Archive for December, 2017|Monthly archive page


In Uncategorized on 12/29/2017 at 16:03

I was truly disappointed in STJ Armen, The Judge With a Heart, when he sent off poor late-filing Amy L. Goline, with an off-handed cite to McCormick and no mention of anything else; see my blogpost “Ya Gotta Have Heart,” 11/9/17.

Well, today Ch J. L Paige (“Iron Fist”) Marvel lays out the full contents of the toolbox for Charlotte Marie Strickler, Docket No. 18477-17S, 12/29/17.

Charlotte Marie was two days late and a lot more than a dollar short, because she used an unblessed variant of FedEx. Remember that only those sanctified versions of the Black-and-Purple gang slide under the Section 7502 mailed-is-filed tag. FedEx Express Saver saved Charlotte Marie nothing, as it wasn’t among the “blessed communion, fellowship divine.”

So Charlotte Marie is tagged “out.”

But Ch J Iron Fist manifests the kindliness of spirit worthy of this season, and counsels Charlotte Marie of other shelter than the Inn at 400 Second Street, NW.

“However, although petitioner may not prosecute this case in the Tax Court, petitioner may continue to pursue administrative resolution of the tax liability for 2015 directly with the Internal Revenue Service, possibly by way of a request for audit reconsideration or by filing an amended income tax return. Another remedy available to petitioner is to pay the tax, then file a claim for refund with the Internal Revenue Service. If the claim is denied (or not acted upon within six months), petitioner may sue for a refund in the Federal district court or the U.S. Court of Federal Claims. See McCormick v. Commissioner, 55 T.C. 138, 142 (1970).” Order, at p. 3.

STJ Armen, please copy.



In Uncategorized on 12/29/2017 at 13:28

Perhaps failing to respond to an IRS motion for leave to file an amendment to its answer out of time isn’t grounds to dismiss one’s petition after all.

Y’all will surely remember Katarzyna Kruczak, Docket No. 21469-17S, filed 12/27/17, in its original version, as more particularly bounded and described in my blogpost “Grounds for Dismissal,” 12/27/17.

It’s not that long ago, guys.

Well, today Ch J L Paige (“Iron Fist”) Marvel calls back the early order. Apparently it was the result of a “clerical error,” and not even an inadvertent clerical error. And there was some other cause as well.

Here’s the link: Katarzyna Kruzcak, Docket No. 21469-17S, filed 12/29/17.

But trust Ch J L Paige (“Iron Fist”) Marvel. The corrected version appears 1/2/18. Katarzyna Kruzcak, Docket No. 21469-17S, filed 1/2/18.


In Uncategorized on 12/28/2017 at 18:24

Remember that Little League truism? When you’re the catcher,  lying in the dust at home plate, tag the baserunner, the batter, the umpire and yourself. That way you got ’em all.

IRS took that route in John L. Roth and Deanne M. Roth, 2017 T. C. Memo. 248, filed 12/28/17. Especially is that wise when IRS messes up the SNOD and its answer to the petition by leaving out the 40% substantial undervaluation chop, and has to do a flying line change in an amended answer.

The flying line change should shift the burden of proof per Section 7491(a) and Rule 142(a), but Judge Wherry falls back on preponderance of the evidence.

John’s and Deanne’s beef is the Boss Hoss sign-off on the amended answer’s assertion of the 40% chop, when they and IRS had stiped away the 20% negligence version. Y’all remember that Section 6664(c)(3) bars reasonable cause as an out from the 40% chop.

John and Deanne had another busted conservation easement; they stiped down to $30K from their claimed $970K. Exam recommended the 40% substantial undervaluation, and in the alternative the 20% negligence chop, and the RO got the Boss Hoss’ signoff. John and Deanne went to Appeals, and the AO approved both the chops, and the AO’s Boss Hoss approved the AO.

