No, neither psychological distress nor identity theft; today we have Lisa A. Bruno, 2020 T. C. Memo. 156, filed 11/16/20, wherein Judge Albert G (“Scholar Al”) Lauber cannot identify in what year Lisa got a theft loss (if CT law says it was theft, which it doesn’t). Lisa claims that when her loved-once failed to turn over property per their divorce decree, he stole from her.

Lisa’s uncoupling with loved-once involved dueling contempt citations (loved-once was one-time record-holder for most contempt citations in CT), property-grabs, cross-border LLCs, and bankruptcy adversary proceedings with loved-once’s Mama and Lisa’s successor in on the play both in bankruptcy court and the divorce court.

Although Lisa wants to deal with other years than the year at issue (including, without limitation, 2020, for which she hasn’t even filed a return), it boils down to two (count ’em, two) issues.

I’ll leave this to Judge Scholar Al. “Failure to transfer marital property is not an uncommon occurrence. Petitioner points to no caselaw or other Connecticut authority establishing that an ex-spouse commits embezzlement when he is held in civil contempt for failing to pay a marital property debt. Indeed, petitioner was herself held in contempt by the divorce court for her refusal to place in escrow Mr. Bruno’s $951,445 share of the proceeds from sale of the Spring Valley property. See supra p. 5. We doubt petitioner believes that she embezzled those funds, and it is not obvious that civil contempt orders directed against her ex-husband should produce a different result.” 2020 T. C. Memo. 156, at pp. 17-18. I’ll defer to CT counsel on that.

Next, even assuming a theft, what was the identifiable event that fixed the date the loss occurred? At year-end of the claimed loss year, Lisa had more than a million bucks she owed loved-once to offset what he owed her. Her lawsuit against Mama and successor was still ongoing. Lisa claims that when loved-once petitioned in bankruptcy in loss year, he claimed he had nothing but a claim against her.

Judge Scholar Al is too polite to reply “Yeah, roger that.”

“…(p)etitioner relies heavily on the assertion in his bankruptcy petition that he then had (apart from his claims against her) assets of only $2,500. We do not think that a reasonable person in petitioner’s position would have believed that assertion. Mr. Bruno was a successful financial professional whose annual income exceeded $2.1 million be- fore the divorce. At the time of the divorce he held assets of at least $5 million, corresponding to his and petitioner’s share of the marital property. Given Mr. Bruno’s profile as someone who repeatedly ignored judicial orders, the assertion that he had essentially no assets in October [loss year] was objectively implausible. And it is obvious that petitioner did not believe that assertion, because she proceeded to file a proof of claim against him in bankruptcy court, to file additional claims against [successor] in New Hampshire state court, and to participate in the bankruptcy trustee’s adversary proceeding against Mr. Bruno, [successor], and Mr. Bruno’s mother.” 2020 T. C. Memo. 156, at p. 21.

So there was a reasonable prospect of recovery, with the end not coming until after the last year at issue here.

Judge Travis A. (“Tag”) Greaves is laconic. He wastes no words in tossing Vahik Aghadjanian, 2020 T. C. Memo. 155, filed 11/16/20, for being three weeks (actually 23, count ’em, 23 days) late with his petition. IRS sought summary J, and Vahik didn’t respond.

My readers, counting the days until Tax Court shuts down its daily delivery of press releases, orders and opinions, will doubtless ask “Why does this need a T. C. Memo.?” In the ordinary course a simple order would do.

Except.

This is a Section 7623 Whistleblower case. And it took the Ogden Sunseteers four (count ’em, four) years to reject (or maybe deny; Judge Tag doesn’t say) Vahik’s claim. 2020 T. C. Memo. 155, at p. 2. Don’t strain yourselves, chaps.

Anyway, Vahik is out. All Judge Tag has to say is that he was late. True, Vahik never raised Myers or anything else. And a Rule 161 probably won’t help, as there’s no new facts or law.

But if Vahik reads this (a most unlikely occurrence), he should read my blogpost “For Whom the Equitable Tolls,” 4/10/20. And maybe so consider a Rule 161. Fast.

