In Uncategorized on 04/19/2016 at 16:03

David H. Hoffmann and Jerrilynn Hoffmann, 2016 T. C. Memo. 69, filed 4/19/16, but especially David, to whom this little story is dedicated, would have done well to have read my blogpost “What Not To Say,” 11/3/11. Had David done so, he might have profited from the examples of Perry Browning and Viggo (“Wiggy”) Carstensen.

Dave claimed he was running his high-priced private jet for profit, but could show nothing but offsetting losses to his substantial income from other sources.

Judge Halpern walks through the Section 183 factors, and David doesn’t score a hit on any of them; not even a “neutral.”

He could have gotten out of the burdensome lease he signed for his plane when his business was still a highflyer (sorry guys), but claims he never read the lease and thought he was locked in.

But the point of this story is not the fact-specific ins and outs, but rather David on the witness stand.

“Mr. Hoffmann testified that he intended to make a profit from his jet service activity.  He admitted, however, that he ‘wasn’t astute on the recordkeeping’ involved in allocating costs between business and personal use of his aircraft.  He viewed any such allocation as ‘irrelevant’.  Because he ‘owned all the Company’, he said, ‘it really didn’t seem to make much difference to me.’  2016 T. C. Memo. 69, at p. 14 (Two, count ‘em, two, footnotes omitted, but one says David only owned 75% of the Company and no evidence about who owned the rest, and the other says David claims he was concerned not to bill his personal use to the minority owners).

It may not have made much difference to David, and maybe not to the minority owners, but it sure did to IRS.

And it definitely did to Judge Halpern.

Takeaway—Woodshed your client. Thoroughly. Loose cannons belong, if anywhere, only on the gundeck; never on the witness stand.

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