Archive for June, 2019|Monthly archive page


In Uncategorized on 06/28/2019 at 20:19

Go get your refund claims filed. The diplomats have won the day. This from the IRS’ e-news for tax pros:

“This year the United States and the French Republic memorialized through diplomatic communications an understanding that the French Contribution Sociale Generalisee (CSG) and Contribution au Remboursement de la Dette Sociale (CRDS) taxes are not social taxes covered by the Agreement on Social Security between the two countries. Accordingly, the IRS will not challenge foreign tax credits for CSG and CRDS payments on the basis that the Agreement on Social Security applies to those taxes.

“Taxpayers have 10 years to file a claim for refund of U.S. tax with respect to a foreign tax credit. The 10-year period begins the day after the regular due date for filing the return (without extensions) for the year to which the foreign taxes relate. The IRS will update information on claiming these taxes as foreign tax credits soon.”



In Uncategorized on 06/28/2019 at 15:54

STJ Diana L (“The Taxpayer’s Friend”) Leyden examines the factification underlying the title of this blogpost in an off-the-bench designated hitter, Forrest Wade Gillespie, Docket No. 6174-18S, filed 6/28/19.

Forrest drives long-haul from CA to UT, and spends 339 (count ‘em, 339) days of the year at issue on the road, mostly sleeping in the compartment of the truck, occasionally sleeping in a rented room in Sandy, UT, paying out-of-pocket for minor repairs so the trucking company doesn’t dock his bonus which they pay, and renting a car to “see the sites” (I guess he meant “see the sights”) when his truck was in for major repairs or when he didn’t have a load to haul.

USDOT requires rest periods.

“Petitioner testified that regulations required that truck drivers not drive for more than 11 hours without resting and then had to rest, without driving, for 10 hours. Further, once a truck driver drove for 70 hours, he had to rest for 34 hours. [His company] accounted for its truck driver’s driving and off duty time in a daily log.” Order, transcript, at pp. 5-6.

Forrest’s unreimbursed employee expenses go down. The minor repairs could have been reimbursed. His meals and room rentals weren’t for travel. Because he had no home.

“The purpose of the deduction for expenses incurred away from home is to alleviate the burden on the taxpayer whose business requires him to maintain two homes and therefore incur duplicate living expenses. Kroll v. 25 Commissioner, 49 T.C. 557, 562 (1968).” Order, transcript, at p. 13.

“…petitioner did not have a principal place of business. He was a long-distance truck driver and was on the road 339 days out of the year. Petitioner was not required to return to [his boss’] principal location and receive his driving assignments at the end point of a previous assignment. Thus, because of the nature of his employment petitioner did not have a principal place of business in [year at issue]. See Howard v. Commissioner, T.C. Memo. 2015-38.” Order, transcript, at p. 14.

So Forrest’s deductions, mostly unsubstantiated, fail.

But IRS has feet of Clay, so they lose the Section 6751(b) Boss Hossery.

“Respondent has presented evidence that the section 6662(a) penalty was ‘personally approved (in writing) by the immediate supervisor of the individual making such determination’ on November 6, 2017. Respondent also provided evidence that the 30-day letter, the first time the IRS proposed the accuracy-related penalty, was dated October 2, 2017, before the date of the managerial approval. Respondent has failed to meet his burden of production.” Order, transcript, at p. 15.

For the story of Clay, see my blogpost “Indians Not Taxed – Not!” 4/24/19.

For the title of this blogpost, see Dave Dudley’s 1981 classic about various over-the-counter medications that speed to your side the food you eat, the clothes you wear and the flickering screens whereon appear these words of wisdom.


In Uncategorized on 06/27/2019 at 16:34

No, this is not Cohan revisited. George M.’s T&E deductions have gotten more mileage than “Give My Regards to Broadway.” This is the inexactitude of Kelvin R Crews, 2019 T. C. Memo. 80, filed 6/27/19.

Kelvin was a chicken farmer, and his wife was a registered nurse. To supplement the chickenfeed he got from the farm, he started a couple businesses (hi, Judge Holmes), but put his wife, and later his daughter, in charge of everything. Then the agrigiant for whom Kelvin worked fired him.

IRS hits Kelvin with TFRPs for both of the businesses. Kelvin filed Form 843 for a refund. And that’s where the trouble started. IRS was prepared to let Kelvin off, but he thought for both businesses. The deficient quarters covered the same times for both businesses.

But IRS was never clear that they meant the TFRPs for Business One, but not Business Two. And enough different IRS employees were involved so nobody had enough of a handle to say definitively.

Kelvin called in counsel, but they couldn’t unscramble the frittata to Judge Morrison’s satisfaction. And Kelvin has the burden of proof.

