If you’re a constant reader of this my blog (in which case, my sincerest thanks), you’re aware of my ongoing colloquy with Ch J L Paige (“Iron Fist”) Marvel about the admission of CPAs to Tax Court, without the need for all that messy examination process, when only eight percent of those taking the exam actually pass.

No, CPAs apparently get a bye. See my blogposts “CPA = USTCP? – This Is Getting Boring,” 12/27/16, “CPA = USTCP? – Redivivus,” 12/19/16, “CPA = USTCP? – Part Deux,” 6/29/16, and finally “CPA = USTCP?” 6/6/16.

There now.

But all this is coming to an end, though, with becoming modesty, I certainly do not claim credit for making it happen.

Here’s James R. McDonald & Robin D. McDonald, Docket No. 1585-17, filed 3/7/17, but Jim and Rob are just along for the ride, as this order really concerns their trusty CPA and EA, whom I’ll hereinafter designate as DKW, EA, CPA.

DKW, EA, CPA moves for entry of decision. See my abovecited blogposts. So this should be a no-brainer.

However, Ch J Iron Fist isn’t buying.

“The Court’s records indicate that [DKW, EA, CPA] is not admitted to practice before the Tax Court, and therefore may not enter an appearance to represent taxpayers. It further appears that [DKW, EA, CPA] is not presently qualified to appear on behalf of petitioners in any other recognized capacity under the Tax Court Rules of Practice and Procedure. The Tax Court is not part of the Internal Revenue Service (IRS) and does not recognize powers of attorney, as does the IRS.” Order, at p. 1.

So let Jim and Rob talk to IRS counsel their own selves, sign a stip or give a status report.

I said back in May last year that I thought it was a profession, but I’m old-fashioned that way.

After losing his claim that his law school tuition and fees were deductible, Emmanuel A. Santos, Docket No. 5864-14, filed 3/6/17, tries to wild-card in his health care costs via a shift from Schedule A to Schedule C at the Rule 155 beancount that followed the loss.

I did give EA a Taishoff “good try, third class,” for the law school tuition play. See my blogpost “The Business of Being a Lawyer,” 5/17/16.

EA took the healthcare deduction on line 1, Schedule A of his 1040, but never mentioned healthcare on Schedule C, even though Section 162(l) allows the deduction up to earned income.

IRS never questioned the Schedule A deduction.

EA tries the healthcare shift in objecting to IRS’ numbers at the Rule 155. The problem is, EA never raised the shift in his petition, or at trial, or in his post-trial brief.

Judge Morrison: “At trial, Santos admitted that the only issue to be resolved by the Court was whether he was entitled to deduct $20,275 in law school tuition and fees. He disputed none of the other adjustments in the notice of deficiency. Nor did he assert his entitlement to a deduction under section 162(l)(1). He presented no evidence, documentary or testimonial, regarding his entitlement to such a deduction.

“In his post-trial briefs, consistent with his position at trial, Santos contended only that he was entitled to deduct $20,275 in law school tuition and fees. The briefs mentioned no other deductions. They did not mention his entitlement to a deduction under section 162(l)(1).” Order, at p. 3.

But EA is an inventive fellow.

“Santos argues that during the…audit of his return, the IRS’s revenue agent determined that he was entitled to a $2,994 deduction under section 162(l)(1). Santos contends that he and the revenue agent made a ‘mutual mistake’ in not including his entitlement to the deduction in the ‘original computation’, by which he presumably means the notice of deficiency. In addition, Santos claims that he could not have taken the $2,994 deduction under section 162(l)(1) on his original return because he was barred from doing so by the income limitation of section 162(l)(2)(A). It was only after his Schedule C deductions were disallowed during the course of this litigation, Santos says, was he able to claim a deduction under section 162(l)(1) free of the income limitation of section 162(l)(2)(A).” Order, at p. 4.

EA, I’ll award you a Taishoff “good try, second class.” You’re moving up.

Judge Morrison, oblivious to the standings in the Taishoff good try league, tosses EA’s casuistry.

