With a deficiency thrown in.

I like the ingenious move. I prefer the successful one, naturally, but the unsuccessful, even if doomed from the start, may furnish grist for the blogger’s mill.

Here’s Bryan Douglas Wendt, et al, Docket No. 11366-17S, filed 3/30/18, an off-the-bench designated hitter from STJ Lewis (“Spelled Correctly”) Carluzzo.

Bryan and spouse have a descendant enrolled and in good standing at Texas Tech in the year at issue, and have paid therefor. The Red Raiders confirm said facts, and confirm that the younger Wendt hasn’t been busted for dope.

So Section 25A American Opportunity and Lifetime Learning credits are on the table.

But Bryan tries to stretch the solid single into a double, and gets thrown out.

Bryan also seeks the Section 222(a) deduction for the same amounts.

STJ Lew breaks the bad news. “…but section 222(c)(2) (A) expressly prohibits a deduction for tuition and fees if the taxpayer ‘elects to have section 25A apply with respect to such individual for such year.’” Transcript, at p. 6.

Bryan claims he didn’t elect.

“According to petitioners, the structure of section 25A, and the titles of the various credits allowable under that section, that is, the Hope Scholarship Credit, the Lifetime Learning Credit and the American Opportunity Tax Credit (AOTC), including the overlap of the AOTC with the Hope Scholarship Credit, see sec. 25A(i), make the statute difficult to apply and subject the statute to differing interpretations.” Transcript, at p. 7.

STJ Lew isn’t buying. “Suffice it to note that we do not share their view in this regard.” Transcript, at p. 7.

If Bryan didn’t elect Section 25A, how does he get the credit at all? On the hearing Bryan cited to no other law. And Bryan has an even bigger problem if he didn’t elect the credit, but is left with the deduction.

“Ironically and arguably, petitioners’ position could result in the disallowance of the education credit, which in turn would allow the deduction for tuition and fees, but result in a substantially larger deficiency. To respondent’s credit, respondent does not alternatively argue for that result.” Transcript, at p. 8.

If you put it on your return, you elected. So two claims will only get you one.

I’m a great fan of summary J; that’s summary judgment, or judgment without trial. See my blogpost “Summary Judgment – A Causerie,” 3/13/14.

But for the motion to work, that is, to dispose of the case altogether (in one’s favor, of course), or to smoke out one’s adversary and tie the adversary down as to facts and law, and, as a collateral benefit, find out what the judge thinks of your case, your case has to be ripe enough, that is, enough facts alleged and substantiated to warrant disposition, at least in part.

I doubt Rose M. Saustegui, Docket No. 20674-17, filed 3/30/18, knew she was moving for summary J when she filed her “MOTION TO DISMISS,” wherein she claims “…we have supplied the IRS with all documents and receipts they have requested. They have requested logging miles on my vehicle which were damaged due to hurricane.” Order, at p. 1.

Of course, a deficiency case can’t be dismissed otherwise than for want of jurisdiction without entry of decision in favor of IRS for the whole amount of the deficiency.

So STJ Daniel A. (“Yuda”) Guy treats Rose’s motion as one for summary J.

I’m sure my sophisticated readers have already spotted the easy response IRS made, rather like the cross-court overhead smash that follows a desperation lob.

IRS says, “No, you haven’t.”

Or rather, as STJ Yuda more elegantly puts it: “Respondent opposes petitioner’s motion and disputes her assertion that she has substantiated the expenses in dispute. Notably, petitioner has failed to show that she has provided respondent with all requested documents and receipts. Accordingly, drawing factual inferences against petitioner as the moving party, we conclude that petitioner has not shown that there are no material issues of fact in dispute at this juncture of the litigation with respect to whether she is entitled to the deductions and credits claimed on her… return and whether she is liable for the accuracy-related penalty under I.R.C. section 6662(a).” Order, at p. 2.

No summary J, but STJ Yuda has some advice for Rose.

“This case requires more evidentiary development. Evidence is received by the Court by means of the stipulation and trial process, not through pleadings such as the petition, answer, and any reply. See Rules 91 and 143, Tax Court Rules of Practice and Procedure. Petitioner is strongly encouraged to meet with respondent’s counsel, exchange documents, and attempt to settle the case or otherwise execute a stipulation of facts and prepare for a trial.” Order, at p. 2.

