Archive for October, 2018|Monthly archive page


In Uncategorized on 10/23/2018 at 15:53

That’s Judge Albert G (“Scholar Al”) Lauber, fellow-alumnus of a well-regarded local high school with my colleague Peter Reilly CPA and my nephew, and MA Clare College (Cambridge).

Today, we have Judge Scholar Al issuing a well-tempered warning to Azael Dythian Perales, 2018 T. C. Memo. 177, filed 10/23/18.

Az seems to be a serial blower, but his blowing is wide of the mark.

“His Form 211 and the materials appended to it, apparently cut and pasted from various websites, were rambling and incoherent.  He made no discernible allegations regarding the tax liability of any person.  Rather, he alleged that numerous individuals and entities – banks, public utilities, California government entities, and agencies of the U.S. Government–had committed espionage, conspiracy, bank fraud, and other crimes. He adduced in support of these assertions no factual material of any kind.” 2018 T. C. Memo. 177, at p. 2.

Well, the Ogden Sunseteers assigned 11 (count ‘em, 11) claim numbers to Az’s excurses, and bounced every one of them for no credible information, no tax information and no specific information. Ogden sent no branch of IRS any of Az’s stuff.

Az petitions, of course.

Judge Scholar Al gives IRS summary J tossing AZ.

Here’s the kicker: “Petitioner is no stranger to the Office or this Court.  He has filed numerous substantially similar claims for award, advancing in each case unsupported allegations of criminal activity by hundreds of individuals, corporations, and government entities, including Federal courts.  In no case did he allege a Federal tax underpayment or noncompliance by any discernible taxpayer.  We have granted summary judgment to respondent in three cases so far.  Two more cases wait in the wings. Our patience is wearing thin.” 2018 T. C. Memo. 177, at pp. 5-6. (Citations and footnotes omitted).

Az, read and heed.



In Uncategorized on 10/23/2018 at 15:32

Judge Holmes has a designated hitter for us, Damon R. Becnel, 14707-14, filed 10/23/18. Y’all will remember Da-Bec and his trusty yacht  Britney Jean, the entertainment facility. What, no? Then check out my blogpost “Go Fish – Part Deux,” 8/2/18.

Judge Holmes sent the parties out for a Rule 155 beancount, but Da-Bec had no numbers to riposte to IRS’ arithmetic.

IRS, however, is too quick off the mark, moving to enter decision on their numbers.

Judge Holmes: “This isn’t quite the right pigeonhole–Rule 155(b) says that in the absence of agreement between the parties, ‘[t]he Clerk will serve upon the opposite party a notice of such filing and if, on or before a date specified in the Clerk’s notice, the opposite party fails to file an objection or an alternative computation, then the Court may enter decision in accordance with the computation already submitted.’ A check of the Court’s docket shows that no such notice was ever sent to petitioner; the Commissioner likewise doesn’t seem to have attached a certificate of service under Rule 21(b)(1) — at least none was scanned to a .pdf image on the Court’s docket.” Order, at p. 1.

So to save the hard-laboring Clerk any further labor, Judge Holmes recharacterizes IRS’ motion as “Respondent’s Computations Under Rule 155.” And he tells Da-Bec to come up with his own in three weeks.

If Da-Bec doesn’t, Judge Holmes may enter judgment based on IRS’ numbers.


In Uncategorized on 10/22/2018 at 18:24

Christopher Schorse, Petitioner, and Cynthia Palabrica, Intervenor, 2018 T. C. Memo.176, filed 10/22/18, reprise the Doris Day – Jimmy Stewart – Alfred Hitchcock classic, and as in the movie, Chris is the man who knows too much.

Chris the computer guy originally got innocent spousery from IRS because of the losses allegedly sustained by loved-once OB/GYN Cynthia’s Sub S, that Chris deducted although he shouldn’t. But then Cynthia intervened, and Chris’ innocent spousery for the two (count ‘em, two) years at issue is out.

For the years at issue, when Chris and Cynthia were still wed, each kept their own bank accounts, but paid mortgage, insurance and utilities from a common account. Cynthia paid the greatest portion of their children’s high-priced private school and high-priced nanny.

But Chris did the taxes. Cynthia gave Chris the K-1s she got from her wholly-owned Sub S, which showed delightful losses.

