Archive for April, 2018|Monthly archive page


In Uncategorized on 04/30/2018 at 15:54

The popular advice from the personal finance bloggers is likely a good idea for the wage-earner and the self-employed, but is not the path to a 501(c)(3) approval, as we see today in Abovo Foundation, Inc., 2018 T. C. Memo. 57, filed 4/30/18.

Emmanuel C. Okonkwo. M. D., is a military veteran and board certified expert in patient safety and risk management. He seeks tax exemption for his Texas domestic nonprofit corporation, the petitioner herein. “Abovo’s primary purpose would be to deliver quality management consulting services to medical providers and advance Government programs through patient safety initiatives.  Its quality management services would include ‘defining, identifying, analyzing, measuring and controlling systems and processes to ensure desirable outcomes’.  In addition, Abovo would provide ‘uplifting services for the elderly and veterans’, housing for low-income individuals, and internal auditing services.” 2018 T. C. Memo. 57, at p. 2.

Sounds great, no?

Well, there’s a hitch that brings Abovo down. And here’s my chance to unveil my latest cognomen, after an exhaustive search and review, for Ch J-elect Maurice B (“Mighty Mo”) Foley.

Ch J-elect Mighty Mo: “Abovo would solicit donations and receive fees relating to its services.  Dr. Okonkwo, Abovo’s president, chief executive officer, and sole employee, would perform services provided to clients (i.e., at an hourly rate of $350), receive a $217,000 salary, and be eligible for an annual performance-based bonus (i.e., not to exceed $100,000).  While Abovo has not entered into any service contracts, its fee structure would be market based and dependent on the nature of the project and the expertise required to complete it.” Order, at p. 3.

For those of my readers who shouted out “inure to the benefit,” congratulations.

“Abovo contends and bears the burden of establishing that its services would advance Government programs pursuant to Federal patient safety laws and lessen the Government’s burden.  See Rule 142(a).  To the contrary, Abovo’s services would not serve an exempt purpose, would be commercial in nature, and would serve Dr. Okonkwo’s, rather than the public’s, interest.  The administrative record does not establish that Abovo would act on the Government’s behalf or that Abovo’s consulting services would lessen the Government’s burden. “ 20187 T. C. Memo. 57, at p. 4 (Citations omitted).

“In short, Abovo is a facade for Dr. Okonkwo’s consulting activities.” 2018 T. C. Memo. 57, at p. 4.

If you’re seeking tax-exemption and deductions for contributions, don’t pay yourself first.



In Uncategorized on 04/27/2018 at 15:52

STJ Lewis (“Great Name”) Carluzzo echoes the words of the late great Sir George Harrison in a designated hitter off-the-bencher, Glen Tremayne Morgan, Docket No. 7695-17S, filed 4/27/18.

Glen had some looseleaf pages showing his backs-and-forths to the asbestos-removing gigs whereat he worked, wherewith to substantiate his unreimbursed employee mileage deductions.

He had no permanent worksite.

“The distance between petitioner’s residence and the jobsites, according to his notes, varied from 20 miles to 58 miles, with a majority of the jobsites being 50 miles or less from his residence.

“At trial petitioner called the Court’s attention to an IRS publication that addresses deductions for travel to temporary jobsites. The Court treated that document as petitioner’s pretrial memorandum and had it filed as such. That document provides a sufficient explanation of the applicable law and we see no need to repeat that analysis here. All of petitioner’s jobsites were ‘temporary’, but as petitioner’s pretrial memorandum correctly points out, taxpayers such as petitioner, who have no regular place of employment, may only deduct travel expenses to temporary jobsites if the jobsite is outside of the metropolitan area where the taxpayer lives and normally works.” Order, Transcript, at p. 5. (Citations omitted).

STJ Lew buys Glen’s notes, despite IRS throwing some serious shade on Glen’s claim that they were contemporaneous. I don’t suggest trying the looseleaf bit otherwise than in a small-claimer with a truthful-looking petitioner, but Glen gets past the Section 274 traffic stop.

Problem: what is Glen’s metropolitan area? His notes don’t help.

STJ Lew is inventive.

“Taking into account the information shown on petitioner’s notes, we find that travel to jobsites 40 miles or less are within the relevant metropolitan area and petitioner is not entitled to a deduction for travel to those jobsites. More likely than not, some of the jobsites shown to be more than 40 miles from petitioner’s residence would be considered inside the relevant metropolitan area, and some would not. In the absence of specific evidence on the point, we find that petitioner is entitled to a deduction for one-half of those miles.” Order, Transcript, at pp. 7-8.

And IRS’ counsel and Glen can do a Rule 155 beancount, using standard mileage rates.



