I miss my visits to various ballparks; the overpriced beer, the spilled nachos, hauling myself upright for people to pass, collapsing into my seat and hauling myself up again for the late-comer, the earsplitting loudspeakers. There’s something about a summer night at a bank-sponsored elliptical heat sink, watching the moths in the floodlights.

But most of all it’s the game I miss.

I long for the great moment when the down-and-outers spark a rally, and claw their way back, run by run, chasing starter, middle-distance, and even threatening the closer. Finally, with tying and go-ahead runs on base, “and the last man in,” closer faces hitter, and the hoots-and-hollers of the fans reach crescendo.

What a let-down, when the hitter chases a split-finger with the count 3-and-2, and grounds out 4 to 3, ending the inning and the rally.

And today I’m reminded of what I’ve lost this summer, as a promising rally peters out (although the STJ is not Peter Panuthos, but Lewis (“The Name is a Home Run”) Carluzzo).

Here’s Faith Lynn Brashear and Hendel N. Thistletop, 2020 T. C. Memo. 122, filed 8/19/20.

This one started out showing real promise. See my blogposts “‘Got To Be There’ – Part Deux,” 8/26/16, and “A Court of Limited Jurisdiction,” 10/25/16.

Well, Faith Lynn and Hendel finally shucked their erstwhile lawyer DJ and went to trial. You can read STJ Lew’s blow-off of unsubstantiateds. It’s too disheartening for me.

And no designated hitters today.

Another quick jotting from my notebook.

There’s just one opinion today, a Sum. Op. from STJ Panuthos, and there really isn’t much to say about it that hasn’t been said many times before. A claim is not a credit; IRS can apply payments how they wish if you don’t specify; you can’t fight about out years in a CDP or petition therefrom; and the SOL for refund claims is a real quick kick.

So you can read Robert William Porporato, 2020 T. C. Sum. Op. 24, filed 8/18/20. And perhaps you can extract more from his plight than I just did. If you do, I’d be glad to know what I missed.

Perhaps the moral is what the stick-and-string sailors say: “If you let the boat fall off to leeward, you have to make it all back at compound interest.”

It might could be that some bright person has figured out how to do a legitimate extinguishment bailout in a conservation easement. Of course, Oconee Landing Property, LLC, Oconee Landing Investors, LLC, Tax Matters Partner, Docket No. 11814-19, filed 8/18/20*, can’t wangle partial summary J out of Judge Albert G (“Scholar Al”) Lauber. But neither can IRS Oakbrook or Coalholder the Oconees into taking a knee.

For those coming late to this party, see my blogposts “They Always Must Be With Us,” 5/12/20, and “Diamonds Are Forever,” 10/28/19.

It’s the usual markup of some GA scrub. But it’s the improvements, or lack thereof, that give the Oconees a soft landing.

“The deed prohibits any form of residential, commercial, or industrial development as well as exploration for or extraction of oil, gas, or minerals. The deed states that there were no existing structures or man-made features on the Property when the easement was granted, and it generally prohibits construction on the Property ‘of any buildings, structures (including mobile homes), or other improvements.'” Order, at p. 2.

It gets even better for the preservationists.

“Oconee reserved the rights to engage in forestry and recreational activities on the Property, including hunting, shooting, boating, fishing, camping, hiking, biking, and horseback riding. In connection with the latter Oconee reserved the right to ‘construct, repair, relocate, and remove small “Recreational-Only Structures” * * * such as deer stands, hunting blinds, emergency shelters, [and] play structures for children.’ The deed prohibits the use of such structures for residential purposes, bars the construction of utilities to serve such structures, and provides that the area of such structures within the Property could not exceed 150 square feet.

“Paragraph 4(e) of the deed, captioned ‘Improvements,’ reserves to Oconee the right to construct a ‘nature trail,’ for use by hikers and bicyclists, in a 42-acre portion of the Property comprising hardwood forest. Any nature trail had to be made of permeable materials (gravel or mulch) and closed to motorized vehicles (except those necessary for people with disabilities, emergency response, and trail maintenance). The deed lists no other permissible improvements that Oconee could make to the Property.” Order, at p. 3.