But Cynthia’s accountant told Chris Cynthia hadn’t enough basis in her Sub S stock to deduct the losses.

So Chris dispensed with the time-honored two-adviser rule (see my blogpost thus entitled, 6/23/16), and did it himself.

Judge Paris: “…intervenor provided petitioner with her tax information, including her [Sub S] Schedules K-1, Partner’s Share of Income, Deductions, Credits, etc.  Intervenor’s [Sub S] Schedules K-1 reflected losses for [years at issue]. Petitioner asked intervenor and her business accountant about the losses.  They informed him that intervenor did not have a sufficient basis in [Sub S] to deduct the losses for those years.  For each year in issue petitioner calculated their tax liability both with and without the loss claimed.  For each year in issue petitioner then instructed his business accountant to prepare and file a joint return that claimed the loss deduction.  Petitioner thought that the information on intervenor’s [Sub S] Schedules K-1 was similar to the information he would have reported on his business’ Schedules K-1 and that the profits and losses reported on intervenor’s [Sub S] Schedules K-1 were the amounts to be used on the joint returns.” 2018 T. C. Memo. 176, at p. 4.

Chris took full responsibility for all tax issues in the divorce decree.

Chris knew Cynthia was paying the freight for the children’s school and nanny, and the tax refunds generated by the Sub S losses went into home improvements.

Judge Paris trudges through the Section 6015 options, both regular and streamline, but at the end of the day, it boils down as follows.

:” Although many of the factors for equitable relief either favor petitioner or are neutral, petitioner’s actual knowledge of the losses deducted on the joint returns, his involvement in preparing those returns, and the significant benefit he received from the understatements weigh too heavily against him to allow relief.  Weighing all the facts and circumstances, the Court finds that petitioner is not entitled to relief from joint and several liability under section 6015(f).” 2018 T. C. Memo. 176, at pp. 22-23.

Too much knowledge is as dangerous as too little. See my blogpost “A Dangerous Thing,” 4/13/11.


In Uncategorized on 10/19/2018 at 16:41

And There Are Days

There are days when the life of a blogger is a land of milk and cliché, when surfeit becomes embarras de richesses, as Sinaiatical full-dress T. C.s and no less weighty T. C. Memo.s vie with designated hitters. The cornucopia overflows with “somber reasoning and copious citation of precedent,” combined with literary skill, and gravitas without over-portentousness.

And then there are days. Usually Fridays, more often than not before three-day weekends, but not necessarily.

I remember a super-efficient office manager three (or was it four?) law firms ago, whose word was law. Offending her meant being sent to a real estate closing of unendurable length, at the outermost reaches of public transport, on a Friday afternoon, before a three-day weekend, in a snowstorm.

Fortunately, such is no longer my fate, but today is a day of drought. No opinions, no designated hitters, only Judge Holmes again dissing the partitive genitive and Ch J Foley correcting a caption to show reports of petitioner’s death were greatly exaggerated.

Enough. See y’all Monday.


In Uncategorized on 10/18/2018 at 17:16

More than a couple times (hi, Judge Holmes) have I torn up tickets on the leader at the top of the stretch who never quite got there at the wire. Sometimes it was accompanied by just a sigh; other times, it featured imprecations hurled to the heavens, excoriating owner, trainer, jockey, stablehands, dam, sire, and the track announcer. But at the end, it was just another loss.

Well, I feel that way today, although I send no imprecations to the Glasshouse crew, and only my deepest respects to STJ Daniel A. (“Yuda”) Guy, who presided at today’s off-the-bencher, Xiangcun Shi, Docket No. 6852-17S, filed 10/18/18.

First, the post parade.

X e-filed a detailed 1040, with schedules, showing all kinds of numbers for his “international sales” business. The return featured his name, SSAN, address and phone number. The tax due stated therein was paid by credit card.

It wasn’t clear from the record who prepared same, but IRS small-d (this is a nonpolitical blog) democratically issued a SNOD, disallowing deductions in all directions.

X timely petitions.

Now the bell sounds, and X leaps from the starting gate, as the Taishoff no-prize, best-excuse sweepstakes is off.