Takeaway- Those who need this won’t read this, and those who read this don’t need this. But raise any cognizable issue every time. You won’t get if you don’t ask.

Overseas contractors in war zones rarely win the Section 911(d) “abode” jumpball. Usually, the offshorenik’s ties to the Land of the Free outweigh their confined existence upon stronds afar remote.  But today, Judge Morrison gives us a small claimer, wherein Patrick L. Duke, Docket No. 25906-17, filed 11/16/20, comes away with the win, despite his confinements to base first at Camp Liberty, Baghdad, Iraq, and later the “U.S. Embassy’s Diplomatic Support Center in Baghdad, Iraq.” Order, Transcript, at p. 5.

Pat had first gone to Iraq in 2006, and only came back in 2020, because the base couldn’t treat a 60-year-old high risk patient for COVID-19. Order, Transcript, at p. 10.

During years at issue, Pat couldn’t leave either base. His life as a heavy-equipment jockey was circumscribed. “Duke lived in a shipping container unit on base. He lived in the same unit the entire time he worked on base. It was a 12 to 14 foot by 40 foot shipping container with two rooms and a bathroom in the middle. Duke lived in one of those rooms and shared the bathroom. He was not allowed to make any modifications to the unit. He did not hang pictures on the walls, for fear of them being knocked off the wall by explosions from incoming enemy fire.” Order, Transcript, at p. 6.

Pat kept his TX driver license, hunting license, and voter registration (although he didn’t vote in either year at issue). During his deployment but before the years at issue, he bought a house in Rosenberg, TX (which you have to visit with your grandchildren, if you are lucky enough to have them; the railroad museum was a blast). But he didn’t stay there much in the two years at issue. He went fishing mostly. Judge Morrison finds Pat and Mrs. Pat were separated during years at issue, and slept in separate bedrooms. Mrs. Pat resented Pat going to Iraq. He rarely interacted with family when home, and rarely Skyped. He kept and funded the US bank account, which Mrs. Pat used to pay the bills.

I’ve blogged a number of cases like this, and petitioner always lost. Not this time, not today.

“Considering the facts and circumstances of this case, we find that Duke’s ties to Iraq were stronger than his ties to the U.S. during the [years at issue]. Duke left for Iraq in 2006 and returned to the U.S. in 2020, some 14 years later. He only moved back to the U.S. because of the pandemic. His communications with his friends and family in the U.S. were few and infrequent. He returned to the U.S. only occasionally. He became estranged from his wife due to his living and working in Iraq for so long.

“We therefore hold that Duke’s abode was not in the U.S. and that his tax home was in Iraq.” ” Order, Transcript, at p. 13.

BTW, Pat and Mrs. Pat reconciled after he came back. Who says Tax Court Judges don’t go for a happy ending?

While it was a good idea, mandatory CLE has spawned the “Win Your Case Anywhere But In The Courtroom” school of practice. Win with the demand letter, in the pleadings, at discovery, by judge-or- jury-shopping, or at simulated jury selection or at mock-trial, the presenters and lecturers have always been ding, dinging their pet panaceas into our ears.

It’s even infected the play-nice corridors of The Glasshouse. Today we have Judge Courtney D. (“CD”) Jones giving the win-at-discovery types a break in Picayune Pearl Aggregates, LLC, Picayune Pearl Aggregates Investors, LLC, Tax Matters Partner, Docket No. 7045-19, filed 11/13/20.

The Picayunes want IRS’ fact and expert witness’ list, with summary of testimony, but IRS says that’s a work in progress. Judge CD Jones isn’t buying.

“To the extent respondent has identified potential witnesses for trial and the nature of their testimony, he must disclose such information to petitioners. If respondent has not yet identified potential witnesses, we remind respondent that once he has in fact identified such witnesses, Rules 102(1)(A) and (B) require him to seasonably supplement any prior response concerning the identity and location of persons having knowledge of discoverable matters, as well as the identity of each person expected to be called as an expert witness at trial, the subject matter on which such person is expected to testify, and the substance of such person’s testimony.” Order, at p. 1. (Footnote omitted).

Now the Picayunes have a wishlist of what supports whatever IRS contends.

