In Uncategorized on 02/06/2019 at 17:02

Intervention may be great stuff for a TV series, but Judge Mark V Holmes isn’t ready to premiere David Marshall on behalf of Virginia Simpson, widow of the late Singleton (“Gerry”) Simpson, a/k/a “the estate,” stars of my blogpost “Settle Order on Notice – to the Nonparticipant,” 10/26/17.

The estate was an indirect partner in BCP Trading and Investments, LLC, William T. Esrey Trading Partners, LP, A Partner Other Than the Tax Matters Partner, et al., Docket No. 10200-08, filed 2/6/19. This case is almost as old as some Scotch I have. With Judge Holmes’ help,  IRS’ and BCP’s attorneys cobbled together a notice provision to let the estate (an indirect partner; apparently the late Gerry, with or without Miss Virginia, was a partner in BCP while he lived) object to the order and judgment after trial. Remember, when IRS and a partnership settle, any nonparticipant in the negotiated settlement gets sixty (count ‘em, sixty) days to object. But BCP and IRS litigated this one to a finish, without the estate in the ring, so the estate gets to object, Rule or no Rule.

The estate objects. The objection is based “… on the entirely reasonable ground that it had no idea what liability it faced under the proposed decision. As a result, we ordered the Commissioner to estimate the effect of the proposed decision on the estate to determine whether it wanted to object and seek intervention.” Order, at p. 2.

The estate moves to intervene, solely to preserve a SOL argument, the years at issue being even older than most of the aforesaid Scotch.

As usual, Tax Court Rule 245 doesn’t help, because this case was litigated to a decision, not stiped out. So FRCP 24 is called in, but before Judge Holmes can decide whether intervention is of right or permissive, the motion to intervene must be timely. IRS claims the estate blew the cut-off, but IRS agreed to BCP’s and Judge Holmes’ sixty-day time-out, so the Rule 248(b)(4) lash-up beats IRS’ Rule 245 freeze-out.

OK, all the estate wants is to preserve its SOL argument. If the SOL argument is a loser, there’s no reason to hold up entering the decision.

The estate claims they never signed the 872-Is and 872-IAs that extended the original SOL, only those long after the original SOL had run, and therefore the latter were invalid, as they extended nothing.

Nope, says Judge Holmes.

“So where does that leave the estate? It argues that, because the Simpsons signed their individual consents after the three-year assessment period for 2000 and 2001, the consents had no legal effect and did not extend the statute of limitations. However, this argument fails to acknowledge that the statute of limitations could be extended by either the Simpsons or BCP’s TMP. See § 6229(b)(1)(A)-(B). The estate’s incorporation by reference of the petitioners’ failed statute of limitations arguments challenging the validity of the TMP’s extensions preserves the argument for any appeal, but doesn’t help them here. Because we held that the extensions filed by BCP’s TMP were valid and bound both BCP’s direct and indirect partners, it follows that the estate, an indirect partner of BCP, is also bound by those extensions.” Order, at pp. 5-6.

So Judge Holmes isn’t permitting intervention.

“This in turn leads us to conclude that the TMP has adequately represented the estate by making the best of what was in the end an unsuccessful argument, which defeats intervention of right. See Fed. R. Civ. P. 24(a)(2). Intervention would also merely duplicate the TMP’s efforts at a very late stage in the case, which would serve only to further delay its conclusion.” Order, at p. 6 (citations omitted).

I wouldn’t blame Judge Holmes if he wanted to open that Scotch already. I can wait, though it’s sometimes a struggle.

If I were the estate, I’d appeal. If the client had the cash for a bond. And my fee.


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