoff Chaucer gave his fourteenth century namesake, in Sumner Redstone, 2015 T. C. Memo. 237, filed 12/9/15.

And here are my comments for Peter Reilly, CPA, which I promised in my blogpost “An Answer You’ve All Been Waiting For,” 10/30/15.

First, Sumner and his late brother Eddie aren’t exactly on the same wavelength. Late brother Eddie handed over his stock in the Redstone family corporation in settlement of a litigation, hotly contested and full of family feuding. Sumner testified that he handed over his voluntarily, and incidentally to please his Dad, the late Mickey.

Judge Lauber extensively airs the family linen in public, and I leave this stuff for those who get off on the foibles of the rich and famous. In such cheap wares I do not deal.

Once again Sumner tries the laches argument (delay of the game), but see my blogpost “The Flavor du Jour,” 9/12/13. Sumner doesn’t make out any better this time than he did then.

Sumner’s claim of repetitive audit per Section 7605(b) fails because IRS didn’t demand his records when they first scoped out his 1972 deal (for which he never filed a gift tax return) in 1975, and he never raised the issue on petition or brief.

And IRS was looking for campaign contributions made under the radar.

I’m not commenting on those here, but oh, am I tempted. I’m doing so elsewhere, extensively, but this is a non-political blog. The RA who was doing the scoping wasn’t sure that Congress had given authority for him to look otherwise than at campaign contributions anyway.

In any case, Section 7605(b) is there to spare taxpayers from relentless audits by overzealous Revenoors. Sumner wants the deficiency scrapped on that ground, and that’s a non-starter.

After some argy-bargy about valuation (was late brother Eddie’s settlement a willing-buyer-willing-seller pas de deux, with an affirmative answer from Judge Lauber and sustentation of IRS’ number), we come to my title for this little tale.

Sumner claims he relied upon his trusty accountants, to whom he unloaded all the skinny from the get-go, and moreover were the acolytes of the famous J. K. Lasser. Upon flying the Lasser nest and opening their own doors, they reaffirmed their position that no gift tax was due by consulting J. K.’s national office.

J. K. Lasser was subsequently swallowed by Touche Ross, which in turn was swallowed by Deloitte, but in my young day the J. K. Lasser annual tax guide was the Holy Writ of preparers. Late each Fall, one expected to see J. K. hisself come down from the mountaintop bearing the sacred scriptures for the next tax year, which resembled the Yellow Pages of a medium-sized city.

And if this makes sense to any of you, my sincerest condolences.

But it’s good enough for Judge Lauber, although he’s probably too young to remember J. K.’s magnum opus. But who knows? He may have imbibed its wisdom at his Mother’s knee.

Howbeit, Sumner gets off the chops.

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  1. I skimmed the opinion and it doesn’t look like the IRS added compounded interest on the tax unpaid in 1972. Is that right? If so, it’s bad policy, since a gift of 1972 dollars is worth a lot more than getting cash in the present. The 5th Circuit Marshall case of last year was about a related but not identical issue. http://ustaxcourt.gov/UstcInOp/OpinionViewer.aspx?ID=10629

    Liked by 1 person

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