“Petitioner alleged in the petition and asserted at trial that the tax return in question was totally fabricated, that he did not work or otherwise conduct any trade or business in [year at issue], and that the tax return was filed without his knowledge to ‘trap’ him.” Transcript, at p. 5.

X claims he graduated college in China, came to the US and ran a travel business for 10 years, filing returns all the while, and then retired. In the year at issue, he was supported by his “affluent daughter” in China (a consummation devoutly to be wished), who apparently bankrolled X’s trips to the homeland that year to care for his aging parents. And, while there, he apparently attended various health and wellness seminars, all paid for by said daughter.

Now we come to the top of the stretch.

“Petitioner testified that on one of his trips to China in [year at issue], his girlfriend had suggested that he meet with an individual in Beijing who might assist him in obtaining U.S. citizenship. Petitioner says he met with the unnamed individual who told him that he should file a Federal income tax return to enhance his chances of gaining U.S. citizenship. Petitioner further testified that he provided this individual with personal information, including his social security number and credit card information. Finally, petitioner testified that the individual later became unhappy with him after he rejected the individual’s request for a loan. Petitioner failed to identify the individual in question.” Transcript, at p. 6.

X claims the unnamed person filed the phony return. Now, while there are many bogus returns filed by identity thieves fraudulently seeking refunds, I’ve yet to hear of an identity thief who pays taxes in someone else’s name.

Still, X is leading in the stretch.

We come to the wire.

“Although petitioner asserts that the tax return was a fabrication, he nevertheless offered a few receipts in an attempt to substantiate some of the expenses claimed on Schedule C. The Court finds that petitioner did not present any objective evidence to corroborate his testimony that the tax return was a complete fabrication. There would seem to have been a number of avenues available to petitioner to provide his case, but he offered the Court nothing but his own self-serving testimony.” Transcript, at p. 8.

STJ Yuda, it’s hardly fair to call testimony “self-serving” when the witness stipulates in evidence that totally destroys the witness’ own case. However, see my blogpost “A Joy Forever? – Not Hardly,” 3/31/14, where distinguished counsel did just that.

So X fades to also-ran status. “The receipts attached to the stipulation of facts bear no discernable relationship to the professional and legal expenses in dispute. On this record, respondent’s determination that petitioner is liable for a Federal income tax deficiency is sustained.” Transcript, at p. 9.

Too bad. I had high hopes for X.


In Uncategorized on 10/17/2018 at 18:29

Mega-movie-mogul Samuel Goldwyn (the pivot man in Metro-Goldwyn-Mayer, a/k/a MGM) was noted for his Berra-like (or better, Goldwyn-like) neologisms. Among these was the term “definite maybe,” apparently meaning a proposition to which he would accord just a trifle more consideration than a flat “maybe,” meaning “no.”

Today, absent any opinions, we have a designated hitter from STJ Robert N. Armen, The Judge with a Heart. Unfortunately, Dana Ann Cheshier, Docket No. 19154-16SL, filed 10/17/18, gives him nothing with which to work his sympathies, not even a definite maybe. She provides neither missing returns, nor a petition from the SFR-derived deficiencies, nor timely responses to orders, nor yet a Form 8857 innocent spouse request.

Even when remanded, Dana Ann failed to deliver. Uncontested summary J for IRS.

“On her Form 12153 petitioner did not check the box for “Innocent Spouse Relief” but she did write “Maybe ?” opposite the printed words on the form preceding that box. However, petitioner never submitted Form 8857 (“Request For Innocent Spouse Relief”), nor did she otherwise pursue the matter during the administrative proceeding. Accordingly, such matter need not be considered further.” Order, at p. 7. (Citations omitted).

Long ago, a casual reader reprimanded me for taking lightly the plight of those finding themselves in Tax Court with little or no comprehension of what they must do. I noted my interlocutor was light on specifics and long on invective. As a lawyer, I’m used to that.

Still, Dana Ann’s plight is exemplified by “Maybe?”

Might have been better to send her to a LITC, if such is available in Dana Ann’s part of TN.


In Uncategorized on 10/16/2018 at 10:14

Whatever will Tax Court get up to when I take an evening off to go to the opera? Even though Judge Chiechi is officially fully retired (see my blogpost “Judge Chiechi Retires – Fully,” 9/25/18), she had a decision last evening that almost had me following Judge Holmes’ lead and quoting Scripture. It’s another church case, and it brings out the importance of bearing the burden of proof.