“The notice of deficiency issued by the Appeals Office omitted the 40% penalty and included only the 20% section 6662(a) accuracy-related penalty. Petitioners timely petitioned this Court for redetermination of the deficiencies and penalties. Respondent affirmatively asserted in his answer that the section 6662 penalty should be calculated at a rate of 40% under section 6662(h)….” 2017 T. C. Memo. 248, at p. 5.

And the amended answer was signed by senior counsel and her immediate supervisor.

Now, obeisance must be paid to Graev. “Compliance with section 6751(b)(1) is appropriately considered in this deficiency proceeding, and showing such compliance is part of respondent’s burden of production under section 7491(c). See Graev v. Commissioner, 149 T.C. __ (Dec. 20, 2017), supplementing 147 T.C. __ (Nov. 30, 2016).” 2017 T. C. Memo. 248, at p. 8.

Burden of production, be it noted. The “burden of proof” addition from 2 Cir is off the table.

John and Deanne want to lay the blame on the AO, but that falls flat.

“In all three of the instances in which respondent sought to assert penalties in this case, the individual proposing the penalties received personal approval from his or her immediate supervisor. The examiner who proposed the 40% gross valuation misstatement penalty the first time (and the 20% accuracy-related penalty in the alternative) received personal, written approval from her group manager. Likewise, the Appeals officer received personal, written approval from his team manager for the 40% gross valuation misstatement penalty (and for the 20% penalty that was shown on the notice of deficiency). And the senior counsel who pleaded affirmatively in respondent’s answer to the petition that petitioners are liable for the 40% gross valuation misstatement penalty received her associate area counsel’s personal, written approval, as evidenced by the latter’s signature on the answer filed in this Court. In sum, no matter which of these three instances was the initial determination of the 40% penalty, section 6751(b) was satisfied because each instance was approved in writing by an immediate supervisor.” 2017 T. C. Memo. 248, at pp. 9-10.

The 40% chop sticks.

John and Deanne sold some CO State tax credits from a different deal years ago, but had to repay them later as a result of subsequent litigation. They want to take Section 1341 treatment and deduct the repayment back in the year when they paid the tax.

Nope, says Judge Wherry. Maybe they can deduct the repayment for some other year, but as cash basis taxpayers they can’t go back.




In Uncategorized on 12/27/2017 at 15:56

Tax Court petitions can be dismissed for various reasons, and we all can recite most, if not all, of those most commonly encountered: petition not manually signed (preferably in blue ink) by petitioner or Tax Court admitted person, failure to state a basis for relief, electronic filing, late filing, filing with IRS and not with Tax Court, mootness (tax, additions and penalties paid), invalid SNOD or NOD (wrongly-addressed, facially-defective), and violates automatic bankruptcy stay.

I’m sure my learned readers can name a couple more (Merry Christmas, Judge Holmes).

But today Ch J L Paige (“Iron Fist”) Marvel has a new one, or rather, a new one on me. It’s failure to respond to IRS’ motion to be permitted to file an answer out of time.

Here’s Katarzyna Kruczak, 21469-17S, filed 12/27/17.

“…respondent filed a Motion To For Leave To File Out of Time Answer and lodged an Answer. Upon due consideration, it is ORDERED that…petitioner shall file an Objection, if any, to the above-described motion to dismiss. Failure to comply with this Order may result in the granting of the motion to dismiss.” Order, at p. 1.

So unless Katarzyna objects to IRS’ late answer, her petition is dismissed?

Always something new out of Tax Court.

Edited to add, 4/3/18: Turns out this was a mistake. Maybe someone does read this my blog, although at Tango Charley Juliet last week people were coming up to me and announcing they did indeed, sometimes maybe. Howbeit, the next day, 12/28/17, this order was vacated, and on 1/2/18, Katarzyna was told to object or IRS would get to file an out-of-time answer.


In Uncategorized on 12/26/2017 at 18:05

The recent tax legislation gives new meaning to Robert Graves’ 1929 autobiography, as it repeals more than one stand-by of tax court litigation. We’ll see the vestigial remnants work their way through the pipeline, and then silence.