The syndicators go wild.

As for prior claims, those get paid out of the Oconees’ cut of extinguishment proceeds. Unhappily, value of future improvements is out of the extinguishment maths, but therein lies the question of fact, namely, viz., and to wit, are any permissible future improvements worth anything? And what does GA law do with prior claims when there’s a split of proceeds? Once again, substantial brain cells are decomposed for an event “so remote as to be negligible.”

Of course, the Oconees have so limited what can be done on the Property as to take them out of the Coalholders or Oakbrook.

The Oconees trot out the old PLR200836014 (Sept. 5, 2008) meets Auer argument, but Section 6110(k)(3) puts paid to that. PLRs are for the requesting taxpayer, for the requested transaction, and for the requested year(s). No others need apply.

No summary J either way, in whole or in part.

But before you go, note that 97% of this sylvan wilderness was sold to the Oconees for $3.7 million. Eight (count ’em, eight) days later, the easement deed was recorded. Whereupon the Oconees took a $20,670,000 write-off.

Section 6662(h) 40% overvaluation chop is on the table.

*OCONEE Landing 8 18 20

I know I stole this line from a CA practitioner, to whom I must apologize both for lifting his bon mot and forgetting his name, but it’s really so good that any attempt at paraphrasing would dilute it: “Every taxpayer needs two advisers – one to tell them what the law is, and the other to tell them what they wish the law was. Then they can choose whose advice to follow.”

Well, Nirav B. Babu, 2020 T. C. Memo. 121, filed 8/17/20, only needs one adviser, because “(D)uring law school he took courses in tax law, participated in a tax clinic that assisted low-income taxpayers, and finished ‘with a pretty good understanding of tax.’” 2020 T. C. Memo. 121, at p. 3. And Nirav also ran a franchised tax prep service that he built up after his mentor’s service was enjoined from tax prep by DOJ in USDCSDOH for “engaging in and facilitating extensive and pervasive tax fraud.” 2020 T. C. Memo. 121, at p. 4. He also subcontracted work for the mentor’s successor.

Nirav was a real success story. Except he didn’t bother to disclose about $2.9 million of income from his mentor’s successor’s firm, from which he had unlimited cash drawing rights.

Nirav fesses up after IRS nails him for unreported income. In fact, after confessions and concessions, all Judge Albert G (“Scholar Al”) Lauber has left to decide is whether Nirav is up for a five-and-ten substantial underpayment chop.

Nirav has five (count ’em, five) lawyers against IRS’ three in Tax Court, but when it came to preparing his individual return, he relied on only one, and on the stand she doesn’t do so good.

“Ms. Rebeck obtained a law degree…and had been practicing law full time for less than a year…. Petitioner hired Ms. Rebeck to represent him in a dispute with the IRS involving the assessment of penalties for alleged violation of section 6695(g), which requires return preparers to exercise due diligence regarding claims for the earned income credit. …she filed a Form 2848, Power of Attorney and Declaration of Representative, to represent him before the IRS in that matter.” 2020 T. C. Memo. 121, at p. 8.

Nirav’s adviser, Ms. Rebeck, told him he didn’t have to report the $2.9 million. Judge Scholar Al is less than convinced this was good advice.

“Petitioner’s testimony was self-serving, and Ms. Rebeck did not strike the Court as an objective or candid witness.

“Petitioner and Ms. Rebeck had mutual business interests, insufficiently explained, that involved large sums of money. Ms. Rebeck acquired former [mentor’s] franchises that appeared to have used [Nirav’s]’s software to process returns. … she and petitioner started a law firm whose bank account balances exceeded $3.8 million [in less than a year]. In early 2018 petitioner transferred $500,000 to Ms. Rebeck for unexplained reasons. At some point she transferred to petitioner a 99.9% interest in an LLC for no consideration. Petitioner and Ms. Rebeck were codefendants in a lawsuit filed in 2019 involving alleged misappropriation of funds. For these and other reasons, we found that Ms. Rebeck’s testimony was likely to be biased in petitioner’s favor.” 2020 T. C. Memo. 121, at p. 9.

