Attorney-at-Law

A TASTE OF BUFFALO, A TEST OF PARTICIPATION

In Uncategorized on 06/10/2019 at 18:50

Once again Judge Mark V Holmes shuffles off to Buffalo, and that metropolis’ gourmet delights in Mikel A. Brown, Sr., and Debra A. Brown, 2019 T. C. Memo. 69, filed 6/10/19. Beef on weck, sweet sponge candy and spaghetti parm, though tickling His Honor’s palate, didn’t make the grade in Alamogordo, NM; and the celebrated wings of the Nickel City crashed.

The Alamogordo noshery, foisting a Taste of Buffalo on The Land of Enchantment, featured Cynthia and Bryan Harris on deep-fryers, but it was Mikel who was the brains of the joint venture. That’s the Rev. Mikel. While his unreported income earns him the usual slam (no resolution by trustees, board or anyone else for parsonage, and lots of cash from faithful flock; see my blogpost “The Envelope Please – Part Deux,” 10/11/18), Rev Mikel did participate enough to get some of the operating losses based on “regular, continuous, and substantial ” participation. Even though Rev Mikel was based in El Paso, TX, he and Ms Debra really kept the noshery on track.

“We also find that, even given their occasional share of management-related participation, the Browns have met what this test requires.  It is obvious to us that the Harrises managed [the noshery]–they ran the restaurant’s day-to-day operations. This means that the Browns’ participation included only a de minimis amount of management.  But the Browns focused on the important chores of handling the finances, product development, and customer retention.  It seems to us that the record as a whole tells a story of two couples who decided to open a restaurant, with one pair able to man the post and provide the hands-on experience, and the other able to provide the business know-how and funds.  Just because the Browns weren’t running the day-to-day operations doesn’t mean they weren’t playing a major role in [noshery’s] operation.  They spent a lot of time working together on [noshery’s] menus, advertising, decor, and whatever else needed to be done.  On top of this, Reverend Brown handled most of the finances and wrote most of the checks for supplies and vendors, rent, and utilities.  The Harrises gave him the daily receipts and cash, and he would do the books.  He also did the payroll for [noshery].  We don’t believe any testimony that the Browns spent many, many hundreds or even thousands of hours doing this, but we do find it more likely than not that they spent more than 100 hours combined on these chores and were integral to [noshery’s] operation.  This lets us find that the Browns materially participated….” 2019 T. C. Memo. 65, at pp. 40-41 (Citations omitted).

The obscurest part of Section 469 saves the day.

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