Leciel L. Lowery, Jr., is a pilot on the Chesapeake, boarding incoming vessels on the bay and steering them to the harbor they were bound for. Leciel works in all weathers, clambering from the pilot boat (today’s version of the Baltimore clipper) to tanker and container carrier. At age 60, Leciel is wore out and plans to retire in eight years.

But Leciel L. Lowery, Jr. and Charlene A. Lowery, 2019 T. C. Memo. 151, filed 11/18/19,  also didn’t bother to pay nine (count ‘em, nine) years’ worth of income tax, which, with interest and chops, comes to $639,100.

IRS hits LLL with a couple NITLs (hi, Judge Holmes), LLL petitions the lot, and Senior Judge John Colvin gets to review the AOs work-up. It doesn’t cut it for Senior Judge John, so he remands, with a few hints to Appeals to steer a straight course.

LLL gets paid through the Pilots’ Association, which takes a bunch of stuff out of LLL’s pay, but the AO only allows some of the take-out. So Senior Judge John would like to know how LLL can pay with money he doesn’t get. “The AO did not treat amounts required to be withheld from petitioner husband’s distribution as reducing the amount of income available to petitioners because those expenses ‘were not allowed as expenses per the IRM.’ The AO did not cite an IRM provision to support that position…. On remand, the Appeals Office will have an opportunity to articulate the basis on which it determined that amounts subtracted from petitioner husband’s distribution should be treated as available to pay petitioners’ unpaid tax liabilities.” 2019 T. C. Memo. 151, at p. 11.

Likewise, the AO wants LLL to liquidate his IRA, but how is LLL to retire in his planned eight years? IRS claims he can make it back. Senior Judge John ain’t so sure. “We are unsure on what basis respondent concluded that eight years is long enough for petitioners to accumulate retirement savings in addition to fulfilling their other financial obligations.” 2019 T. C. Memo. 151, at p. 16.

And while you’re at it, Appeals, check out LLL’s age and physical condition and see if special circumstances don’t warrant not requiring LLL to liquidate his IRA.

LLL claims he had unreimbursed business expenses (overnight stays, special gear) and proffers credit card receipts to show same, but AO claims he never showed them. Well, Senior Judge John gives Appeals a chance to make it up, since there’s a letter in the record that shows LLL offering to provide same. Appeals shall “…review records previously made available by petitioners and consider whether or to what extent those records substantiate the amounts of petitioners’ reported unreimbursed expenses, and, to the extent respondent concludes that petitioners had unreimbursed employee expenses, why funds so expended should be considered available to petitioners to pay their back tax….” 2019 T. C. Memo. 151, at p. 18.

And Charlene is trustee under a trust created by her dad for her benefit and that of her two siblings. The only asset of the trust is a house in AZ that is rented but shows no income. Charlene has broad power to sell, so the AO wants Charlene to sell and hand over her share of the proceeds. But Senior Judge John reads AZ law to require trustees to act for benefit of all beneficiaries. So Appeals should check out AZ law to see if Charlene can sell to benefit herself, without regard to the other beneficiaries.

I want to give a Taishoff “good job” to Stephen P. Kauffman, Esq., and Terry L. Goddard, Jr., who represented LLL and Charlene. As they say in Gleesca, they are “verra thorough.”