OK, but maybe after some argy-bargy with IRS, there can be a stipulation of agreed facts that doesn’t give away Rose’s case. And although piecemeal motions for summary J are much disfavored (see my blogpost “The Second Time Around – Part Deux,” 8/1/17), it just might could be that another motion for summary J does the job.

With the proper disclosure of the previous application for the relief sought therein, of course.

It’s my fault this blogpost is delayed. I once again acknowledge with gratitude the overwhelming hospitality of my brother and sister-in-law. Many thanks again, guys.

Returning from the elevated discussions of argute points of law by argute judges and practitioners, the gratifying comments of readers of this my blog, and the good fellowship everywhere manifest at Tango Charley Juliet, first I wish all participants thereat, and all my readers, the very best wishes for this holiday season.

Thanks to the friendly citizens of Chicago who directed my hapless footsteps between The Busiest Airport, the CTA, the Northwestern University Pritzker School of Law (and its genial faculty and staff members) and the hotel. And of course the Tax Court Judges and staff who worked so hard to make the Conference a great success.

Alas, now back to the daily grind.

Not much coming out of The Glasshouse today, except an example of total lack of jurisdiction too good to pass up.

Morei, Inc., Docket No. 13770-16, filed 3/29/18, gets sent off by ex-Ch J Michael B (“Iron Mike”) Thornton. Ex-Ch Judge Iron Mike has no need of a dictionary here, nor is any fine point of law anywhere to be found.

Morei’s petition was signed by a disbarred attorney. After he was disbarred. After he was disbarred for exchanging in a Facebook colloquy with a prospective client of the sort that drew the legendary response from an attorney at an ethics CLE, which gives me my title for this blogpost.

Morei had also had its corporate status revoked by its home State prior to the disbarred attorney filing the petition.

Ex-Ch J Iron Mike has clearly heard enough.

“For the reasons explained in respondent’s motion to dismiss, petitioner has not shown that any owner or officer of petitioner, or anyone acting on their behalf, asked Mr. [disbarred] to sign the petition on petitioner’s behalf. Moreover, petitioner has failed to show that under Rule 60(c) and Nev. Rev. Stat. § 78.175 petitioner had the capacity to commence this case.” Order, at pp. 1-2.(Name omitted, but read the 4/13/17 Memorandum Sur Order).

I don’t remember in which panel discussion on Tuesday the “secret subpoena” was mentioned. Of course, this was a reprise of the Rule 147 vs FRCP 45 joust, that I’ve been chronicling for the last three years. If you tuned in late, read my blogpost “The Stealth Subpoena is Alive and Well,” 12/2/16, which chronicles the tale as I told it.

Always eager to rush in where angels et cetera, I corrected the panelist viva voce with “it’s the stealth subpoena.”

Ch J L Paige (“Iron Fist”) Marvel seemed to think that I, or perhaps the panelist, had imputed to Tax Court some nefarious motive, and rushed to defend the Court.

I certainly did not suggest at any time that the divergence of third-party subpoena issuance practice arose as a result of anything other than what Judge Holmes called it back in 2015: “it’s just an example of the two sets of rules drifting apart over time.”

I hope Ch J Iron Fist did not take my remark as being either disrespectful, or worse, derogatory to the Tax Court.

But the drifting apart has consequences, as I pointed out in my above-referred-to blogpost. IRS, seeing that Rule 147 doesn’t require a view halloo to opposing party or counsel when they subpoena third parties, doesn’t give it. And there is no sanction.

Discontinuities, divergences over time, unintended consequences, the gentlest of finger-fehler, all provide opportunities for gamesters.

I ought to have raised this back when ex-Ch J Michael B (“Iron Mike”) Thornton requested proposals for rule changes back in January, 2016. I didn’t, raised something else, and got a dope-slap from the ABA Tax Section, to which august body I do not belong. And now I know the fulness of my gain.

Tango Charley Juliet has ended. Hon. Eugene P. Rossiter, C J of the Canada Tax Court, added a burst of fresh northern air with his brusque but engaging commentary. I was very glad to hear from him.