The real problem is that the letter from IRS on which Kelvin relies specifically mentions Business One, but not Business Two. And worse, the stipulation of facts said that all Kelvin was off the hook for was Business One. The stip didn’t mention Business Two.

After all the tohubohu, whatever the standard and scope of review, Kelvin loses.

Read the opinion. With some headache medicine close at hand.

Yes, Tax Court bears heavily against the taxpayer…whose inexactitude is of his own making.


In Uncategorized on 06/27/2019 at 16:02

No, not a remake of Gene Roddenberry’s never-ending story. This is the next generation of tax dodgers, Troy K. Dixon, 2019 T. C. Memo. 79, filed 6/27/19, who gets nailed from some, but not all, of the TFRPs from his parents’ now-defunct staffing agencies.

His parents are James and Sharon Dixon. Their tale is told in part in  my blogpost “The Great Dissenter – Redivivus,” 9/3/13.

Troy started from the bottom.

Judge Paris: “Despite his being established as the sole director and president of the corporation on paper, petitioner initially worked under the control and direction of his parents.  Petitioner was directed to work on third-shift labor crews, drive forklifts, and do other ‘dirty jobs’ while his parents actively managed the corporation. He worked at locations offsite from the corporate office.  Initially he had meetings with clients and focused on the “labor side” of the business.  Later he became more involved in sales and spent more time in the corporate office.

“In 2005 petitioner became the safety coordinator for the corporation and handled some sales.  Petitioner continued to work on safety and sales offsite and checked in with the corporate office in the mornings and evenings.  When he was at the corporate office, he would often have a stack of documents to sign.  He did so without reviewing them.  Occasionally petitioner checked the mail and made bank deposits, but primarily he left the mail for his parents to open and review.” 2019 T. C. 79, at p. 4.

But he was being groomed for the C-suite. And when he got there, with signature over accounts and hire-fire power, he didn’t bother paying a couple million dollars’ worth (hi, Judge Holmes) of FICA-FUTA-ITW for fifteen (count ‘em, fifteen) quarters.

Troy loses his CDP, and Judge Paris sustains.


In Uncategorized on 06/27/2019 at 15:46

STJ Diana L (“Sidewalks of New York”) Leyden echoes the immortal words of Charles Edward Anderson Berry’s 1955 homage to Hank Williams, when William Joseph Davidson, Docket No. 5849-09, filed 6/27/19*, laments that he cannot review his documents to verify those IRS attached to their Rule 90(b) request for admissions, because William Joseph is in the slammer.

IRS attached 35 (count ‘em, 35) documents to their motion.

Now I’ve said before I’m a great fan of motions (or notices, as we State courtiers call them) to admit. They smoke out opposing parties and save time. And maybe 35 documents are appropriate; from STJ Di’s order I can’t tell.

IRS claims the responses William Joseph sent them “…are ‘incredulous’ and ‘violate the requirements of Tax Court Rule 90(a) and (c)’, and that petitioner failed to ‘specifically admit or deny the requests, or to make reasonable inquiry thereof’. Furthermore, respondent asserts that petitioner did not provide an original signature on his response.” Order, at p. 1.

I think you meant “incredible,” IRS, that is “unbelievable,” not “incredulous,” which means “unable to believe.” You were “incredulous,” if his statements were “incredible.”

Howbeit, William Joseph is off the hook.

Tax Court can review the responses, and order an amended response.

And since William Joseph is due for release this year, STJ Di orders  “an amended answer, that complies with Rule 90(c), including an original signature, be served on respondent no later than by January 22, 2020, which is 30 days from the date petitioner is expected to be released from incarceration. Failure to comply with this Order will result in petitioner’s response being stricken from the record.” Order, at p. 2.

So William Joseph does get satisfaction from the judge, as the late great Chuck predicted.

*Wm J Davidson 5849-09 6 27 19


In Uncategorized on 06/26/2019 at 16:30

Hector Baca and Magdalena Baca, 2019 T. C. Memo. 78, filed 6/26/19, certainly have that. Immigrants, Maggie is a bank officer and Hector has many more businesses than records, from oil field stimulation (that’s fracking, so stop with the smirks) to belly dumping (that’s moving sanitary landfill) to multi-level marketing, a fraud I fought in my young days at our State’s Attorney General’s Office.

It’s the usual want of substantiation, so Judge Holmes gives the win to IRS.

I only want to point out yet again that, in a deficiency case, which this is, past is prologue.