“If the revenue agent determined that Santos was entitled to a deduction under section 162(l)(1), this determination did not make its way into the notice of deficiency. Nor was any such determination memorialized in a closing agreement, which is the type of agreement which binds the IRS. See sec. 7121(a) and (b); see also sec. 7701(a)(11)(B). In challenging the notice of deficiency, Santos was required to plead his right to such a deduction. See Rule 34(b)(4). He did not. At trial, he introduced no evidence that he was entitled to such a deduction. Thus, the record does not support his entitlement to the deduction. His brief did not address the deduction. In the course of this litigation, counsel for the IRS never agreed that Santos was entitled to a deduction. Nowhere in our Opinion did we express the view that Santos was entitled to a $2,994 deduction under section 162(l)(1).” Order, at pp.4-5. (Footnote omitted, but it says EA never had to fight about his Schedule A deduction, as it was never challenged, and anyway the requirements for the Schedule C deduction are different from the Schedule A variety).

In short, EA is trying a new issue, and Section 155 beancounts are only to figure out what number reflects the Court’s decision.

No, not the 1975 Broadway play, nor the 1978 movie of that name. This is yet another variation on the Delay of the Game gambit, which I more thoroughly discussed in my blogposts “Yonder Come Day,” 7/30/13, and “Delay of the Game,” 7/12/13.

Tax Court holds moveable feasts as it traverses this broad land of ours. It stays not over long in any locale. And it alights in some of its far-flung localities but once in a twelvemonth.

Thus Judge Pugh gets a trifle testy with Al Benavides & Louise A. Benavides, Docket No. 06840-14, filed 3/3/17.

Al & Lou hang out in MT, and have twice continued (that’s adjourned, for us State courtiers) their trial in Missoula, MT. Now their trusty attorney, whom I’ll call Stu, moves yet again to continue (adjourn).

Judge Pugh has a practical approach.

“The Court conducts trial sessions in Montana once a year, so any continuance of these cases would result in a delay of trial for another year and [Stu’s] affidavit indicates that respondent objects to the continuance.” Order, at p. 1.

So let each side file its own status report “…detailing all steps taken (1) to resolve these cases without trial, (2) to stipulate to facts and documents, (3) to narrow issues for trial.” Order, at p. 1.

And in addition, “(P)etitioners’ status report also shall address petitioners’ ability to proceed with other counsel or pro se.” Order, at p. 1.

I note that, back in 2015, when I suggested a change in the Tax Court Rules to require petitioners to state a reason for selecting the desired place of trial, the ABA Tax Section, of which illustrious body I am not a member, rejected my suggestion.

“Lewis Taishoff of The Taishoff Law Firm sent in a letter suggesting that Rule 140(a) require that a petition state a reason for the trial location preference. A petitioner is currently free to request a trial location from a list of as many as 74 locations (for small tax cases) in nearly every state without providing a reason.

“The ABA Tax Section letter disagrees with Taishoff’s suggestion, noting that pro se taxpayers already often complete the trial location request form incorrectly. The additional burden could increase petitioner confusion, according to that letter.”

It’s not the innocent who are confused, ABA Tax Section.

No, I am posting neither an assault upon, nor a defense of, this statute.

I merely report the case of Gregory Thomas Orr, Docket No. 12742-16SL, filed 3/2/17, as told by that modest jurist, CSTJ Panuthos, who again eschews referencing his Chieftainship.

GTO filed, claimed an Advance Tax Credit, showed a balance, but couldn’t pay it, he says. IRS gives GTO a NITL at no extra charge, and he sends in a 12153.

He never comes up with the Form 433-A, and never claims the amount of tax in his return is erroneous.

GTO tells the AO “…Mrs. Orr had excess medical expenses and they were spending a lot of money out-of-pocket for medical costs and gas and mileage….” Order, at p. 2.

But still GTO produces no proofs thereof. So Appeals gives him a NOD, also at no extra charge.

GTO petitions, and states as follows. “…the ‘levy action * * * is prohibited by the Affordable Care Act’. To explain the amount reported as due on his Form 8962 petitioner wrote ‘I signed up for Kaiser Health Plan through Covered California in 2014. The subsidy allowed by Covered California turned out to be $8,000 over the proper subsidy amount.’ Petitioner also asserted that he could not afford to pay the amount due.” Order, at p. 3.

Again at no extra charge, IRS moves for summary J, stating that the ban on levy under the ACA has to do with failure to pay the penalty imposed by Section 5000A(g)(2), but that isn’t the case here. No penalty, just tax.