The electronic controversy goes on apace. PACER doesn’t, of course, hand out personally identifiable information. And I don’t think any of us who lobby for greater on-line access want to trudge through every unsubstantiated, unredacted, pro se Sched A or Sched C or EITC. But the petitions, motions and briefs of the Fortune 100 are another story. To the extent unsealed, expert counsel have purged the public versions. So why not let us see those on-line?

Finally, just as I was ready to close up Sir Andrew for the trip down the jetway, up pops a first-class silt stir. Ch J L Paige (“Iron Fist”) Marvel may be rebuking me for my frank exchange of views by not designating this one, and dropping it in my lap just as I turn for home.

Anyway, here’s Lori J. Manroe, Docket No. 21590-17, filed 3/28/18, trying to get IRS to un-levy or disgorge, because the SNODs she got need partner-level proceedings.

You won’t remember Lori unless you’ve been reading my blog for years. See my blogpost “It’s A Sham,” 9/25/12.

Once again it’s the phony partnership, in which one has zero basis. Petaluma, Tiger Eye, and Randy Thompson all do reprises, but Woods has supervened, except it really hasn’t.

“As to whether partner-level adjustment of outside basis incident to a deficiency determination should also be merely computational, Woods provides no direct answer. In dicta, however, the Court addresses the amici’s suggestion that its decision will permit the Internal Revenue Service to directly assess a penalty on a tax underpayment that cannot itself be assessed without deficiency procedures. Noting that ‘an underpayment attributable to an affected item [such as outside basis] is exempt’ from deficiency procedures where partner-level determinations are unnecessary, the Court observes that ‘it is not readily apparent why additional partner-level determinations would be required before adjusting outside basis in a sham partnership.’” (Order, at p. 4)(Citations omitted).

So let both Lori and IRS hand in their essays, and “…set forth and discuss fully her/his position as to: (1) whether additional partner-level determinations of outside basis and/or other partner-level determinations are required in this case; (2) if so, what specifically are those additional partner-level determinations of outside basis and/or other partner-level determinations; and (3) to what extent, if any, this Court has jurisdiction in this partner-level proceeding as to the income tax deficiencies and/or penalties for 2001 and 2002 determined in the notice of deficiency.” Order, at p. 5.

Now I’m getting on the plane.

I Draw the Line at Peanut Butter and Mayonnaise

Here I am at Tango Charley Juliet, the United States Tax Court Judicial Conference, the first to be held in a time zone other than Eastern (as we were reminded by Ch J L Paige (“Iron Fist”) Marvel in her opening remarks).

And I’m soaking up learning from the sages and savants, both on and off the Bench, at a rate so furious my fingers can’t type quickly enough.

Moreover, even over a hasty lunch, the conversations of experts filled the air. The journalistic front-bench included Tax Notes’ gifted analyst Nathan Richman, and at the back The Jersey Boys held court, with promises of great blogfodder to come.

So here am Little I, a mere “general practitioner with very limited experience and mediocre qualifications,” as a much finer writer than I put it, throwing down the gauntlet to a much more distinguished member of the Bar from a high-class NYC semi-white shoe.

Contrary to my usual practice, I’ll name the gentleman: Bryan C. Skarlatos, Esq.

Mr. Skarlatos spoke of the novel jurisdiction of Tax Court under Section 7623, critically examining the limited “abuse of discretion” review and suggesting something broader. It may be his analysis will draw legislative or judicial attention, but I still make “abuse of discretion 8 to 5″, as I said in my blogpost “A Hotly-Burning Quesiton What Has Swept The Continent – Redivivus,” 7/28/17.

But my real quarrel with the distinguished counselor is over a much humbler subject. He denounced Tax Court whistleblower jurisdiction as an improper mixture, like peanut butter and mayonnaise.

I love peanut butter and mayonnaise!

Today STJ Daniel A. (“Yuda”) Guy, about to lecture to us anent the Section 7623 whistleblower statute, its cause and cure, has an undesignated order in a CDP that seems mundane, but whose offspring and siblings we will see more and more.

I take my title from G. K. Chesterton, but this is not a sequel to “The Man Who Was Thursday.” This is the sad tale of Friday O. James, Docket No. 12911-15SL, filed 3/27/18.