Richard I. Presley and Martine N. Presley, 2018 T. C. Memo. 171, filed 10/15/18, don’t get a break from the Section 6662(a) chop, despite having three (count ’em, three) CPA’s (one of whom also had a master’s degree in tax) to guide them. Plus a qualified appraiser.

No scenic easement here, but a donation of land (or maybe ponds) to grow blueberries to fund their non-profit family church via a for-profit LLC, their residence (where they resided post-donation, a no-no), and a tractor-mower.

You can, if you wish, read all 103 (count ’em, 103) pages of Judge Chiechi’s deconstruction of the trial record. Richard’s and Martine’s crew of experts reminds me of G. B. Shaw’s remark about trying to grow roses on opera house seats by hiring expensive gardeners.

But the key is knowing what you have to prove and getting it into the record.

Editorializing, I think Judge Chiechi came down a wee bit too hard on Richard and Martine when it came to the accuracy chops. True, their experts may have been less than brilliant on the stand, and Richard may not have been the best of witnesses, but Judge Chiechi has assigned to Richard and Martine foreknowledge of the inconsistencies and contradictions IRS’ astute trial counsel brought out on the trial.

If Richard and Martine were capable of the cross-examination meted out to the experts by IRS’ trial counsel, chopping them might answer. To expect a preacher and a blueberry farmer to do so is loading too heavy a burden, and woe to Richard’s and Martine’s trial lawyer.

Oops, almost quoted Scripture again.

Edited to add: Thinking it over, maybe I was a little too heavy on Judge Chiechi. After all, I didn’t see the trial, or hear and watch the witnesses’ testimony. The experts may have been far less brilliant on the stand than their resumes. And Richard and Martine might have told a tale that was less than compelling.

Of course, few people find the witness stand a pleasant locale in the best of circumstances. I remember how distasteful it is, even when one wins.


In Uncategorized on 10/15/2018 at 14:49

Let’s give a big Tax Court enthusiasts’ welcome to Judge Elizabeth Ann Copeland, who joined the “small court” on Friday last. Her delayed appointment was reinstated (or whatever the technical term is), and prompt Senatorial confirmation followed.

Nice to see the system working.

My colleague Peter Reilly, CPA, will be no doubt pleased to note that Judge Copeland is a fellow-CPA, as well as being a Tax Notes 2012 Tax Person of the Year. She is also a long-time Texas practitioner.

I’m anticipating great things from Judge Copeland.


In Uncategorized on 10/12/2018 at 14:53

The Beatles’ 1966 conclusion to their hit album gives me the title for this essay. Gail Goldberg, Docket No. 13148-14L, filed 10/12/18, gives me the rest.

Gail is fighting an NFTL, but had sent in a Letter 12153 late after the NFTL was sent to her. So there was no appeal, and the NOD she got dismissed her request for a CDP was late. At best she could get an equivalent hearing, from which there is no appeal to Tax Court.

Gail is inventive.

“…petitioner appeared generally to take the position that the circumstances underlying this proceeding should operate in lieu of a determination to confer jurisdiction on this Court, presumably implying that the… decision letter attached to the petition should be treated as a determination with respect to the Notice of Federal Tax Lien. More specifically, statements by petitioner suggested an attempt to rely on an extensive, years-long history of interactions with the IRS regarding the…tax liabilities. The saga began with investments by petitioner’s spouse in oil and gas TEFRA partnerships, which partnerships were subsequently examined and proposed adjustments litigated before the Tax Court between 2008 and2013. Corresponding proposed adjustments were then made to petitioner’s joint returns, and the couple sought to challenge those changes via a protest submitted…after learning about them through a Form 4549-A, Income Tax Discrepancy Adjustments…. Petitioner thus contended: ‘Respondent cannot successfully argue that Petitioner did not respond to notices that were not timely responded to….’ In a similar vein, petitioner added: “Respondent also cannot argue that the IRS has not received timely noticed [sic]… as this matter as a group of plaintiffs, which include the Petitioner, has been in litigation with the IRS in the United States District Court, Chicago, Illinois, known as case #16CV6130 over these same issues’. Multiple documents pertaining to the protest and district court case were attached.” Order, at p. 3.