Today, we have two small claimers: Mary A. Colliver, 2017 T. C. Sum. Op. 93, filed 12/26/17 and, of even date therewith, Robert Gollnick, Jr. and Piyanut Ustsasan-Gollnick, 2017 T. C. Sum. Op. 94.

They both have documentation problems, but those are not going to be rendered obsolete by any Congress yet assembled or to be assembled.

No, these are unreimbursed employee expense cases, and Section 199A(d)(1)(A) of the 2017 enactment ends these going forward from next week.

I’ll be sad to see them go.


In Uncategorized on 12/26/2017 at 12:15

Mark Twain wrote of the stirring times in Austria in 1898. Now it’s my turn.

Tax Court is back from “making merry ‘neath the white and scarlet berry” so the Bench again assembled emits a barrage of orders, enGraeving the 6751(b) Boss Hoss signoff far and wide.

Be prepared for even more silt-stirring between now and the horns blown at midnight on Sunday night.

For those tuning in late, here’s a random sample, with chronology; Hrach Shilgevorkyan, Docket No. 9247-15, filed 12/26/17. I won’t summarize, as Judge Ashford has the whole saga laid out in the abovecited order. And see my blogpost “Stir, Baby, Stir – That Silt,” 12/20/17.




In Uncategorized on 12/22/2017 at 16:39

IRS got zip from Zip, so Debra Ray doesn’t have to pay. That’s the good news from Judge Buch, who seems to think the United States Attorney for the Central District of Illinois is a District Attorney (a District Attorney is a State official, Judge), telling Deb that she doesn’t owe interest on her civil restitution, in Debra J. Ray, Docket No. 12358-16L, filed 12/22/17.

Deb took a Section 7206 false return fall, and USDCCDIL hit her for $7K in restitution, with a $250 credit for sums previously paid. Deb paid up timely, and the US Attorney filed a satisfaction of judgment.

IRS came looking for interest, got the entire payment wrongly applied, straightened it out (more or less), but still wanted interest. After working with collections, Deb went to Appeals. There, the AO said no managerial or ministerial delay, so no abatement.

Deb petitions, but in the meantime the Philosopher-Judge, Judge Lauber, hands down the case of Zipora Klein. For the skinny on that one, see my blogpost “IRS Gets Zip,” 10/3/17.

First, scope of review. “Here, Ms. Ray has not had a prior opportunity to dispute the amount of restitution that remains due, as such we review de novo. Although Ms. Ray has continuously argued that she paid the full amount of the restitution, neither the appeals officer nor the settlement officer addressed the issue. We will address it here.” Order, at p. 5.

And the satisfaction of judgment from the miscalled DA estops IRS from claiming any part of the restitution wasn’t paid.


In Uncategorized on 12/21/2017 at 17:15

In the immortal words of Izzy Baline, “I just got an invitation through the mails.” It isn’t formal (business attire), and it isn’t this evening (no, it’s in March). It’s the Section 7470A Tango Charlie Juliet, the upcoming Tax Court Judicial Conference.

So I hope to see as many of my readers as can make it to “that toddlin'” town on the shores of Lake Michigan. Alas, if you’re an employee I can’t assure you it’s deductible.

While, unlike Fred Fisher, I also can’t guarantee “you’ll have the time, the time of your life,” we’ll swap some war stories, learn a lot and have fun.


In Uncategorized on 12/21/2017 at 16:59

In the days of my youth, the Bad Old Days deservedly long gone by, we had a lengthy lacuna at the end of each closing, while some para or title closer wrested multiple forests’ worth of copies out of a single-purpose photocopier, whose feeders would jam or whose cartridges would die or both. We’d while away the time telling anecdotes unfit for repetition on a high-class blog meant for family reading.

I was reminded of one yesterday evening, as Judge Holmes unleashed a barrage of designated hitters, all evoking the Creature From the Graev, the Section 6751(b) Boss Hoss penalty signoff. And Judge Buch has a bunch today. Check ‘em out. Here’s one at random, Triumph Mixed Use Investments III, LLC, Fox Ridge Investments, LLC, Tax  Matters Partner, Docket No. 20412-14, filed 12/21/17.