Ms. Rebeck posited the $2.9 million was repayment of loans, but had no documentation. Likewise the claim that there were offsetting bad debts.

“The theories she enunciated at trial struck the Court as post hoc rationalizations for petitioner’s erroneous reporting.” 2020 T. C. Memo. 121, at p. 14.

As for Nirav, his heavy-duty experience makes it incredible that he didn’t know that diverting an entity’s income to his personal benefit generated taxable income.

I’ve blogged so many scenic/conservation easement dodges that crack up, and historic façade crumbles, artistic collapses, and sporting icon-vs-ambassador unravelings, that I’m halfway to the shootdown before the case even gets airborne.

But that Obliging Jurist, Judge David Gustafson, knocks IRS’ case for six (as the cricketers say) today. Here’s Peter C. Emanouil And Pascale Emanouil, 2020 T. C. Memo. 120, filed 8/17/20.

It’s Pete the developer’s case. He commenced to build an affordable housing development in the thriving, striving commune of Westford, MA (and no, I don’t know where that is, either; perhaps my colleague Peter Reilly, CPA, now or formerly a Bay Stater, can tell us). Pete got the usual schlecht (please pardon an arcane technical term) from the communards (those who governed the commune), so he chopped and changed his plans as required.

As Pete’s job was nearing completion, he got a couple appraisals (hi, Judge Holmes) and donated some of the land he had, but didn’t build on, to the municipality. IRS claimed the appraisals weren’t qualified, because they didn’t state they were intended for tax purposes, and didn’t state the anticipated date of donation. The other nine (count ’em, nine) Reg. Section 1.170A-13(c)(3)(ii) factors are all there. So Judge Gustafson plays the “substantial compliance” card. See my blogpost “Method, No Madness,” 9/21/16. Anyway, the 8283s that accompanied Pete’s and Pas’ return stated the date of contribution, and that was within 30 days of the appraisal, which said it was current.

Finally, Pete’s appraiser testifies the appraisal was a market value appraisal. “Market value is market value, and whether you are preparing this for an owner or a bank, or a public entity, or for any purpose, that market value premise governs, and the analysis must be true to that principle. The intended use and user is inconsequential.” 2020 T. C. Memo. 120, at p. 42.  Judge Gustafson agrees.

And since Pete donated the land and not the easement, he sheds the abusive shelter mantle.

Enter quid pro quo. Did Pete hand over the property to quell the communards?

The communards gave Pete a laundry list of requirements to get the development approved. They did ask for open space, but not for land; and the open space wasn’t on the donated land. Nobody testified there was a quid pro quo. And it is very unlikely the communards would have played “trust me, trust me,” and approved anything without a written agreement. Besides, eight years before, Pete had sued the communards over another deal, so while they were civil they were hardly buddies.

There’s the usual jumpball between appraisers, but Pete’s crew prevails, especially since IRS’ appraiser relied on the same plot plan as Pete’s appraiser, while claiming excessive discounts and absorption. Read the appraisal joust, as an example of how it should be done.

Since the deductions are sustained, no deficiencies, no chops.

A Taishoff “Good Job, First Class,” to Pete’s trusty attorneys at McLane Middleton, and his even trustier appraiser Ms. Pamela McKinney.

Ex-Ch J L Paige (“Iron Fist”) Marvel is wearied of the multitudinous wits, wags and wiseacres who petition decades (if not millennia) of years, seeking judicial confirmation that they received neither SNOD nor NOD for any thereof. Whether this is to clear their own decks, or a try to attack assessables like refund grabs for child support, or to harass IRS, is never clear.

Today, a recidivist, Bryan C. Waite, Docket No. 3490-19, filed 8/17/20, gets a warning from ex-Ch J Iron Fist. Bryan C. petitions from and including 2000 through and including 2018. IRS says they searched and found nada.

