Today the title of J. S. Bach’s cantata BWV 82 sums up the ongoing purge of non-motion requests for extensions of time carried out by That Obliging Jurist, Judge David Gustafson.

See my blogpost “Ya Gotta Move, Move, Move,” 2/27/18.

Since rock ‘n’ roll didn’t work, today Judge Gustafson goes for the classics in Broad River Holdings, LLC, Broad River CE Manager, LLC, Tax Matters Partner, Docket No.22635-15, filed 3/7/18.

It’s the same with the Broads as with Joe Earl York and the IRS. They’re trying, they really are, to schedule anything else they have to do, but they’re snagged on the SOL for the various Broad partners.

Judge Gustafson gave them two months to “get ‘er done” back in January. They did report on time, but their report asks for more time.

No, says Judge Gustafson.

“A request for the issuance of an order should ordinarily be stated in a motion. See Rule 50(a) (“An application to the Court for an order shall be by motion”). Following this procedure helps assure that a request is not overlooked. Parties should generally avoid putting requests for relief in documents that they file as status reports.

“Filing a motion not only simplifies the matter for the Court (enabling the immediate granting of a motion without the need for preparing an order) but also helps to assure that the Court does not overlook a request. Filing a request as a motion also helps to assure that the requesting party will comply with the requirements for motions. The parties’ request appears reasonable, but under Rule 50(a) it should have been presented by motion and not as an informal request in a status report.” Order, at p. 2.

At least both parties in this case agree that they need more time.

Of course, clever counsel use the status report to wildcard in all manner of stuff. See my blogpost “Chai, Chai, V’kayom,” 4/18/17. BTW, a docket search reveals that my colleague not only moved, he filed two amendments to the petition, and the parties are still jousting.

C’mon, guys, move.

I didn’t blog Timothy M. Dees, 148 T. C. 1*, when it came out 2/2/17, because I was more interested in the Battat recusal gambit (see my blogpost “Pay the Man – Part Deux,” 9/1/17), as that was obviously going to be the newest game in town.

Then too, I’d already discoursed and ranted extensively anent IRS’ now-you-see-it, now-you-don’t appearing and disappearing SNODs; see my blogpost “Should You Petition Everything?” 8/15/17.

But today, the plight of Cedric Ray Allen, 2018 T. C. Memo. 24, filed 3/6/18**, should wring a muffled sigh, at least, out of even the stoniest heart.

I’ll let Cedric tell the tale in his own words. “I am the petitioner in the within bona fide legal cause of action, am a poor indigent incarcerated prisoner, and have at risk threatened personal and/or property rights as a result of the within cause of action;

“THAT, declarant is a layperson, untrained in law, and as a result of poor, indigent, and incarcerated status is barred from access to the courts to protect personal and/or property right as guaranteed by due process abd [sic] equal protection clause of both the state and federal constitution….” 2018 T. C. Memo. 24, at p. 6.

It gets worse. Cedric was on KP for the years at issue. And he was on KP in the jailhouse kitchen.

Lemme tell y’all about KP, although not in the jailhouse kitchen.

From 4 a.m. until after 9 p.m., soaked in suds and dishwater, boots that had to be highly polished encrusted in grease, scrubbing endless squareheads and flattrays, barked at by every six-month National Guard PFC cook, berated by a mess sergeant with years of practice, unloading trucks in pouring rain… I’ll leave it that it was an enlightening experience. I will not make any political comments about those deferred.

Cedric got paid, and claims he should get $2500 back from IRS. Cedric wants his day in court, the prepayment sixty-buck ticket to justice.

Now IRS’ correspondence wasn’t of the best. Judge Buch charitably characterizes some of it as “confusing.”

But the bottom line is that all IRS did was not give Cedric a refund of his withholding, denied him his claimed EITC (which prisoners don’t get), and told him he owed no tax. They also asked him for information about his children, but he said he hadn’t any.

At the end of the day, IRS never determined that what Cedric showed on his return was less than what he owed.

And in a considerate footnote, Judge Buch lets Cedric out of a concession that would have destroyed his case. “Petitioner’s concession that he did not receive a notice of deficiency or notice of determination for 2008 or 2009 is also persuasive, but we do not hold his concession to be conclusive on its own, as petitioner was likely not fully cognizant of the decisive jurisdictional consequences of making such a concession.” 2018 T. C. Memo.24, at p. 12, footnote 11 (citation omitted).

Judge, when you come off KP you’re lucky if you know what day it is.

Cedric also got a Section 6702 chop, probably because of the EITC claim. However, that can only be considered at a CDP after a NFTL or NITL, and none thereof has yet issued.

