In Uncategorized on 05/10/2019 at 15:54

Litigators are conditioned to oppose. When the Lone Ranger rides to their rescue, they suspect Silver is a Trojan Horse, and want to run him out of town. Given the usual course of American litigation, I can’t say that it’s the wrong attitude. But sometimes it’s proof of my old adage: “Lawyers can’t add.”

Here’s our breaker-buddies Eaton Corporation and Subsidiaries, Docket 28040-14, filed 5/10/19.

Eaton is sweating out the “dission” in 2017 T. C. Memo. 147, where apparently the Rule 155 beancount Judge Kerrigan ordered is still undone; for more about that, see my blogpost “Breaking Bad,” 7/26/17. Trying to move the case, the parties cross-moved for summary J, but didn’t get it. They got a full-dress T. C. instead. See my blogpost “When Judge Gustafson Dissents,” 2/25/19.

Well, with nothing doing, and trial not yet scheduled, IRS decides to stir up the old silt by moving to amend its answer.

“Respondent’s requested first amendment to answer seeks to raise a new issue which would adjust petitioner’s income under sections 951 and 956. This new issue involves petitioner’s upper-tier CFCs’ loans to one of its U.S. corporations, AT Holdings Corporation (Loans). Respondent’s position is that the Loans are ‘obligations of a United States person’ and, as such, are U.S. property under section 956(c)(1)(C), supporting an increased income inclusion to petitioner under section 951(a)(1)(B). In support of respondent’s motion, respondent states that because the increased income to petitioner would result in redetermined adjustments for each taxable year in an amount less than the amount determined in the notice of deficiency, the requested first amendment to answer does not result in an increased deficiency for any year.” Order, at p. 2.

Well, sound discretion of the Court, avoid more trial prep and more expense, and all that jazz. But at close of play, IRS is asking for less than the SNOD sought that started this fight.

Eaton’s counsel, white shoe to the core, objects.

“Petitioner contends that respondent’s motion would cause petitioner to suffer substantial delay and prejudice. Petitioner further contends that respondent previously had ample opportunity to identify and characterize the Loans as U.S. property attributable to the upper-tier CFC partners, and that respondent’s mischaracterization results from a lack of due diligence.” Order, at pp. 2-3.

Well, maybe IRS could have done better, but Judge Kerrigan doesn’t see how Eaton is really hurt.

“…, the circumstances of this proceeding do not meet the requisite prejudice or delay to justify denial of respondent’s motion. The requested first amendment to answer will not require substantial new preparation at a late stage in the proceedings, nor will it ‘surprise and/or unfairly disadvantage’ petitioner.” Order, at p. 3. (Citation omitted).


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: