And Maybe Their Helpers Can’t Either

Judge Buch has a designated hitter off-the-bencher, Orlando F. Cabanday & Teresa H. Cabanday, Docket No. 5068-18, filed 4/28/20, in further proof (as if any were required) of the title of this sermonette.

Orlando parted acrimoniously from his firm and hung out his shingle. I left my last firm after the boss and I exchanged assurances of the greatest personal esteem and affection, and did likewise. I sympathize with Orlando. No support staff, and no revenue to support one.

Orlando’s trouble, of course, is that he can’t substantiate expenses. I once told a RA that if I had wanted to be a bookkeeper, I would have been one. Orlando was in a like fix.

Judge Buch, whose cursus honorum has been far from the short and simple annals of the poor like Orlando and me, has a certain fellow feeling, and allows Orlando some deductions above what IRS was willing to give.

“The Cabandays’ testimony about specific vendors noted above and their nexus to the law practice was credible. Because the credit card statements and cancelled checks verify those specific payments, the Cabandays met their burden of proof as to those expenses. As to the remaining expenses, they did not, and therefore the Commissioner’s disallowance is sustained.” Transcript, at pp. 10-11.

But Orlando, perhaps recognizing his own shortcomings (notwithstanding he had passed three parts of the CPA exam, Transcript, at p. 4), hired one Mr T to reconstruct his expenses. And that gentleman produced some extraordinary results.

“In reconstructing Mr. Cabanday’s expenses, Mr. T had imperfect records to work with. For example, the law firm wrote a check to IPS in the amount of $25,000, but on the portion of the check where the amount is written in words, the check merely said twenty-five. That check cleared for $25. When Mr T tabulated that check, he took the numeral amount of $25,000, resulting in an overstatement of $24,975. Also, a check to Mr. C for $8,050 was dated January 5, 2014, and Mr. T tabulated it in 2014. On closer examination, however, the check sequence and the date the check cleared the bank show that the check was written in early 2015.

“Mr. T also made mistakes of his own. When Mr. T tabulated checks payable to ODG, he mischaracterized a $200 check as $42,212. And in the Court’s own tabulation of expenses… the Court found a $332 payment to NLS and a $2,000 payment to AMK omitted from Mr. T’s summary.

“The Commissioner suggests something nefarious in these errors. The $25,000 error relating to IP is understandable giving the manner in which the check was written. The $42,212 error relating to ODG is more difficult to plausibly explain, but the evidence is insufficient to conclude that there was an affirmative intent to mislead. Regardless of these errors, Mr. T’s summary was not admitted for the truth of the matters set forth therein.” Transcript, at pp. 7-8. (Names omitted).

Fortunately for Orlando and the equally hapless Mr. T, Judge Buch thoroughly disproves the canard that titles this blogpost.

“The Court calculated the expenses … directly from the bank and credit card records; they were not taken from any summaries or demonstrative exhibits.” Transcript, at p. 8.

There’s one lawyer here who can add, and he’s on the bench.