Judge Buch suggests IRS could have been clearer, and made his life easier thereby. Read the correspondence cited by Judge Buch; between IRS’ bureaucratese, and Cedric’s prose, one could easily be befuddled.

Cedric wants counsel appointed, but that he only gets in a criminal case. Anyway, Cedric isn’t nearly as clueless as he lets on. “Petitioner’s filings reflect a fair amount of familiarity with the legal process–indeed, more than many of the pro se nonincarcerated litigants who appear before us.” 2018 T. C. 24, at p. 14, footnote 13.

Judge, you can learn a lot of law when you have a lot of time on your hands, a lot of motivation, and you’re not on KP.

*Timothy M Dees 148 TC 1 2 2 17

**Cedric Ray Allen 2018-24 3 6 18

Judge Mark V. Holmes claims Tax Court has gone back to Ancient Rome, but fortunately the gang at 400 Second Street, NW, is a lot “more collegial.”

To begin with, four years ago Judge Chiechi left in play the excess Roth IRA contributions of Celia Mazzei, 150 T. C. 7, filed 3/5/18. Income tax was off the table, due to SOL.

For the backstory, see my blogpost “Foolish Consistency – Redivivus,” 4/1/14.

Well, today ex-Ch J Michael B (“Iron Mike”) Thornton doesn’t need a dictionary chomp, because the tax benefits from Celia’s and famiglia’s Foreign Sales Corporation (a now-defunct export subsidy via Congressional largesse) are for income tax, not for the 6% overfunding Section 4973 hit.

The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, Master Silt-Stirrer and Suetonius Scholar, Judge Mark V. Holmes, says ex-Ch J Iron Mike ignores 6 Cir precedent (though Mazzei is 9 Cir bound), and acts like Caligula. 150 T. C. 7, at p. 77. If Congress carelessly gave away the ranch twice, it’s not Tax Court’s job to remedy same.

The FSC was properly set up, even if Celia and famiglia bought shares for a buck a pop and got better than half-a-million funneled into their Roth IRAs. Celia’s reliance on her CPA of 29 years’ standing was justified. But Celia and family controlled both the FSC and their own C Corp who paid the commissions to the FSC when, how, and in what amounts they wished.

While the FSC legislation made this OK, and exempted same from Section 482 reshuffling, that was for income tax, says the majority. And the majority does the usual form-over-substance. The only party with any economic risk was Celia and famiglia. They were on all asides of the deal, and while that may be OK for income tax purposes, it was too great stretch to cover Roth IRA funding limits.

The Great Dissenter says the majority could wreck many small corporations, capitalized for pennies, which later made millions. No, says ex-Ch J Iron Mike.

“The dissent’s hypothetical scenario would not involve a mismatch between substance and form.  At the initial point of capitalization, the fair market value and the substantive economic value would be identical and equal to the capital investment.  As the day-to-day operations commenced, that initial value would begin to change in concert with changing expectations regarding future cashflows.  The fair market value and the substantive economic value of the stock would remain identical, whether the business was a success or not.  Petitioners’ situation is different because at the moment of purchase petitioners’ formal characterization of the purchase did not match the underlying substantive and related-party economics.” 150 T. C. 7, at p. 66 (Footnote omitted).

I agree with ex-Ch J Iron Mike. Celia and famiglia were doing a double-dip, and the statute upon which they relied gave them only a single dip.

The Great Dissenter again went too far. See my blogpost so entitled, 2/11/13.

It’s a standard football tactic, to overwhelm a defender by dispatching a large number of attackers into the area the defender seeks to protect. IRS seems to think the tactic goes better with Coke, so they try it in The Coca-Cola Company and Subsidiaries, Docket No. 31183-15, filed 3/5/18.

And this is just one of four (count ‘em, four) discovery face-offs on the Tax Court order board today; the remainder have to do with expert witnesses and their limitations.

The Cokers’ gripe is that IRS is trying to flood the zone.

The Cokers claim “…that respondent’s listing of trial exhibits is excessively voluminous and includes many items that respondent could not possibly intend to use at trial. As directed by the Court, respondent timely responded to this motion…. In that filing respondent states: ‘If petitioner’s concern is to avoid surprise and shorten trial time, a timely exchange of documents used to question witnesses is a practical solution.’” Order, at p. 1.

Judge Lauber has a useful suggestion. “The Court favors a requirement that each party must (absent exceptional or unexpected circumstances) provide to the other party, at least one week in advance of calling a particular witness: (1) the identity of that witness and (2) identification of all documents that the party expects to use on direct examination of that witness.” Order, at p. 1.

The parties are to discuss this at trial opening. Of course, this order is dated March 1, but since the Nor’easter last week it only gets published today. And today is the day when trial opens.

Good luck, guys.

Our Nation’s Capital, s/a/k/a The Swamp, is being slammed by the cyclobomb, wherefore teletubby is the order of the day. My e-mail is out because aol.com has been down for hours, so I can’t even teletubby. And my tolerance for cutesy names for weather events, as well as statutes, is at an all-time low.

So with only four (count ‘em, four) orders, and no opinions, out of The Glasshouse today, I was going to shut up and shut down, and go have a tassie or two with my old chum Fred.

But Ch J L Paige (“Iron Fist”) Marvel absolved me from my vow of silence. Unhappily, that’s not good news for Roger W. Guge & Susan A. Guge, Docket No. 25443-17L, filed 3/2/18.

Rog & Sue really have a sad tale. Rog & Sue got a notice of decision in their equivalent hearing, and petition. A year earlier, they had sent in Letter 12153, asking for a CDP, but at that point no NITL or NFTL had been issued. When they got the CP90, which gave them a chance to send in a new 12153, they sent in the old one.

“Petitioners contended that they had been improperly denied a Collection Due Process (CDP) hearing under section 6330(d)(1), I.R.C., through operation of constitutionally inadequate IRS notice procedures. They argued that the February 13, 2017, Notice CP90 did not sufficiently advise that an already submitted Form 12153 would be ineffective to serve as a timely request. (In that connection, petitioners also offered copy of an email in support of a claim that they re-sent the November 2016 Form 12153 to IRS in December 2016 as well.) Petitioners further stressed that they were not disabused of such misunderstanding until too late to respond in a timely manner. Specifically, they attached an IRS Letter 4473C, dated March 13, 2017, stating that they were not entitled to a CDP at that time on the basis of the earlier Form 12153, because that IRS had not yet issued an underlying notice of lien filing or intent to levy when it was submitted. Petitioners highlighted that the period for filing a timely Form 12153 expired on March 15, 2017, only two days after the date of the Letter 4473C.” Order, at p. 3.

Talk about being scrod, if I may use the pluperfect subjunctive.  Another little game from IRS’ cubby of dirty tricks.

“Unfortunately, despite the sympathetic nature of petitioners’ circumstances, the bona fides of their extensive efforts, and the facial appeal of their arguments, the potential efficacy of a premature Form 12153 has been thoroughly considered and rejected by this Court. In Andre v. Commissioner, 127 T.C. 68 (2006), the taxpayers’ attempts to rely on a Form 12153 that predated the underlying notice of intent to levy were held unavailing. Petitioners regrettably fall into the same situation here, and the Court is convinced that the reasoning in Andre v. Commissioner, 127 T.C. at 70-74, remains valid.

And to top it off, Sue’s name is misspelled as “Gage,” Order, at p. 1.

The “People’s Court,” the sixty-buck-ticket-to-justice, right? Yeah, roger that.

For those looking forward to the next USTCP exam, there’s a detailed look at some of the anfractuosities of the hearsay exclusion and its convoluted variations and exceptions today, as Judge Holmes reviews FRE Art VIII in Estate of Michael J. Jackson, Deceased, John G. Branca, Co-Executor and John McClain, Co-Executor, Docket No. 17152-13, filed 3/1/18.

Though the case was tried a year ago, there’s still post-trial briefing going on, and there’s a pickle-barrel full of exhibits (57, to be precise), where the parties have reservations as to admissibility, both as to the truth thereof and relevance.

I suggest the serious student read the order, side by side with the Rules cited by Judge Holmes. Some of this might just be on the exam.

Neither treaties with, or enactments by, the US of A (like the General Allotment Act of 1887, the Canandaigua Treaty of 1794, and the Treaty of 1842), nor the Two Wampum Belt from the 17th Century treaty with the Dutch, rescue Alice Perkins and Fredrick Perkins, 150 T. C. 6, filed 3/1/18, from income tax on the gravel they sold, even though Alice, an enrolled member of the Seneca Nation, extracted the gravel from the lands of the Seneca Nation with permission therefrom.

Alice and Fred are jousting with IRS in USDCWDNY, and doing OK in said Court, having stalled IRS’ attempted toss in a refund case.

But today Judge Holmes, who seems to specialize in Western New York cases, relishes the chance to second-guess USDCWDNY. He interprets the Canandaigua treaty to limit the exemption from tax to products of land allocated to individual member of the Nation in trust. Alice admits that the gravel came from common lands of the Nation.