“Petitioner has filed a similar case before the Court at Docket No. 11245-18. In that case, petitioner disputed both notices of deficiency and notices of determination concerning collection actions for tax years 2000 through 2016. Petitioner did not attach to that petition any notice of deficiency or notice of determination. The petition at Docket No. 11254-18 was not properly executed, the petition did not bear an original signature of petitioner, and petitioner failed to pay the $60 filing fee. The Court issued several orders directing petitioner to ratify his petition, but he failed to do so. On October 4, 2018, the Court on its own motion dismissed petitioner’s case at Docket No. 11245-18 for lack of jurisdiction on the grounds that petitioner did not properly execute the petition or pay the filing fee.” Order, at p. 2.

I’ve been blogging this game for two (count ’em, two) years now, beginning with my blogpost “A New Gambit?,” 4/2/18, and shortly thereafter suggested laying a Section 6673 frivolity chop on the avid players thereof. See my blogpost “I’m Beginning to See the Light,” 4/9/18. Ex Ch J Iron Fist seems to have specialized in this stuff.

But today her patience is worn thin.

“Petitioner’s present case is similar to other cases recently filed in this Court where the taxpayer files a petition listing a large number of years and claims that he or she never received any notices of deficiency and/or notices of determination for any of the specified years. The taxpayer does not attach any notice of deficiency or notice of determination to the petition. This type of case forces the Commissioner to spend a considerable amount of time trying to verify the taxpayer’s allegations that the Commissioner has not issued either a notice of deficiency or a notice of determination for each of the years identified in the petition. The search foisted on the Commissioner, which takes a great deal of time and effort, often leads to the filing of a motion to dismiss for lack of jurisdiction, and may lead to the taxpayer pressing for the entry of an order that specifically states the taxpayer did not receive any notice for any of the years listed in the petition. Cases similar to this one have uniformly been dismissed for lack of jurisdiction and may in fact be frivolous and worthy of an award of damages under section 6673. Although petitioner has filed a previous case before the Court listing a large number of years and claiming that he never received any notice of deficiency and/or notice of determination, the Court in the exercise of its discretion will not impose a section 6673 penalty in this case. However, petitioner is warned that this Court will consider a section 6673 penalty in any future case commenced by petitioner seeking similar relief under similar circumstances.” Order, at pp. 2-3. (Emphasis by the Court).

Of course, imposing the Section 6673 chop raises the question how to collect. See my blogpost“Paper Tiger,” 8/3/20.

This is the first example I’ve seen of this dirty trick. I don’t want it to gain any traction. Here’s Tony Patrinicola & Barbara Patrinicola, Docket No. 498-19, filed 8/14/20. Note I’m not alleging or claiming that Tony or Barbara was in any way involved in this.

You’ll recall Judge David Gustafson was on this case, as recently as Monday. See my blogpost “Office For The Self-Represented?” 8/10/20.

Now Judge Gustafson isn’t.

“By our order of August 10, 2020, we directed the parties to make certain filings in this case. Later that day the undersigned judge received, from an individual not connected to this case, an unsolicited email discussing this case.” Order, at p. 1.

So Judge Gustafson recuses himself.

I am not second-guessing whether Judge Gustafson should or should not have done so. Not having seen the e-mail, I cannot tell.

But this e-mail maneuver is despicable. This unconnected person is trying to influence a judge.  The Federal Protective Service might wish to contact the unconnected individual and suggest (or perhaps more than suggest) that tampering with Federal judges is a very bad idea.

There are those recurring themes, of the kind gardeners used to call “hardy perennials,” that flourish at 400 Second Street, NW, in The State That Isn’t. That consists of invasive species CPA and their relative, the mis-called POA.

To refresh the recollection of those who need it but won’t read it, in the tax world Form 2848 Power of Attorney and Declaration of Representative is either a piece of paper or a concatenation of electrons. The person, which said document authorizes to act for the principal, is called the “Representative.” A human being cannot be a POA, unless he or she is literally a paper tiger.

Howbeit, no Representative, however credentialed s/he may be, may appear in Tax Court unless admitted to practice in USTC. See Section 7452 and Rule 200 for more.

