Attorney-at-Law

VENUE WALK THROUGH A STORM

In Uncategorized on 07/27/2020 at 13:34

Sorry, Guys, the Devil Made Me Do It

I missed Murfam Enterprises LLC, Wendell Murphy, Jr., Tax Matters Partner, et al., Docket No. 8039-16, filed 6/29/20, for which omission I now apologize. I wish this had been a designated hitter, especially since I had not blogged this case for almost two (count ’em, two) years. Had it not been for Murfam Enterprises LLC, Wendell Murphy, Jr., Tax Matters Partner, et al., Docket No. 8039-16, filed 7/27/20, I would have missed this interesting sidelight.

First, let’s go back a month. IRS was arguing that appeal would lie with 4 Cir, not 11 Cir. This matters because Section 7482(b), the Tax Court’s version of the Peace of Augsberg (1555): “Cuius regio, eius religio.” I need not, of course, translate.

“The entity that contributed the easements on the ‘River Tract’ and the ‘Landing Tract’ is Duplin Land Development, Inc. (Stip. paras. 24, 35). It appears that Duplin Land is not a TEFRA partnership but is an S Corporation in which the petitioners in Nos. 14536-16 and 14541-16 are shareholders. It appears that the deductions for contribution of the easements were disallowed in statutory notices of deficiency (not FPAAs) issued to those shareholder-petitioners. At the time they filed their petitions, one set of petitioners resided in North Carolina (Stip. 6) and the other in Florida (Stip. 10). We have therefore supposed that one of these consolidated cases would be appealable to the Fourth Circuit and the other case would be appealable to the Eleventh Circuit. See, e.g., Estate of Israel v. Commissioner, 159 F.3d 593, 596 (D.C. Cir. 1998) (‘Because §7482(b) allows multiple possible venues when there are multiple petitioner-appellants with different residences, the Tax Court may be unable to confine its decision to the law of any one circuit (assuming the circuits are in disarray). But we believe the venue provision makes this circumstance, rare as it may be, unavoidable’). We would benefit from knowing why respondent concludes otherwise.” Order, 6/29/20, at pp. 1-2.

Remember this fandango started with Judge David Gustafson’s plea for a simple one-size-fits-all stip. See my blogpost “Mise En Place,” 6/25/18.

Well, today Judge Gustafson got his answer, but wants more.

“…respondent shall file a supplemental memorandum addressing the contention as to Docket No. 14536-16 in paragraph 9(c) of petitioners’ memorandum–i.e., ‘Due to the stipulated reallocation of the D.M. Farms contribution, the other contributions do not impact Dell and Wendy’s tax for their only year before the Court, 2010. Code § 170(b)(1)(A) (contributions limited to 50 percent of AGI); Stip. ¶ 19 (agreed $9 million contribution by D.M. Farms); Exs. 56-J, p. 1 (AGI of $3,537,641); 58-J, p. 77 (Dell owns 99 percent of D.M. Farms). Dell and Wendy’s 99 percent share of the D.M. Farms contribution exceeds their 50 percent AGI limitation.'” Order, 7/27/29, at p. 1.

I’ve commented before that we need a single Federal Circuit to deal with tax appeals. If there isn’t enough money or business for a separate Federal Circuit Court of Tax Appeals, then send it all to DC Cir. But anything is better than this hodge-podge.

I will make no political comment on the likelihood of anything so rational occurring.

 

 

 

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