In Uncategorized on 08/02/2018 at 18:55

Once again The Great Dissenter/Concurrer, Master Silt Stirrer and Old China Hand, Judge Mark V. Holmes, has a designated hitter with some rare judicial acrobatics.

I offer for your reading pleasure James L. Wilson & Vivien Wilson, et al., Docket No. 26547-13, filed 8/2/18. This consolidated case was tried two years ago,  but briefing still isn’t finished. Jim & Viv and their affiliated LLC and C Corps raised the chops issue.

But the Boss Hosses never made it out of the stable, so IRS wants a reopener. And it’s a good one, with a TEFRA partnership, a C Corp and an LLC all thrown in.

Ordinarily our old chum Beekman-Dynamo would dig the C Corp’s Graev, because C Corps aren’t individuals, so Section 7491(c) ousts them from IRS’ burden of production or proof.


“If § 7491(c) doesn’t apply, it calls into question the importance of the Commissioner’s proffered evidence. (additional evidence needs to be material to the issues involved and something that would probably change the outcome of the case). There’s a different reason, though, that the Commissioner has the burden here: He raised the § 6662 penalty against [C Corp] for the first time in his answer, which makes it a new matter and one that the Commissioner has the burden of production and proof on. See Tax Court Rule 142(a)(1)….(we have long recognized that a penalty raised in the answer is a new matter on which the Commissioner bears burden of production and proof). This all means that the Commissioner might be able to pass the first test for reopening the record — that the additional evidence is not merely cumulative or impeaching, is material to the issues involved, and probably would change the outcome of the case.” Order, at p. 3.


All IRS has is a hearsay affidavit to substantiate its answer, prepared three years later and not in the ordinary course of business.

As for the individuals, Judge Holmes has penalty-approvals that might survive a hearsay objection, and he’ll let them in, but the parties can deal with their problems in their non-yet-completed briefs. It’s an open question whether anyone waived Section 6751(b).

Ain’t tax fun?


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