In Uncategorized on 04/26/2018 at 15:42

His Honor Big Julie, better known as His Honor Judge Julian I Jacobs, hereinafter HHBJJJIJ, reaches back for a State Court remedy and finds it in Rule 104(e)(3).

Amnesty National, Docket No. 4570-17, filed 4/26/18, isn’t a first-timer at 400 Second Street, NW, although it’s been years between appearances.

IRS claims the documents it seeks are necessary to prepare a defense for the trial. HHBJJJIJ buys it, especially as Amnesty has been ducking IRS’ counsel.

So here are the sanctions HHBJJJIJ will lay upon Amnesty if the documents aren’t forthcoming: “…the issues to which respondent’s discovery request pertain shall be taken as established in this case as set forth in (and petitioner will be prohibited from offering evidence to rebut the determinations made in) the notice of deficiency issued to petitioner, …the assignments of error set forth in the petition will be struck, and … such other and further relief as the Court deems proper.” Order, at p. 2.

Of course, in the days of my youth such a drastic remedy was rarely if ever imposed in State Court.


In Uncategorized on 04/25/2018 at 16:27

No, this is not about yesteryears’ TV performers waxing comfortably stout in the wallet as their ancient epics fill the midnight streamings of the exotic entertainment providers. This is about the residual exception to hearsay in FRE 807.

Now where would one encounter this catch-all? Well, one might guess when a party is trying to wild-card an otherwise inadmissible statement into evidence, hasn’t got anything better, and the judge is leaning toward that party’s case anyway.

And in Tax Court, that has to be the Section 6751(b) Boss Hoss sign-off, the flavor de l’année post-Graev. All manner of Civil Penalty Approval Forms (CPAF) made their appearance in record reopeners, as the silt-stir predicted by Judge Holmes (see my blogpost “Stir, Baby, Stir – That Silt,” 12/20/17) shifts into overdrive with the afterburners cutting in.

Judge Ashford goes off here on Nikta Fatemeh Abdolrahim & Melvin Collins, 9650-14, filed 4/25/18. Each of them and both of them have tax problems, but Mel is looking at some Section 6663 75% fraud chops. And when they tried their cases back in 2015, neither Mel nor Nik nor IRS mentioned Section 6751(b).

But the RA who proposed chopping Mel testified on the trial, although the CPAF, allegedly duly signed by the RA’s immediate supervisor, never made it into the record.

Mel & Nik object that they never got a chance to challenge the CPAF. But they can’t tell Judge Ashford what evidence they would adduce now to challenge it.

Mel “…seemed only to question the authenticity of the Civil Penalty Approval Form, stating that he thought the form was recently signed and that there were undated handwritten notations on it. The form, however, clearly shows that it was signed on October 21, 2013, several months before the January 23, 2014, notice of deficiency was issued to petitioners, and the handwritten notations (which are below the signature and date line of the form) confirm the assertion of the section 6663 penalties and the section 6651 additions to tax for 2009 and 2010. Similar to their written objection, at no point during the [Court’s phoneathon] did petitioners identify any particular testimony they would wish to elicit from either Mr. [RA] or Mr. [Boss Hoss], or suggest any other additional evidence they would like to proffer.” Order, at p. 4. (Names omitted).

So Mel & Nik got enough advance warning to satisfy Judge Ashford that they got sufficient FRE 902(11) heads-up. And though the CPAF stumbles at the FRE 803 barrier, it recovers enough to jump the FRE 807 residual fence.

Read this designated hitter, practitioner. Think carefully: what might you proffer to avoid the chops hitting Mel, when aimed at your clients?


In Uncategorized on 04/25/2018 at 15:26

I am quite sure that Judge David Gustafson, however obliging he may be, has never encountered RuPaul Andre Charles, or has had dealings with supermodels, whether on or off the runway. So the title of this little essay will not recall to His Honor the 1993 cavatina whence cometh said title.

Howbeit, Judge David Gustafson echoes Mr./Ms. Charles’ injunction to counsel in Johannes Lamprecht & Linda Lamprecht, Docket No. 14410-15, filed 4/25/18.

Linda’s counsel (and also Johannes’, which might spell trouble; see infra, as my expensive colleagues say) is as big a fan of summary J as I am. But his problem is as expressed hereinabove. Yesterday Judge Gustafson bounced an attempt at summary J by Linda to get out by asserting that Johannes’ fraud can’t be attributed to Linda.

“Our order of April 24, 2018 (ECF 80), observed that ‘the memorandum in support of her motion states very few facts; it cites no evidence’; and we criticized petitioner’s apparent intention to “leave to respondent (or perhaps to the Court) the task of extracting from prior filings the facts in this action that are relevant to this motion” and then the task of searching the record to see whether those alleged facts can be supported by materials in the record. Rule 121 does not permit this approach.’ We denied the motion.” Order, at p. 1.

Well, ya gotta admit the dude isn’t a quitter, whatever his skills as a pleader. And he sure checks the Tax Court website even more carefully than I do. Later the same day (yesterday), counsel shoots in another summary J motion with memorandum.

“The memorandum appears to assert that alleged fraud attributed to Mr. Lamprecht cannot be attributed to Ms. Lamprecht, but it gives no factual information whatsoever that would permit this distinction to be examined. The memorandum (at 21) cites an affidavit that appears in a prior filing to support an assertion about the IRS’s intention to issue a summons; but the memorandum generally alleges facts about issuance of the summons, summons litigation, and withdrawal of the summons, for which allegations it cites no support. Once again, petitioner seems to assume that the Court will itself derive the specific facts from somewhere in the record, or will assume facts in petitioner’s favor unless respondent disputes them. This reflects a misunderstanding of the movant’s burden under Rule 121.” Order, at pp. 1-2.

So Judge Gustafson bounces the second summary J try. And imposes a limitation I’ve seen in State court, where a too-energetic litigator (whether pro se or counsel) tries the bombardment tactic. It’s called the “Mother, may I?” rule.

“…neither petitioner shall hereafter file a motion for summary judgment without first scheduling and conducting a telephone conference with the Court and respondent.” Order, at p. 2. Pre-motion conference is a rule in a number of courts.

And counsel has yet more homework.

The main case upon which counsel relies doesn’t quite say what he says it says, at least not to Judge Gustafson, but I’ll leave that for those of you who want to read Judge Gustafson’s order and the case therein cited. You tell me.

But there’s more. What would a Tax Court case be without at least one look at the Section 6751(b) Boss Hoss sign-off?

“…Section 6751(b) makes no mention of ‘fraud’ in particular and makes no provision whatsoever affecting the running of the statute of limitations under section 6501(c)(1) as the result of ‘a false or fraudulent return’. Even if we were to accept petitioner’s novel suggestion that section 6501(c)(1) constitutes a ‘penalty’ of sorts, it would not be the sort of penalty affected by section 6751(b), which provides that ‘No penalty shall be assessed’. A statute of limitations is not ‘assessed’. … If one of the petitioners in this case has separate contentions that would relieve her of liability to the relative disadvantage of the other petitioner, then due attention should be paid to whether a conflict of interest might exist that would prevent one attorney from representing both petitioners. See Rule 24(g).” Order, at p. 2. (Emphasis by the Court).

I love summary J. But for it to work, you better work.



In Uncategorized on 04/24/2018 at 16:18

No, not the Barbara Stanwyck-Bert Lancaster thriller of seventy years ago. This is the story of the wrong EIN on a 941, and the taxpayer’s attempt to get proper credit after the 3SOL has run.

So it’s equitable recoupment to the rescue for Emery Celli Cuti Brinckerhoff & Abady, P.C., 2018 T. C. Memo. 55, filed 4/24/18, a local law firm.

For the skinny on equitable recoupment, see my blogpost “Equitable Recoupment,” 7/8/13.

ECCBA went from LLP to PC, in the process getting a new EIN but putting the old LLP EIN on the 1Q 941 for the transition quarter. The clock had long since run when IRS dinged the PC for the “unpaid” FICA/FUTA/ITW that its predecessor had in fact paid.

PC’s counsel was a wee bit late (like about seven weeks) getting the SO all the documents, pictures, descriptions and accounts to paper the goof. The SO had already determined to drop a NOD on PC, but same had not yet issued when PC’s counsel unloaded the exculpatory material.

Judge Gale: “First, we note that the administrative record includes not only material that the settlement officer reviewed but also material that was available for his review. See Thompson v. U.S. Dept. of Labor, 885 F.2d 551, 553-556 (9th Cir. 1989); West v. Commissioner, T.C. Memo. 2010-250, slip op. at 11 n.11.  Moreover, at the time of … PC’s CDP hearing, the Internal Revenue Manual (IRM) instructed Appeals employees conducting such hearings to “[c]onsider information received after the due date for supplying information but prior to issuance of the Notice of Determination/Decision Letter.”  IRM pt. (Oct. 30, 2007); see Shanley v. Commissioner, T.C. Memo. 2009-17, slip op. at 15 (noting the de facto extension of time for submitting information arising from the requirement in IRM pt. that an Appeals employee consider information submitted before the issuance of a notice of determination).  It is undisputed that Emery PC submitted substantial information and supporting documents 11 days before the notice of determination was issued and that the settlement officer did not consider the submission. The submission included two letters with extensive attachments.  In view of the fact that these materials were available for the settlement officer’s review, and that IRM guidelines instructed him to review them, we find that the two letters and their attachments are part of the administrative record.” 2018 T. C. Memo. 55, at pp. 21-22 (Footnote omitted).