CSTJ Panuthos: “The Court notes that petitioner asserted in his petition and in his response to respondent’s motion that the levy action is prohibited under section 5000A(g)(2). Section 5000A(g)(2) applies where a penalty has been imposed under section 5000A. Respondent did not impose a penalty under section 5000A. Thus, this section is inapplicable. See sec. 5000A(g)(2)(B).” Order, at p. 4.

And CSTJ spares GTO the trip to San Francisco, where the trial was to be held, despite GTO’s motion to move it to Phoenix, AZ, because IRS gets summary J.

In any event, the news media report that Congressional leadership and the White House state that come soon the ACA will either cease to exist, or else be refurbished, reupholstered and re-engineered so as to be unrecognizable.

I’m sure GTO will be pleased.

I must leave discerning the meaning of the title hereinabove set forth to the reader’s imagination. I trust the reader will experience little difficulty thereat.

It’s Joe Alfred Izen, Jr., who has appeared before in this my blog. See my blogposts “The $2000 Misunderstanding,” 6/12/12 and “Try, Try Again,” 1/16/13.

Well, as I said in the second of those two blogposts “Joey A is quite a card.”

And now he’s made the Big Time, with his own full-dress T. C., Joe Alfred Izen, Jr., 148 T. C. 5, filed 3/1/17.

Joey A wants a $338K deduction for his half-share in a 1969 model Hawker-Siddeley-DH-125A-400. This is an ancient business jet.

He didn’t bother to take the deduction for the year he made it, taking the standard deduction instead. I assume Joey A is self-employed, and playing the Sched C-standard deduction gambit, loading the Sched C and foregoing any Sched A. And the audit and SNOD for the year at issue dealt only with Sched C and Sched E.

Joey A petitions timely, and moves to amend, four years after he allegedly gave away the airplane to the Houston Aeronautical Heritage Society at HOU (a field I know well), to claim the deduction.

Then Joey A moves for partial summary J.

Well, no summary J, because there’s a couple questions (hi, Judge Holmes) of fact, like contemporaneous acknowledgment, properly filled out Form 8283 and FMV of Joey’s half.

So Joey A sends in a 1040X, six (count ‘em, six) years after the alleged donation.

“On this return he claimed for the first time a deduction of $338,080 for his alleged contribution to the Society of a 50% interest in the aircraft.  Petitioner included with this amended return:  (1) an acknowledgment letter addressed to Philippe Tanguy [the GP of the co-owning LLP], dated December 30, 2010, and signed by Drew Coats as president of the Society; (2) a Form 8283 executed by Amy Rogers, managing director of the Society, and dated [six years after the alleged donation]; (3) a copy of an ‘Aircraft Donation Agreement’ allegedly executed [12/31 in year of alleged donation], by Drew Coats as president of the Society but bearing no other signatures; and (4) an appraisal by Winston McKenzie dated [next year after alleged donation], opining that the fair market value of petitioner’s 50% interest in the aircraft, as of December 30, 2010, was $338,080.” 148 T. C. 5, at pp. 5-6.

The IRS riposte does not convulse me with shock.

“Respondent represents that the IRS ‘will not process petitioner’s amended 2010 tax return.’” 148 T. C. 5, at p. 6.

Joey A again wants summary J, but there is the question how the half-share of the airplane that he bought three years before the alleged donation for $21K became worth $338K in the interim.

As for the contemporaneous written acknowledgment, check out the special rules for donations of used vehicles, including aircraft. Joey A never got a 1098-C, the magic form, apparently because the Houston Aeronauts never prepared one, filed one or sent Joey A Part B thereof.

Neither did the Houston Aeronauts keep the records required by Section 170(f)(12), and no document proffered by Joey A comes close to being contemporaneous. Joey A claims that, when integrated, they fill the bill.

Judge Lauber does a major deconstruction of Joey A’s proposed integration of documents. For a proper integration, see my blogpost “A Thing of Beauty” – Redivivus,”10/25/12.

Ya gotta love the guy. “Brass” definitely isn’t the word.

Sounds a wee bit counterintuitive, no? Well, it did to STJ Lewis (“Say It Loud”) Carluzzo in today’s off-the-bencher.

