In Uncategorized on 06/01/2016 at 13:13

No, not the 1933 Jerome Kern-Otto Harbach ballad, most famously reprised by The Platters in 1958. Rather, this is another trip into the Section 280E minefield, as IRS seeks partial summary J in Patients Mutual Assistance Collective Corporation d.b.a. Harborside Health Center, et al., Docket No. 29212-11, filed 6/1/16.

And Happy Palindrome Day.

But there are obstacles to each of the three issues IRS wants precluded.

And who better to throw obstacles in the way of a craftily-crafted motion for summary J than The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Indomitable, Indefatigable, Ineluctable, Irrefragable, Incontrovertible, Illustrious and Impeccable Foe of the Partitive Genitive, His Honor Judge Mark V. Holmes?

As is well-known, I’m a great fan of motions for summary J. Even in the Branerton-saturated world of Tax Court discovery, not everyone always plays nice. And motions for summary J are far cheaper than depositions, and more efficacious than interrogatories and document demands. Let both sides lay whatever cards they’ve got on the table. Then let the Judge tell us what’s relevant.

Now let’s get to the smoke. In this case at bar, the smoke derives from plantlife whose chief isomer is (−)-trans9-tetrahydrocannabinol, the which is released in vaporized form and inhaled, strictly for medical purposes, of course.

The Patients want to include indirect costs of said plantlife in inventory per Section 263A. IRS wants summary J that the Patients can’t. But the desired finding requires determining whether Patients had more than one trade or business, and whether they purchased or produced the plantlife at issue.

IRS also want Judge Holmes to find that the Patients, individually, or as their name suggests, collectively, engaged in the sole trade or business of pushing (or more politely, trafficking in) boo, and therefore get no deductions per Section 280E.

But singularity vs multiplicity depends on an open-ended review of factors.

“These are not necessarily even the familiar factors of section 183, which do not apply in cases where the taxpayer is a corporation, Sec. 1.183-1(a), Income Tax Regs., and are hotly contested here where petitioner sold at least some non-marijuana products and also argues that it bundled enough services with its marijuana sales to make it not exactly a trade or business that — to use the verb of section 280E – ‘consists of’ trafficking in controlled substances. We also note that the only affidavit attached to respondent’s motion is from one of his attorneys who depends for his description of petitioner’s business on an interview (possibly not even done by the attorney — the affidavit uses the circumlocution ‘Respondent interviewed’) with someone described as petitioner’s employee. This is pure hearsay of course and cannot support summary judgment.” Order, at p. 2.

And as for production vs purchase, the Patients have an affidavit from one who claims at least some of the goods were owned by the Patients when grown.

But this proves the point. This is where to make points with the Judge, see what evidence the other side is going to try to use, and what they’ve got to counter your evidence.

And it sets up a good footing for a CTJ moment with the client.


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