Archive for May, 2016|Monthly archive page


In Uncategorized on 05/31/2016 at 16:26

I remember, so clearly the old cliché about as-if-it-were-yesterday almost has meaning, those waning days of October, in a year so long ago, when I shouted at every opportunity “Short!” And that magic moment when the mimeographed yellowed sheet (it was that long ago that photocopying was reserved for the highest echelons) came into my hands, and I exultantly screamed “FIGMO!”

There are no longer such moments. “Gone, alas, like our youth, too soon.”

If all this is gibberish to you, my condolences. Explanations merely dilute and trivialize.

Tomorrow comes the change of command ceremony, as Ch J Michael B (“Iron Mike”) Thornton passes the Chieftain’s gavel to Judge L. Paige Marvel. I’ll publish my reflections thereon tomorrow.

But today, Ch J Iron Mike shows how I felt in that sandy spot beside the South China Sea.

Here is Steven P. Stewart, Docket No. 7133-16S, filed 5/31/16.

“Upon due consideration of the Notice of Intervention by Courtney Ira…, it is

“ORDERED, that the caption of this case is amended to read “Steven P. Stewart, Petitioner and Courtney, Intervenor v. Commissioner of Internal Revenue, Respondent.” Order, at p. 1.




In Uncategorized on 05/28/2016 at 11:22

I can hear the adenoidal snarl of the late great Conrad Veidt, as he leers at Hans Conreid and Ingrid Bergman, and Claude Rains gives us one of his ambiguous smirks. That was when they made movies….

Enough nostalgia.

But I daresay the conversation will be a trifle one-sided, as IRS doesn’t object to Joseph A. Insinga, Docket No. 9011-13W, filed 5/27/16 taking his own deposition.

And either that Obliging Jurist Judge David Gustafson isn’t a cult-movie fan, or he eschews the sort of wit that drew Judge Posner’s rebuke to Judge Wherry, as to which see my blogpost “There Goes the Neighborhood,” 9/3/13.

No, Judge Gustafson dryly orders “…petitioner’s application is granted and that, pursuant to Rule 81(b)(2), petitioner is authorized to take the deposition as requested.” Order, at p. 1.

I’ve blogged Fighting Joe’s fight a lot, but it’s instructive.


In Uncategorized on 05/27/2016 at 15:59

It’s getting late on a Friday afternoon, and even IRS E-Services’ Transcript Delivery System, TIN Matching and e-file Application is shutting down for the weekend. But there’s one last designated hitter to blog before I head off for a piña colada.

Joseph N. Ryan, Docket No. 13473-15L, filed 5/25/16, got a letter from Social Security Administration that would lighten any old-timer’s heart. “”Recently I discovered a sentence in my Social Security award letter -(copy enclosed, with the sentence highlighted), stating that I may keep ALL of my benefits – no matter how much I earn.” Order, at p. 2.

Well, Joe never paid tax, and didn’t petition the SNOD. When Joe got the NITL, he asked for a CDP, and was told that, although he can keep it, it’s still taxable.

STJ Armen, The Judge With a Heart, gives Joe the bad news.

“…it is clear that his argument is unavailing because he misunderstands the meaning of the Social Security benefit statement that he so heavily relies on. The statement deals only with what happens when a worker continues to work while receiving Social Security benefits. In other words, depending on a worker’s age, the worker’s Social Security benefits may be reduced if the worker earns above a prescribed amount; however, after attaining a certain age a worker will receive the worker’s full benefit regardless of the amount earned. In short, the Social Security benefit statement that petitioner relies on has nothing to do with the taxability of Social Security benefits; indeed, the word ‘tax’ or ‘taxable’ does not even appear. Rather, section 86 of the Internal Revenue Code determines the extent to which Social Security benefits may be taxable.” Order, at p. 5.

Sorry, Joe, you have to pay tax on Social Security. Welcome to the club.


In Uncategorized on 05/27/2016 at 15:09

Remember James W. Blackbourn, II & Angel M.  Blackbourn? No? Well, check out my blogpost “It’s Payback Time – Part Deux,” 1/28/16, wherein STJ Lewis (“Our Name Is Our Fame”) Carluzzo rejected Jim’s and Angel’s First Time Home Buyer Credit, First Edition, for their Canton cantonment, but asked IRS to play nice and credit Jim and Angel for the paybacks they made for the credit they now have lost ab initio.

But the Rule 155 beancount STJ Lewis ordered apparently got stalled, because IRS wants more time to spill the beans.

Well, not only is that not going to happen, but STJ Lewis spurs the parties on to the finish line.

It’s found in James W. Blackbourn, II & Angel M. Blackbourn, Docket No. 5964-12S, filed 5/27/16.

And STJ Lewis gets right to the point.

No more time, and “…the decision entered in this case will reflect the amount of the deficiency shown on the computation for entry of decision first received from either party.” Order, at p. 1.

I bet this race is more exciting than the Preakness.


