In Uncategorized on 11/28/2018 at 17:24

The free-and-easy discovery practice in Tax Court is certainly a relief to the weary practitioner, accustomed to the endless scrapping, jousting and push-and-shove of State court (and even sometimes Federal court), with endless appeals to the overburdened courts to play schoolyard monitor.

“Play nice” and “talk among yourselves” are the watchwords.


Here’s Judge David Gustafson, the blogger’s obliging friend, with a designated hitter and a discovery suggestion for IRS in Palmolive Building Investors, LLC, DK Palmolive Building Investors Participants, LLC, Tax Matters Partner, Docket No. 23444-14, filed 11/28/18.

IRS wants to amend its answer to KO Mike Ehrmann’s appraisal of the Palmolive façade. IRS claims Mike was a “promoter” of a dodge, thus unworthy of the Palmolives’ confidence.

Mike’s been around and had a bumpy time of it, finally being enjoined by USDCNDOH “from preparing any further property appraisals for federal tax purposes.” See my blogpost “The Façade Collapses – Redivivus,” 6/20/14.

But the Palmolives were a wee bit casual in pleading good faith reliance. “(The petition did not explicitly assert a defense of ‘reasonable cause’ pursuant to section 6664(c)(1). Palmolive has never sought leave to amend the petition to assert such a defense.)” Order, at p. 2.

Nevertheless, IRS is also a trifle ambiguous. Though the Palmolives’ ambush claims are thrust aside, Judge Gustafson wants IRS to bukh with some more specificity. And he uses a tried-and-true method familiar to all of us.

“Palmolive correctly states that ‘Respondent has provided no facts to support his new promoter allegation.’ Given the petition’s lack of specificity about penalty defenses, this defect does not incline us to deny the motion for leave. However, we will require the Commissioner to communicate to Palmolive detailed allegations about its contention that Mr. Ehrmann was a promoter, so that Palmolive can prepare for trial.” Order, at p. 5.

The bill of particulars is alive and well in Tax Court.


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