“This leaves us with an unusually messy substantiation case, which we start to untangle by noting that it is up to the Bacas to show that they are entitled to the deductions they took for 2012 and 2013.  See Rule 142(a).  The Bacas, however, urge us to look only to the administrative record compiled during the audit.  When considering just this record, they insist we must find that the Commissioner’s notice of deficiency is ‘defective and perfunctory’ under the Administrative Procedure Act (APA), 5 U.S.C. secs. 501-559, 701-706 (2006), because it is arbitrary, capricious, and an abuse of discretion. The Bacas also argue that, if this case is reviewed de novo, they have substantiated every deduction that the Commissioner disallowed.  The Commissioner disagrees.” 2019 T. C. Memo. 78, at pp. 12-13. (Footnote omitted, but see below).

“We won’t discuss this issue [APA] beyond noting that the Bacas have preserved it.  We have already held that the default provisions of the APA do not apply to our deficiency cases.  See Ax v. Commissioner, 146 T.C. 153, 161-63 (2016). Every circuit court to consider the question has agreed with us.  See QinetiQ US Holdings, Inc. & Subs. v. Commissioner, 845 F.3d 555, 559-61 (4th Cir. 2017), aff’g T.C. Memo. 2015-123; Bratcher v. Commissioner, 116 F.3d 1482 (7th Cir. 1997), aff’g without published opinion T.C. Memo. 1996-252; Clapp v. Commissioner, 875 F.2d 1396, 1403 (9th Cir. 1989); see also Humphreys v. United States, 62 F.3d 667, 672 (5th Cir. 1995) (the Code and not the APA provides a basis for review of a taxpayer’s tax liability).”2019 T. C. Memo. 78, at p. 13, footnote 9.

But before I go, I really have to mention Gregory J. Podlucky & Karla S. Podlucky, Docket No. 453-17, filed 6/26/19.

One of the joys of covering US Tax Court is discovering the truly unique, ya-can’t-make-this-stuff-up, tidbits that, like Tommy Gray’s “gem of purest ray serene,” lie in the “dark, unfathom’d” files at The Glasshouse at 400 Second Street, NW.

Greg has bestowed upon Judge Goeke the following: “a Bill in Chancery for Vacating of Void Judgments for Delictual Fault for Fraud and for Misprision of Felony By and Through Jurat Affidavit.” Then Greg followed this up with “an Exception to Final Judgment and Decree for Compelling Immediate Discharge and an Offer in Compromise as Non-Disclosure Agreement.” Order, at p. 1.

But Judge Goeke has had enough of Greg’s inventive style.

“These documents are not in accordance with Tax Court Rules of Practice and Procedure given the current status of this case. Accordingly, we will take no further action with respect to these documents…” Order, at p. 1.

Who said tax is dull?


In Uncategorized on 06/25/2019 at 16:35

I’ve quoted 2 Samuel 1:20 often enough so that y’all can recite it in unison, like the verses my daughters intoned in their schooldays. But though scholars over the millennia have located the original Gath on more tells than a poker game, we find it migrated to the Internet, whence come all things to be registered. Here’s John Horner, Docket No. 15601-17L, filed 6/25/19.

John had no return for the year at issue, but three (count ‘em, three) 1099-MISCs, aggregating about $33K. Plus affidavits from responsible officers of John’s customers. Plus copies of canceled checks that John signed.

John gets a CDP, with a chance to challenge the SFR that IRS bestowed upon him, the 1099s, and anything else he can suggest, like collection alternatives.

John says, “I don’t make an income.” Order, at p. 4. Plus the State of NV granted him a tax exemption (from what tax not stated), and IRS gave him an EIN.

But IRS presents The Judge With a Heart, STJ Robt N Armen, with what shows that John has quite a business. Here’s just a sample of what John has told in CyberGath, and shouted in the tents of the Internet.

“Hello! My name is John Horner. My dad and I started this company in 1995 with a lot of firm convictions. Both of us having much experience in the trucking and moving industry, we decided that we could build a company on complete Christian integrity and reasonable prices. We have been the exclusive Kansas City Mover for the Bryan Cave Law Firm (which is in the top 35 law firms in the world) since the year 2000.” Order, at p. 6.

There’s a lot more, but I’ll spare you.

Needless to say, there’s a 1099-MISC from Bryan Cave.

And we can stop here.


In Uncategorized on 06/25/2019 at 15:53

We all know the rationale for Rule 155: Judges don’t want to be bothered with arithmetic. And lawyers notoriously can’t add; I’ve blogged that often enough.

Bradley Sharpe-Geisler & Valli Sharpe-Geisler, Docket No. 5460-19S, filed 6/25/19 are listed as pro sese, and neither seems to be an attorney. But neither they nor IRS’ representative from OCC seem able to figure out if Brad & Valli should lose their “S.”