Now when interpreting treaties between the US of A and the Indians (I use the term as the Court uses it; “Much of the literature in this area refers to ‘Indian law’ and ‘Indian treaties’ and the like, however; so to maintain some continuity with this legal-historical past, we will use the traditional nomenclature….” 150 T. C. 6, at p. 2, footnote 1), “(T)he normal maxims–cited almost every day our Court releases opinions–that deductions ‘are a matter of legislative grace,’ and that exemptions from tax are strictly construed are displaced a bit when Indians are involved.  We construe treaties and statutes in favor of Indians because courts have viewed Indians as being in a more vulnerable position in relation to the United States government.” 150 T. C. 6, at p. 7 (Citations omitted).

But that doesn’t help Alice and Fred. The General Allotment Act of 1887 means allocated to specific individuals. The Treaty of 1842 doesn’t exempt individuals, only the Seneca Nation as a whole and its allied members of the Iroquois Confederacy. It’s a non-alienation treaty, that prevents the lands of the Nation and its allies from being taken.

And the famous Two-Wampum Belt, which is two-parallel rows of contrasting colored shells, is insufficient to confer tax exemption. It means “peaceful coexistence” to Judge Holmes, but the Indian Citizenship Act of 1924 makes Alice and her fellow-Nationals US citizens, just like the rest of us, and subject to tax unless exempted.

Alice didn’t mine and sell the gravel for the benefit of the Nation, but only for herself (and Fred). Art. 9 of the 1842 Treaty pledges the US of A to prevent lands of the Nations and allies from being taxed by New York State (and New York State knows how to tax; I’ll say!). New York State was hot to tax the Nations and allies for roads in 1842. Some things never change.

It’s unnecessary to distinguish between gravel as realty or non-realty, because it was detached when sold. In any case, the 1842 Treaty only exempts the lands of the Nation from real estate taxes.

But see Judges Lauber and Pugh concurring, and especially Ch J-in-waiting Foley’s dissent. Judge Holmes shouldn’t play with gravel. Just stick to treaties and wampum.

As for chops, they’re off the table, as it’s another Fifty Shades of Graev, with IRS once more playing the Michael Corleone gambit.

Judges Vasquez, Morrison, Buch, and Nega are down with this.

Judges Lauber and Pugh, agreeing with the result, take issue about the gravel. Ch J-in-waiting Foley (I’m still taking applications for soubriquet) raises the very valid point about products taken from the land being part of the land. USDCWDNY went off on whether the gravel was real property, which would somehow take Alice out from all the other cases that taxed salaries, wages, royalties, rental income and unearthly stuff.

Judges Lauber and Pugh don’t want to go anywhere near the gravel or the land. “Unlike the opinion of the Court, we would not reach the issue of whether gravel constitutes real property.  Instead, we would grant summary judgment for respondent because article 9 of the 1842 Treaty conferred rights on the Seneca Nation, not its constituent members, and because immunity from Federal taxation was not among the rights conferred.” 150 T. C. 6, at p. 28.

Ch J Marvel, and Judges Gale, Thornton, Goeke, Gustafson, Paris, Kerrigan, and Ashford agree with this opinion concurring in part and concurring in the result.

Ch J-in-waiting Foley dissents, saying land is dirt. And it isn’t as simple as Judge Holmes thinks it is.

“The opinion of the Court concludes that gravel mined from Indian land is not part of Indian land, reasoning that ‘[t]he gravel wasn’t attached to the land when it was sold, so the Perkinses aren’t exempt from tax on the sale of the gravel under the 1842 Treaty.’  See op. Ct. p. 18.  More convincingly, the United States District Court for the Western District of New York stated that ‘[g]iven the liberal principles of treaty construction that apply here, there is no reason to believe that one rule would apply to taxing the dirt, gravel, and foliage that make up the property and another to the property itself–if ‘the property’ can even be distinguished from the dirt, gravel, and foliage that comprise it.’  The opinion of the Court’s conclusion, see op. Ct. p. 18, that it is not ‘difficult to distinguish real property from the gravel severed from it’ ignores the complexities relating to mineral rights and property law.” 150 T. C. 6, at pp. 29-30 (Citation omitted). I think you meant “op. cit.” Judge, but maybe supra would have done better.

I agree with Ch J-in-waiting Foley. As a dirt lawyer with fifty years in, it isn’t as simple as Judge Holmes would let on. “So affixed to the freehold that it cannot be removed without injury to the freehold” has fed many of my brethren and sistern very well, thank’ee. I remember all the throwdowns about fixtures in leasehold negotiations and litigations, mortgage negotiations, workouts and foreclosures; even in apartment sales, where “built-ins” was a fighting word; and what about cellphone towers, like Frank Dirico in my blogpost “Passive Aggressive – Part Deux,” 11/13/12?

Tell me that mining doesn’t damage the freehold.

Best advice came from Judges Lauber and Pugh: stay away from the dirt.