In Uncategorized on 05/26/2016 at 16:05

Although his cursus honorum on the Tax Court website doesn’t state his undergraduate major, it may have been physics, because STJ Lewis (“Honor That Name”) Carluzzo is a real fan of the uncertainty principle. See my blogpost “The Uncertainty Principle,” 1/30/13.

And today it defeats IRS’s move for summary J in Ronda Robinson, Docket No. 1417-16SL, filed 5/26/16.

Ronda claimed at her CDP she never got the SNOD that gave rise to the collection action she’s fighting, so she wants a chance to fight on the merits.

IRS ripostes that they mailed the SNOD and it came back “unclaimed.”

Sounds open-and-shut enough not to merit a designated hitter, but STJ Lew has a point to make.

“…nothing in respondent’s [IRS’s] motion suggests that petitioner received the notice, or deliberately refused to retrieve it from the post office.” Order, at p. 1. (Citation omitted.)

So STJ Lew is not so sure he agrees with IRS that Ronda is out on contesting liability.

Remember, a late petition from a received SNOD, or a claim the SNOD wasn’t received, doesn’t work in a deficiency proceeding if IRS can prove mailing to last known address, or willful failure to claim the SNOD from USPS.

But in a collection proceeding, non-receipt, if credibly asserted, might carry the day. See Section 6330(c)(2)(B).

No summary J for IRS.


In Uncategorized on 05/25/2016 at 17:06

He who would petition, though he were dead, should make sure his personal representative checks the mail at his last known address, or shoots IRS a Section 6903 notice by certified mail of his representativeness forthwith.

That’s the moral from Estate of John A. Massie, Deceased, John Stephen Massie, Executor, Docket No. 5961-16S, filed 5/25/16.

John Stephen petitioned a SNOD directed to the late John A., attaching his appointment as executor.

IRS claims John Stephen is late, as the SNOD was “most likely mailed to the decedent’s address….” Order, at p. 1.

But “most likely” doesn’t cut it for Ch J Michael B (“Iron Mike”) Thornton in the waning days of his Chieftainship.

Turning to John Stephen, Ch J Iron Mike wants John Stephen to dish about the late John A.’s date of death, whether John Stephen notified IRS that he was the executor, and if he did, when, and send in a copy of the notice he gave IRS.

Executors, be warned. Check out Section 6903 and the Regs, and fire off that notice. Check out Form 56 and the instructions thereto.



In Uncategorized on 05/25/2016 at 16:26

Rickey L. Drilling, 2016 T. C. Memo. 103, filed 5/25/16, has lots of troubles. Beside child support, criminal restitution to his ex-wife, and unapplied withholding that reduces his tax liability to what he said on his 1040-EZ for the year at issue, his OIC gets bounced because his RCP is enough to pay off his debt whatever time period (24 months, 60 months or 120 months) is used.

IRS wants to toss Rickey for various reasons, but I want to talk about IRS’s admission that Rickey doesn’t owe tax for the year at issue (and there’s no disagreement about what he owes for other years), so there will be no collection action taken, and therefore the much-cited Greene-Thapedi rule ousts Tax Court of jurisdiction.

No it doesn’t, says Judge Morrison, IRS hasn’t withdrawn the NFTL it filed. “Where, as here, the taxpayer seeks to withdraw a filed lien notice, and the notice has not been withdrawn nor the lien released, the case is not moot merely because the taxpayer has paid the related liability.  A lien-notice filing can cause injury to a taxpayer even after the underlying liability has been paid.  See William T. Plumb, Jr., ‘The Creation, Removal, and Impact of Tax Liens’, 20 Prac. Law. 75, 84-85 (1974)(‘Consummation of a transaction in which a taxpayer might desire to engage may be seriously impeded if notice of a general tax lien is on file in the appropriate public office, even if the taxpayer has actually paid the delinquency secured by the lien.’).” 2016 T. C. Memo. 103, at pp. 51-52.

The two cases IRS relies on didn’t involve withdrawing a NFTL. Greene-Thapedi wanted to argue underlying liability, but in a collection case that doesn’t work when there’s no collection, and the petitioner in the other case didn’t talk about withdrawal of the NFTL.

So although Rickey loses on his OIC, and loses on his claim that IRS misapplied his payments and miscalculated his tax, his case is not moot.

I can recommend Judge Morrison’s opinion, with its exhaustive (not to say exhausting) extracts from Appeals’ notes, to any sufferer from insomnia. Long before reaching page 71, you will nod out.


In Uncategorized on 05/24/2016 at 21:27

Most people writing fiction hope to make money. The allure of best-sellerdom, with attached international translation and film rights, motivates the eternally hopeful to put paw to wordprocessor and hammer out the successor to Fifty Shades of Whatever.

Well, there’s a downside if you write fiction on a 1040. Here’s the tale of Giliard Schwartz, Docket No. 11996-15S, filed 5/24/16.

This is a designated hitter from The Judge With a Heart, STJ Armen. But STJ Armen has no balm for Giliard (sorry, guys).