And unlike that Obliging Jurist, Judge David Gustafson, Ch J Maurice B (“Mighty Mo”) Foley will not whip out his calculating engine to help them.

IRS moved to de-small Brad & Valli. Brad & Valli riposted, and IRS came back with something other and further on the subject.

Ch J Mighty Mo bears out my title.

“At this juncture, and despite the multiple submissions, suffice it to say that neither party has provided computational information that would clearly establish that the contested amount falls under $50,000. The $50,000 limit refers to the amount challenged, not the amount that will ultimately be owed. There may also be some confusion about the significance of various Tax Court procedures and designations. Petitioners are therefore advised that this case will proceed and that opportunity will be afforded for petitioners to present to the Tax Court evidence and/or argument in support of their position. The case will simply go forward here as a ‘regular’ case and will not be designated as a ‘small tax’ case.” Order, at p. 1.

It’s what number you’re challenging that decides whether you get your “S” handed to you, not the final number (which no one yet knows).

And don’t count on Ch J Mighty Mo to do your numbers for you.


In Uncategorized on 06/25/2019 at 00:02

Neither movie nor magazine, this is the story of Donald Burden and Mary Torres, 2019 T. C. Sum. Op. 11, filed 6/24/19. Don and Mary are traveling people, Don as a Seventh Day Adventist pastor, and Mary as aircrew for United Airlines, on which by coincidence I flew home this afternoon.

Mary maintains a “crash pad” in northern NJ when she has to work from there. But her problem is her home is with Pastor Don in OH; thus her “crash pad” is her personal choice, and her deduction for rent thereon crashes.

Pastor Don’s problems are his car mileage logs. Judge James B (“Big Jim”) Halpern finds these unworthy of belief.

“Fourth, respondent claims that the logs contain patently wrong or dubious entries. For instance, respondent points out, the logs purport that Pastor Burden drove for business purposes 360 days out of 365 days during [year at issue], and, on average, he drove more than 100 business miles a day in and around Columbus, Ohio. The travel log also appears to indicate that Pastor Burden drove to and from the Dominican Republic, once in January …, leaving on a Sunday and returning the next Wednesday, and again in September …, leaving on a Sunday and returning eight days later. And the log also indicates he drove to and from South Africa in December …. Also, while the logs claim business trips to Alabama, Florida, and Texas, petitioners failed to produce gas receipts or other records that would substantiate that the travel actually occurred. They also offered nothing other than Pastor Burden’s testimony to prove the business purpose of any of the trips.” 2019 T. C. Sum. Op. 11, at pp. 11-12.

And Pastor Burden’s overseas travels featured too much sightseeing to serve as “strictly business.”

“Petitioners have failed to show that Pastor Burden’s travel … either to the Dominican Republic or to South Africa primarily related to his trade or business. We conclude that his traveling expenses were personal expenses and not deductible for Federal income tax purposes. See sec. 262(a); sec. 1.162-2(b)(1), Income Tax Regs.” 2019 T. C. Sum. Op. 11, at pp. 15-16.

Your Section 162s had better be “strictly business.” Even if you have fun.




In Uncategorized on 06/21/2019 at 17:40

We all know that Settles settled the question whether a petition from a CDP could be dismissed without entry of decision for IRS. See my blogpost “Dismissed!” 5/8/12. But today STJ Lewis (“The Name”) Carluzzo has an unsettling variation on the Settles theme (sorry, guys and Judge Posner).

Here’s a Friday designated hitter, Matthew D. Betters, Docket No. 8386-17L, filed 6/21/19.

Matt is a convert to Ch 7 bankruptcy, and claims IRS has filed a proof of claim, which will be completely paid in the bankruptcy proceeding. So dismiss the petition.

No, says STJ Lew. Tom Settles had litigated his bœuf with IRS to a finish, but Matt’s claim hasn‘t yet been adjudicated.

“The parties recognize that unlike the situation in Settles, the bankruptcy court in petitioner’s related bankruptcy proceeding has not yet adjudicated respondent’s claim with respect to petitioner’s 2014 and 2015 Federal income tax liabilities. That distinction is meaningful and constrains us to disagree with respect to the parties’ position that petitioner’s motion may, and should, now be granted.” Order, at p. 3.

Even though the parties are happy, the Bankruptcy Court still has the final word. But there is a way out.

“Either party, of course, can apply to the bankruptcy court for an order that modifies the automatic stay to allow the Court to dismiss this case or allow other appropriate relief related to this proceeding. See11U.S.C.§362(d)(1). Until then, or until the bankruptcy court adjudicates petitioner’s 2014 and 2015 Federal income tax liabilities, the relief sought in petitioner’s motion is unavailable.” Order, at p. 3.