In Uncategorized on 01/05/2018 at 20:03

I’ll bet none of my readers have expended any time, or used any brainpower, on the question that has Judge Holmes designating today’s order, Oakbrook Land Holdings, LLC, William Duane Horton, Tax Matters Partner, Docket No. 5444-13, filed 1/5/18.

It’s the latest silt-stir on the Section 6751(b) Boss Hoss signoff. While Section 7491(c) places the burden of production for the imposition of chops on IRS, that provision only relates to “individuals.” But if chops are on the table, what if the chopee isn’t an individual?

Here the chop is the 40% undervaluation chop in one of those conservation easement deals. After trial IRS tergiversated extensively when the TMP raised Section 6751(b), and when, after post-trial briefing, IRS tried to wild-card in evidence about compliance therewith, Judge Holmes shut them down.

I blogged one IRS wild-card attempt in this case in my blogpost “Win Your Case By Exclusion,” 9/23/16, but missed the shutdown. Here it is.

Now, however, with Graev rising ghoul-like from the earth, and with this case presumptively bound for 6 Cir (and I guess there’s enough money on the table to make shutting down a 40% chop worth going there), Judge Holmes has some second thoughts.

“The parties may wish to brief the issue of how the Court’s ruling in Graev III that §6751(b) compliance is part of the Commissioner’s burden of production affects TEFRA cases. (The petitioner in a TEFRA case is the partner who files the petition, Chef’s Choice Produce, Ltd. v. Commissioner, 95 T.C. 388, 395 (1990), who is an individual here.) They should note that the Court has applied § 7491(c) in at least one TEFRA case, though that case showed that the caselaw might be of less than crystalline clarity. See Seismic Support Servs., LLC v. Commissioner, 107 T.C.M. 1405, 1407, n.11 (2014) (explaining that § 7491(c) refers only to individual liability for penalties but our Court sometimes applies it to taxpayers who aren’t individuals). And, of course, in a TEFRA case the only penalty issue is the applicability of the penalty, not the liability for the penalty. See United States v. Woods, 571 U.S. __, __ , 134 S. Ct. 557, 564 (2013).” Order, at p. 2.

And Judge Holmes, as he sends the parties off for the optional additional post-trial briefing, is a wee bit coy with IRS, who hasn’t so far covered itself with glory.

“The Court suspects that the consequences of Graev III may require some coordination on respondent’s part with other sections of the IRS….” Order, at p. 2. Although he means “other sections of the IRC.”

And IRS still can’t wildcard in any evidence of Section 6751(b) Boss Hossery.

If I’m spending a lot of time at the Graev-site, it’s the hot new Tax Court story, as the effects of the Internal Revenue Code of 2017 won’t be felt for years.

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