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?


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