In Uncategorized on 06/03/2016 at 16:16

No, not the Jacob Jacobs and Sholom Secunda hit that gave the Andrews Sisters their 1937 liftoff to stardom. This is a designated hitter in today’s evidentiary special, brought to us practitioners desperately seeking enlightenment by none other than The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Inexhaustible, Indefatigable, Ineluctable, Incontrovertible, Ineffable, Implacable and Industrious Foe of the Partitive Genitive, His Honor Judge Mark V. Holmes.

And the first lesson deals with experts, their opinions and testimony. It features our friends from the day before yesterday, Patients Mutual Assistance Collective Corporation d.b.a. Harborside Health Center, et al., Docket No. 29212-11, filed 6/3/16.

The patient mutualists want to put in the reports and testimony of Sanford Schane and Henry C. Levy. IRS wants to bounce them, and trial starts Monday.

Well, despite the title of this little essay, Judge Holmes finds Schane not so schön, at least as an expert.

“Schane is a linguistics professor. He offers his opinion in his report about the meaning of the phrase ‘consists of’ for the purposes of I.R.C. § 280E, and then concludes that petitioner’s business does not ‘consist of’ dealing in a controlled substance. He also opines that petitioner’s sale of articles and offering of services is not associated with the dispensing of medical cannabis; and thus that I.R.C. § 280E should not apply to petitioner’s business.” Order, at p. 1.

That this is a nonstarter should not surprise you.

“Respondent is entirely correct that Schane’s and Levy’s conclusions are nothing more than legal opinions and thus should be excluded. Testimony on the meaning of a phrase within a statute, even by a linguist or CPA, does not concern an issue of fact. And expert opinions on law do not assist the ‘trier of fact to understand the evidence or to determine a fact in issue’ and are thus, inadmissible. Fed. R. Evid. 702(a). ‘Each courtroom comes equipped with a “legal expert,” called a “judge”.” (Citations omitted.)

Henry Levy is a CPA, and wanted to expatiate on “… several treasury regulations, sections of the Code, and subregulatory guidance to conclude that petitioner is entitled to a higher COGS adjustment than it originally reported. The interpretation of the COGS regulations is an important part of these cases.” Order, at p. 1.

You’ll recollect that the winning dodge for the medical potters is to lump deductibles as Cost of Goods Sold (COGS), which is an adjustment to gross receipts and not a deduction from taxable income, thus sliding under the Section 280E tag. The now-indicted Judge Kroupa waived home the runners, as more particularly bounded and described in my blogpost “Everybody Must Get Stoned,” 8/3/12.

So Henry Levy too might avoid being thrown out at the plate. Maybe.

“Unlike Schane, Levy may well be a useful fact witness on the quantification of COGS that petitioner actually claims, as well as issues related to respondent’s assertion of penalties. But petitioner will have to have him testify as a fact witness and not rely on his opinions in an expert-witness report.” Order, at p. 2.

Litigators please copy.


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