Turns out Section 213 is sufficiently wide to cover the unconventional, but nevertheless deductible, medical expenses of Victoria Malev, Docket No. 1282-16S, filed 3/1/17.

Everybody agrees that Victoria suffers from at least one spinal condition. Chiropractic only helps partially, and, in a diagnosis made three years after the year at issue, her own MD says surgery is at best a “maybe.”

But her MD does recommend “integrative medical care.”

“According to Duke University, ‘Integrative medicine is an approach to care that puts the patient at the center and addresses the full range of physical, emotional, mental, social, spiritual and environmental  influences that affect a person’s health. Employing a personalized strategy that considers the patient’s unique conditions, needs and circumstances, it uses the most appropriate interventions from an array of scientific disciplines to heal illness and disease and help people regain and maintain optimum health.’” Order, at pp. 4-5.

All I can say is that, when I was a patient at Duke University, they didn’t ask about my “emotional, mental, spiritual and environmental influences.” They just operated and saved my life. As Grandma would have said, “Frag nisht.”

But apparently the Duke University idea gets Victoria her deductions, and a Taishoff “Good job” to her attorney Lawrence A. Sannicandro, Esq., of that well-known firm, sometimes herein and elsewhere referred to as The Jersey Boys.

The magic word here is “heal.”

“The word ‘heal’ in the above definition is critical here, as an expense paid by a taxpayer for ‘healing services’ directed towards any structure of the body may be deducted as a medical expense. See sec. 1.213(e), Income Tax regs. That regulation is promulgated under section 213(a), which in relevant part, and subject to various limitations, allows ‘as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer.’” Order, at p. 5.

Nothing in Section 213 or the regs require the treatment be supplied only by licensed professionals, or be generally accepted, or be given in person rather than remotely (WebMD.com, anyone?), or even be effective. In fact, STJ Lew has as much to say about what Section 213 and the regs don’t say, as what they do.

“Concerned that conventional treatments for her condition posed too much risk, or were or would be ineffective, Petitioner subscribed to various forms of treatment from four individuals, none of whom would be commonly recognized as a conventional medical caregiver. And to be sure, none of the methods utilized by these individuals would commonly be recognized as a conventional medical treatment. The methods Petitioner subscribed to might be termed ‘alternative medicine’ by the polite, but we expect the less tolerant would characterize the treatments in other than legitimate or complimentary terms.” Order, at p. 6.

It would have helped Victoria had she gotten the diagnosis before the treatment. It seems to undermine her case that she needed to seek out her own MD if the alternative treatments did the job. And I note the diagnosis post-dated the SNOD here.

“In reaching our conclusion we consider: (1) the literal language of section 213 and its underlying regulation, which speak in broad terms; (2) Petitioner’s sincere belief that the expenses she paid for the treatments she received were directed to cure or mitigate the symptoms of her spinal disease; (3) the expenses incurred by Petitioner for the treatments she received were not of the type that an individual would routinely incur for non-medical reasons; (4) nothing in the record suggests that the relationship between Petitioner and any of the four individuals whom she paid for the services was other than professional; and (5) this Court’s recognition that expenses paid for ‘alternative medical’ treatments can be deducted as a medical expense under section 213. See Dickie v. Commissioner, T.C. Memo. 1999-138; Crain v. Commissioner, T.C. Memo 1986-138; Tso v. Commissioner, T.C. Memo 1980-399.

“Taking all of the above into account, along with the evidence introduced at trial but not referenced in this bench opinion, we find that Petitioner is entitled to the medical expense deduction claimed….” Order, at p. 8.

So, even though STJ Lew is dubious, to say the least, about the actual efficacy of Victoria’s treatment, not to say the probative value of the post-treatment diagnosis by her own MD, the deduction stands.

Lest the Jersey Boys trot out their Section 7430 fees-and-admins motion, STJ Lew has a curb for their enthusiasm.

“…in closing we think it appropriate to note that we fully appreciate the position taken by Respondent in this case, and consider that position to be more than justified.” Order, at pp. 8-9.

Remember David Seville’s 1958 hit song, which featured the words “ting tang walla walla bing bang.”

And see my blogpost “Not Parsley, Sage, Rosemary and Thyme,” 8/28/13.