Whether its members stand with the majority, the concurrence or the dissent, the Tax Court Judges’ union seem now to unite in dissing 2 Cir’s diss of ex-Ch J Michael B (“Iron Mike”) Thornton’s dictionary chaw, which gave rise to the Chai principle and the current Graev corollary. IRS must produce Boss Hoss signoffs for dozens, if not hundreds, of cases. Any case where there was a penalty imposed, whether before or after opinion rendered, whether or not decision entered, and even if entered, where the time to move for a Rule 161 or Rule 162 hasn’t run, or when the time to appeal hasn’t expired (and the Circuit Courts decide that), as long as the Boss Hoss wasn’t up front and personal, records reopen like the graves on The Last Day, and the Boss Hosses must do a Lazarus and come forth.

The Great Dissenter, now a candidate for the cognomen The Great Concurrer, Maybe, with his ring of slain partitive genitives at his feet, stands forth, his giant kochleffel (please pardon an arcane technical term) in hand, stirring silt like it’s the first act of The Scottish Play, takes a bow.

He warned all y’all yesterday (see my blogpost “Stir, Baby, Stir – That Silt,” 12/20/17), that by overturning ex-Ch J Iron Mike’s chew-up across the board, rather than just deferring Golsen-wise to 2 Cir in Graev as just another case of “New York values,” ex-Ch J Iron Mike and the majority were opening a Pandora’s cliché.

Well, whether the concurrers are dissing the majority, the dissenters dissing the majority and the concurrers, and the majority dissing all and sundry, one thing is for sure.

Section 6751(b) is a boobytrap in a minefield. And 2 Cir went blundering into the middle.

The joke? I cannot repeat it, but involves a nasty little boy in the heart of Rome and exceedingly exalted religious figure; the only words of the four-word punchline I can repeat are “me? You!”

I don’t fault The Jersey Boys for starting this Pythonesque circus; Congress enacted this monstrosity, and will have to correct it in one of the half-dozen or so technical correction acts that must follow their latest enactment. The Jersey Boys had a client and a case to win, “a bumping pitch and a blinding light and the last man in.” They had what looked like a winning argument, and it still might be if 2 Cir stops IRS’ Big Daddy Lipscomb move with the three (count ‘em, three) Boss Hosses.

I expect plenty more blogfodder in my Christmas stocking.


In Uncategorized on 12/20/2017 at 18:53

Means Paying the Tax

Unrelated Business Income Tax levels the playing field between the exempts and the regulars. And Judge Lauber has the steamroller rolling along in New Jersey Council of Teaching Hospitals, 149 T. C. 22, filed 12/20/17.

It’s a bad day for the Garden Staters, as The Jersey Boys lost a big one, and the Counciler’s alliances with a debt collector and credit-card processor, and a group marketer, render the Counciler’s seven-figure fees taxable at corporate rates.

Neither debt collector nor group marketer paid to use the trademarks, trade dress, regalia, or service marks of the Councilers. Though a link on the Counciler’s website led their members to said collector and marketer, the Councilers have no record what their members (all 501(c)(3)s like themselves) saved or how their members’ charitable ends were thereby served.

Although the Councilers gave the debt collector the contact info for their members’ high commands, that info was available on the public portion of the Counciler’s website to anyone with Google and  a smartphone.

No use of IP, so no 512(b)(2) “royalty” out. Draft those outside-provider agreements carefully, exempt counsel. Make sure they’re paying to use your marks and brands.

Also not “primarily for convenience of members.” Section 513(a)(2) doesn’t help, again because no records, and members could use the marketer on their own, without going through the Counciler’s website or even telling the Councilers that they were going it alone. The magic word “primarily” for benefit of members therefore doesn’t apply.

Raising money for charitable purposes, though necessary, doesn’t exempt every means of doing so from tax.