Formerly some judges winked at these requirements in the early stages of a case, letting letters from CPAs serve as minor procedural motions. I’ve blogged a lot of these; I’ll spare you the list. There must be dozens that I haven’t blogged. But they recur constantly, like non-endangered knotweed.

Here’s Judge Joseph W. Nega taking a stand against an invasive species, in Wayne Lawton & Imogene Lawton, Docket No. 3660-19, filed 8/14/20.

“The Court notes that petitioners’ C.P.A. appears on the petition and has participated on the conference calls with the Court. The Court’s records indicate that ST is not admitted to practice before the Tax Court. Accordingly, she may not enter an appearance to represent taxpayers before the Court. Unlike the IRS and some other Courts, the Tax Court does not recognize powers of attorney.” Order, at p. 1. (Name omitted).

Burt Judge Nega is willing to give Wayne & Imogene a break. They don’t need to file Form 10.

“The Court will send all future correspondence directly to petitioners’ address which was informally provided to the Court.” Order, at p. 1.

But Wayne & Imogene had better do their teletrial prep and talk to IRS’ counsel in furtherance thereof.

Doesn’t Pay Off

Michael C. Iaco, Docket No. 19694-18L, filed 8/13/20 “…pled guilty to operating an illegal gambling business. Petitioner’s plea agreement specifically covered his activities from January 2012 thru June 2013.” Order, at p. 1.

MCI falls foul of the Section 4401 excise tax on wagers, and if you’ve never encountered this one, neither have I.

MCI had no books and records, nor did what RO B (name omitted) terms MCI’s “power of attorney” (should be “representative”; a power of attorney is either a piece of paper or a bunch of electrons) furnish any thereof. So RO B took a one-day run of the wiretap that brought MCI down, and extrapolated.

MCI is a sporting guy. He offers RO B “…he would concede to tax liability for one month with the remaining 17 months to be conceded by the Government.” Order, at p. 3. I give MCI a Taishoff “Good Try, third class.”

MCI went to Appeals, but claims “The Appeals Officer made no attempt at all to determine the correct amount of the excise tax. None at all. Instead, she simply ‘rubber stamped’ the Examiners [sic] crazy conclusion.” Order, at p. 5.

Judge James S (“Big Jim”) Halpern gives IRS summary J, and me a designated hitter. MCI had plenty of chances to put in documentation of what wagers he handled with RO B. Uncorroborated oral testimony doesn’t cut it.

Tax Court is a bad place to play longshots.

Judge Mark V Holmes waged an open war on the stealth subpoena. For those new to this my blog (and a hearty welcome to all, both old and new), see my blogpost “The Stealth Subpoena,” 7/16/15. See also Judge Chiechi’s counterattack “The Stealth Subpoena Is Alive and Well,” 12/2/16.

No Ch J has taken it upon her/himself to amend the Rules to bring Tax Court into the last decade of the last millennium, much less than into the second decade of the current one.

Though Judge Holmes has been unceremoniously relegated to seniordom, the lampada has been passed to Judge Emin (“Eminent”) Toro. And he bears it “like a torch in flame,” in Kenneth A. Hangartner and Catherine Frazier, Next Friend, Docket No. 2051-19, filed 8/13/20. Note there should be a comma, and not the word “and,” between Kenneth and Catherine. There is only one petitioner, Kenneth, acting through his next friend, Catherine.

IRS filed a status report, wherein they mentioned they would be serving some third-party subpoenas. Judge Eminent tells IRS to make these returnable at the teletrial date and time. He orders the Clerk to get the parties the teletrial stuff; might I suggest that IRS give the third-party subpoena’d types the teletrial stuff as well when they serve the subpoenas?

And Judge Eminent brandishes the torch: “ORDERED that both parties shall comply with Federal Rule of Civil Procedure 45(a)(4).” Order, at p. 1.

Is this the start of the Cold War on the Stealth Subpoena?

“To you from failing hands we throw/The torch, be yours to hold it high.”

Word to Ch J Maurice B (“Mighty Mo”) Foley. How ’bout we stop with wars, hot or cold, and fix Rule 147?