‘The record shows that petitioner is currently being held at an Immigration and Customs Enforcement detention facility in Pennsylvania. Petitioner is prosecuting an appeal of a decision by the Board of Immigration Appeals that he be deported from the United States. The Court has been unable to arrange a conference call with the parties and is unable to determine whether petitioner has the financial resources to pay for transport by the United States Marshals Service to a facility where the Court could receive his testimony (by electronic means) with the aim of resolving this case.” Order, at p. 1.

So Friday gets an order to file a status report next month. He can’t make a phonecall, apparently, but perhaps he can send STJ Yuda a letter.

It’s not clear from where.

Here at Tango Charley Juliet, about to breakfast with the greats and near-greats of Tax Court law and practice, I haven’t been “smoking cigarettes and watching Captain Kangaroo,” as Lew (“He Spelled It Right”) DeWitt wrote at just about the same time I was admitted to the Bar of Our Fair State.

It’s been a deck of Fifty-One indeed. Today is the fifty-first anniversary of that admission. Fifty-one years of a wonderful ride.

And no ride is worthwhile that hasn’t some hairpin turns, gut-wrenchers and near-crashes.

More to follow, if time permits.

Here I am in the Windy City. While there aren’t any hog butchers in evidence, nor stackers of wheat, and there’s no stormy, husky or brawling in evidence (yet, but they haven’t started serving drinks), the luminaries of USTC are around and about.

It was great to say “hi” to Judge Buch, and to wave at CSTJ Lewis (“That Man Knows How to Spell”) Carluzzo. I’m sure more of the judiciary will be sharing their insights with us.

I’m disappointed that Judge Posner of 7 Cir. won’t be speaking. He would certainly add a distinct perception.

But even more surprising is that today we have no opinions, rather only two designated hitters, both from Judge David Gustafson, and both examples of how that Obliging Jurist tries to lead the recalcitrant and the befuddled among the self-represented who find themselves enwrapt in the anfractuosities of Tax Court practice.

Dorothy L. Anderson, Docket No. 30766-15L, filed 3/26/18, may not be getting all her Tax Court mail. When you read Judge Gustafson’s order, it’s not surprising. So Judge Gustafson launches a bombardment to every address Dorothy might have or had, to encourage her to play nice with IRS counsel.

And Judge Gustafson once again tries to help out Douglas Stauffer Bell & Nancy Clark Bell, Docket No. 1973-10L, filed 3/26/18. This time Judge Gustafson gives Doug & Nancy a list of local clinicians, without guarantee, warranty or representations, of course.

Doug & Nancy have been befuddled before, and Judge Gustafson came to their aid. See my blogpost “Forms and Letters,” 6/5/17. After chronicling in some detail Judge Gustafson’s generosity, I gently suggested we have another Judicial Conference, to talk things over.

And so we have.

Lose Your Advanced Premium Assistance Credit

Although damaged, the Patient Protection and Affordable Care Act drives on, and like Juggernaut’s Car of legend, runs over the unwary taxpayer-beneficiary. Here’s the story of Eliot M. Gray & Susan C. Gray, Docket No. 28011-16S, filed 3/23/18.

Eliot & Susan exchanged vows at midyear. By year’s-end, Susan, who had started the year with estimated income below the 400% of poverty line and $3K of advanced premium assistance credit, found herself in the happy position of having nearly double that income on her joint return with Eliot.

But she also has a deficiency, as the credit is wiped out.

Sue claims that only her prenuptial income should count, but Judge Buch gives IRS summary J for the whole shebang.

Judge Buch explains: “When a taxpayer marries during the year they can elect the alternative computation of additional tax liability. Under this computation each spouse individually computes the alternative premium assistance amounts for the time they were unmarried using one-half of the actual household income and their family size prior to the marriage. The taxpayers add the alternative premium assistance amounts from the time they were unmarried with the premium assistance amounts the taxpayers were entitled to when married to calculate the alternative marriage year credit. The alternative marriage-year credit is then reconciled with the actual credit received to determine if excess credit was paid on behalf of the taxpayer. Mr. and Mrs. Gray did not elect this alternative computation on their Form 8962.” Order, at p. 4. (Footnotes omitted, but they cite to the relevant regulations).

Eliot & Sue are apparently so far over the cut-off that this computation doesn’t help them.

And so it’s off to Chicago and Tango Charley Juliet, the Tax Court Judicial Conference. Watch this space.