Ch J Maurice B (“Mighty Mo”) has the bad news for Gail.

“Unfortunately, whatever other proceedings and interactions petitioner may have had with the IRS cannot alter the necessity of complying with the definitive requirement to submit a Form 12153 (or an equivalent request) within the specified timeframe. Regrettably, such confusion is not uncommon given that the IRS frequently treats as separate processes or proceedings what taxpayers view as a single dispute.” Order, at p. 3.

“Hence, the record herein at this juncture contains nothing that might suggest a timely request for a collection due process (CDP) hearing as to the Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320. Petitioner’s attempts to rely on a protest sent more than a year earlier in response to an entirely different communication from the IRS and on other IRS-connected proceedings are unavailing for multiple reasons. In particular, the cited materials lacked the information required for a document to constitute a CDP request. See sec. 301.6330-1(c)(2), Q&A-C1, Proced. & Admin. Regs.; sec 301.6330-1(c)(2), Q&A-C1, Proced. & Admin. Regs. Moreover, insofar as the Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 was dated April 7, 2015, only items submitted to the agency within the pertinent 30-day window ending in May 2015 would be germane.” Order, at pp. 3-4.

At least there’s a form called an NFTL, and only one so denominated, and garnished with a timely-filed Form 12153, can make the cut for Appeals, and ultimately a timely-filed petition can qualify for Tax Court review.

As there’s no standard form for a SNOD, and as it doesn’t matter what IRS knows or says, best of luck, taxpayer.







In Uncategorized on 10/11/2018 at 21:44

But Not on the Court

Back in August, 2014, Judge James S (“Big Jim”) Halpern filed an opinion in Brown, 2014 T. C. Memo. 167, wherein the petitioners were mulcted for nearly everything IRS wanted, due in large part to the inadequacies of their attorney, whom I’ll call Wilf.

I’ve blogged the misadventures of more than one attorney whom I’ve called Wilf over the years, but this one is a new one on me. In any event, this Wilf is now out of the picture, as he was disbarred in August, 2015, and DC Cir affirmed same in 2017.

But now come Bassett H. Brown & Marcela M. Brown, Docket No. 28934-10, filed 10/11/18, seeking a Rule 162 vacation, based upon the fraud on the Court committed, allegedly, by Wilf.

It’s a wee bit late under ordinary rules, as 162s need to be made within 90 days after filing of decision. But fraud on the Court is special, because it undercuts the entire judicial process.

However, the hurdle is high, and Bassett (that’s Dr Bassett) cannot surmount same.

One must prove, by clear and convincing evidence, an unconscionable scheme or plan designed to influence the Court improperly, and that the Court was deceived thereby.

And not all fraud in a judicial proceeding is fraud on the Court. Because Dr Bassett (and maybe Marcela) were defrauded by Wilf’s negligence and incompetence doesn’t mean Judge Big Jim was taken in.

“… we concede that [Wilf] may have been untruthful with the Court in excusing his failures to obey our orders because he was out of the country, his computer crashed, or he had no ability to access the Court’s website. Nevertheless, even accepting that his excuses were untruthful, we believe that [Wilf] lied not to influence the outcome of the case one way or the other but to avoid reprimand by the Court and to excuse his failures to obey our orders. And while there maybe evidence that [Wilf] failed to introduce–though petitioners have failed to identify any–and certainly he failed effectively to argue their case (we struck petitioners’ brief as untimely), those factors did not work any corruption on our decision making. We were aware of [Wilf]’s inadequacies and warned petitioners of them. We decided this case on the evidence the parties, acting through their counsel, presented to us. We were not deceived, and certainly we were not improperly influenced or corrupted by [Wilf]’s thin excuses. Petitioners have failed to prove that [Wilf]’s untruths resulted in a fraud on the Court.” Order, at p. 7.

Wilf may have blown it, but Dr Barrett was there throughout. “Respondent points out that the Court, at the conclusion of the trial, recognizing [Wilf]’s shortcomings, advised petitioners to supplement their representation, yet they continued to rely on him, and, thus, they must bear the risk that his inadequate representation imposed.” Order, at p. 6.

Motion to vacate denied.