Giliard claimed $330K in moving expenses. Except her address never changed since she previously adjusted her gross income therefor a year earlier in a much smaller amount. Her boss sent W-2s to that address, the local taxing authority billed her for the taxes there, and she filed her return for the year at issue from that address.

“Not surprisingly, petitioner’s… income tax return was selected for examination. But, neither during the examination phase of this case, nor the administrative appeal phase of this case, nor the litigation phase of this case did petitioner ever respond to requests for substantiation of her alleged moving expenses, and petitioner essentially ignored respondent’s personnel during these three phases of the case. For example, respondent’s counsel found it necessary to file a Rule 91(f) motion when petitioner refused to stipulate facts or documents as required by the Court’s Rules of Practice and Procedure.” Order, at p. 2. (Footnote omitted, but it says IRS’s asserted facts deemed admitted).

Giliard ignored IRS’s requests as above-stated. So STJ Armen set IRS’s motion to dismiss for want of prosecution for a hearing, and added, at no extra charge, a Section 6673 warning to Giliard. If she was writing fiction, that’ll cost her.

Came the trial date, and STJ Armen throws a rope to Giliard.

“Petitioner was given the opportunity of consulting with a pro bono attorney from the Tax Section of the Texas State Bar Association who was in attendance at the session to assist pro se taxpayers such as petitioner. The matter was then recalled several times. Ultimately petitioner, with pro bono counsel present, stated that she did not wish to try her case, that she would not oppose the granting of respondent’s motion to dismiss, but that she would not concede the factual allegations made in the motion regarding the fictitious nature of the alleged moving expenses. Petitioner expressly acknowledged that she understood the consequences of the Court granting the motion, i.e., that she would be liable for the determined deficiency in tax and accuracy-related penalty, as well as statutory interest. The Court then stated at length that it would grant respondent’s motion and also issue an order for petitioner to show cause why a penalty under I.R.C. section 6673 should not also be imposed. In that regard the Court made clear that such penalty would not be imposed if petitioner were able to demonstrate that there was some plausibility or some rationality to the $330,000 moving expense deduction that she had claimed, but that if petitioner were not able to do so then the Court would impose a penalty under I.R.C. section 6673 in an amount not to exceed $25,000. Petitioner was expressly advised by the Court that if she failed to respond to the show cause order, a penalty under I.R.C. section 6673 would be imposed.” Order, at pp. 3-4.

Well, if I told you that STJ Armen hit Giliard with a $10K Section 6673 chop, could you guess whether or not Giliard replied effectively to the OSC?

Writing fiction can be expensive.



In Uncategorized on 05/23/2016 at 16:35


Not quite, says Judge Ruwe, and Section 6402 backs him up, the 1798 Episcopal Church Book of Common Prayer to the contrary notwithstanding. It’s Caesar’s coin, remember.

So Lynn Marie Domaschko, 2016 T. C. Sum. Op. 24, filed 5/23/16, is out the $4K IRS took from the refund on her MFJ return to pay off a previous year’s deficiency.

In the year at issue, Lynn Marie had only $5k of income, and didn’t have any tax withheld, nor did she pay estimateds. Loved-once Peter made $155K and paid a lot of tax.

IRS wanted summary J, Lynn Marie claimed innocent spousery but put in no opposition. Judge Ruwe didn’t have to go into Lynn Marie’s marital woes.

“Section 6402 allows the Internal Revenue Service to credit an overpayment to ‘the person who made the overpayment’.  In the case of married taxpayers filing jointly, ‘a joint income tax return does not create new property interests for the husband or the wife in each other’s income tax overpayment.  * * * [T]he * * * [spouse] having paid the entire amount of the tax is entitled to the entire amount of the overpayment.’  Rev. Rul 74-611, 1974-2 C.B. 399.” 2016 T. C. Sum. Op. 24, at p. 7.

You could also look up Rev. Proc. 2013-34, sec. 4.04, 2013, 43 I.R.B. 397, 403, for the take on innocent spousery. The spouse who paid gets the refund or credit.

Judge Ruwe doesn’t have to deal with Lynn Marie’s innocent spousery. Innocent she may well be, but she didn’t pay the overpaid taxes.




In Uncategorized on 05/20/2016 at 17:47

No, this is not a pitch for an over-the-counter purple pill.

Peter Reilly, CPA, Forbes’ man-on-the-spot, picked up on Third Circuit’s rescue of Giant Eagle’s “all events” accrual at the end of last month.

I had blogged the T. C. Memo. that disallowed Giant Eagle’s accrued deductions for gasoline discounts earned but not redeemed by big spenders in Giant Eagle’s food aisles. Here’s the story, “Ya Gotta Do It To Accrue It – Part Deux,” 7/23/14.

Third Circuit said Giant Eagle negotiated successfully the Reg. Section 1.451-4(a)(1) slalom.

Visit Mr Reilly’s blog for the skinny.

So Third Circuit, like a much more exalted source, satisfies appellant with good things, so thy youth is renewed like a Giant Eagle.