IRS was going to collect twice. LLC was too late to go back, and PC was sufficiently aligned in interest with LLC to get the benefit of the payment. IRS’ argument that the alleged overpayment arose out of two taxable events is wrong; the taxable event was payment of taxable wages, not the Commissioner’s assessment of tax. And PC used reasonable care: the right amount of tax was timely paid and reported. Only the EIN was wrong. So no late-filing or late-payment chops.

As for remand to Appeals, there’s nothing fresh for Appeals to decide. The bushelbasketful of papers that PC’s counsel put in before the NOD issued was part of the administrative record. It was introduced on the trial as well. So it was “all ye know on earth and all ye need to know,” as a much finer writer put it.

Whether PC or LLC, ECCBA wins it.


In Uncategorized on 04/24/2018 at 15:11

For those among my readers not yet satiated beyond repletion with the Section 6751(b) Boss Hoss sign-off, its cause and cure, Judge James S. (“Big Jim”) Halpern has yet another helping of hot-from-the-barbie chronology and commentary on this epochal silt-stir.

Here’s Horace R. Weaver & Candace M. Weaver, Docket No. 262-15S, filed 4/24/18. Horace & Candace are through with their trial, but their small-claimer lingers on.

I’ll spare all y’all the four (count ‘em, four) pages of Judge Big Jim’s prose, chronicling the trek of the Boss Hoss along Tax Court’s via dolorosa. Those practitioners expecting a trudge of their own might want to lift chronology and commentary for their memos of law.

And of course they can’t cite the source.


In Uncategorized on 04/24/2018 at 08:37

This comment is in part political, contrary to the established policy of this my blog. So it is definitely off topic.

Given that the Congress of the United States has failed or refused to override the regulations of the Federal Communications Commission, thereby surrendering the internet to the highest bidder, it remains to be seen how much longer anyone will be able to read this my blog.

I will, however, continue to write it.

I once wrote “Je Suis Charlie,” when fellow-journalists were attacked. I now join colleagues now or formerly in Stalinist Russia (or its current embodiment, wheresoever situate) and shall write samizdat pieces, self-published and “for the desk drawer,” circulation not permitted by the authorities.

I am sure that, one day, the authorities who now try to ban us will come to the same end as those in the past.

THE 375

In Uncategorized on 04/23/2018 at 15:34

No, not another fractured opinion, with eccentric majority, concurring and dissenting; nor yet another one of the weirdest doubleplays in baseball history.

Rather, I’m tying an electronic string around my finger to remind me that the month after next is when I must fork over the $375.00 biennial fee for my continued good standing in the Bar of Our Fair State.

What happens if one blows past the registration date is illustrated in the Press Release of 4/19/18, wherein the failure of one Jude Ezeala is highlighted.

The Powers That Be even take credit cards, so one can get miles even as one re-ups for membership.



In Uncategorized on 04/23/2018 at 15:11

Many times have I stated that this is a nonpolitical Bog. So perhaps I’m stepping too near the cliché in the sand when I start the campaign for the next Chief Judge once Ch J-elect Maurice B (Watch This Space) Foley’s term has ended.

But when it comes to untangling and deciphering the convoluted, discombobulated and swangdangled papers that are launched at the Glasshouse at 400 Second Street, NW, by IRS, pro ses and automatic admittees, which unhappy task falls upon the Ch J, I nominate that Obliging Jurist, Judge David Gustafson (and I’m sure he won’t thank me for supporting him for that position).

Here’s a writing sample, Trilogy, Inc. & Subsidiaries, Docket No. 12097-16, filed 4/23/18.

Apparently IRS and the Trilogians had stiped to a bunch of facts, but one paragraph thereof was more than what IRS agreed, so IRS wants to bounce the paragraph. IRS moves for leave to file a first amended stipulation of facts.

Minor problem: “…no such amended stipulation was submitted with the motion (and evidently none exists, since the motion states that petitioners object to the motion), and the relief sought by such a motion for leave would be granted only if the motion to strike were first granted.” Order, at p. 1.

Judge Gustafson recharacterizes the motion as a motion to strike the offending paragraph.

So let the Trilogians explain why they object, being aware that in an earlier order regarding admissions, Judge Gustafson rejected a similar Trilogian objection, because the Trilogians couldn’t show how they were worse off if the paragraph were stricken now, than if it had never been made.

Any seconds for this nomination?