“Discovery is to assist the parties in their preparation for trial. ‘To prepare properly for a trial, it is necessary for each party to know the position of the other party, and discovery may be used to clarify that position.’ Petitioners’ interrogatories 4 through 25 primarily seek to clarify respondent’s position, and we find they request discoverable information. In response to these interrogatories, respondent states that the FPAA sets out his position, or that petitioners have not ‘established that the claimed deduction meets all of the requirements of Internal Revenue Code Section 170.’ We conclude that respondent’s responses, which consist of high-level contentions, are inadequate because they fail to facilitate reasonable trial preparation….” Order, at pp.1-2. (Citations omitted).

And IRS’ boilerplate “work product” and “unduly burdensome” objections founder for want of substantiation.

 Finally, IRS tries to jump aboard Greenberg’s Express, but miss their footing. “…respondent argues that interrogatories 23, 24, and 25, which inquire into the bases for the positions and penalties asserted in the FPAA, improperly seek information behind the FPAA. We have denied discovery requests when the taxpayers argue that the Commissioner’s deficiency determinations are arbitrary and capricious or challenge the Commissioner’s motives or procedures in making the deficiency determination. But the question of whether the deficiency notice is arbitrary or capricious was not placed in issue by these interrogatories. Rather, petitioners’ interrogatories seek information as to the grounds on which respondent relies to deny the deduction at issue. Therefore, respondent’s reliance on Greenberg’s Express v. Commissioner in this context is misplaced.” Order, at p. 2 (Citations omitted).

CSTJ Lewis (“How To Spell It”) Carluzzo evinces the above sentiment to save Andrea Darnell, Docket No. 2548-20S, filed 11/13/20, from the Friday the Thirteenth jinx, not to mention a Section 6673 frivolity chop. But he also spares IRS any Section 6751 Boss Hoss inquiry in this off-the-bencher.

Andrea claims no taxable income, despite a $38K W-2, a $2500 1099-R and a SNOD.

“Petitioner does not dispute that she received the wage and pension income determined in the notice. Rather, she argues that the payments are not income. According to petitioner, gross income does not include compensation for services, wages, or salaries, and in any event, she is not the type of taxpayer that is subject to tax.” Order, Transcript, at p. 5.

Andrea could have done better than this tired protester jive.

CSTJ Lew only needs to go to his desktop to get the boilerplate.

“Petitioner’s position to that end is patently inconsistent with the literal language of section 61(a)(1) and (a)(10) and obviously frivolous. There is no need for the Court to address frivolous arguments ‘with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit.” Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984). It suffices to note that petitioner’s arguments have no colorable merit and nothing more be said other than to state that she is a taxpayer who is subject to Federal income taxation and obligated to pay Federal income tax on the wage and pension income she received….” Order, Transcript, pp. 5-6.

IRS’ counsel calls an audible post-trial for a Section 6673 frivolity chop. Does a Section 6673 require Boss Hossery? CSTJ Lew isn’t going there, especially in a small claimer.

Yeah, Andrea is a frivolite, and doubtless chopworthy.

“Nevertheless, in addressing respondent’s oral motion in this case, we consider not only petitioner’s arguments, but her behavior in advancing those arguments as well. In that regard we note that she stipulated to the receipt of the contested items of income thereby reducing what might have otherwise been a more lengthy trial and eliminating the need for the Court to consider additional evidence regarding the disputed items of income. Potential implications of section 6751(b) and Petitioner’s behavior tips the scales ever so slightly in her favor. That being so, respondent’s oral motion to impose a section 6673 penalty upon petitioner will be denied.” Order, Transcript, at pp. 6-7.

Takeaway 1- Frivolites, don’t count on this treatment in a T. C. Memo. or even a T. C. Sum. Op.

Takeaway 2- IRS trial counsel, I know that defending these petitions is frustrating, but calling post-trial audible Section 6673s isn’t going to help.

Takeaway 3- All litigants, don’t make the Judge work too hard.

Wasting readers’ time (few though my readers may be, and short though everyone’s time when trying to make a living, even pre-COVID19; now, don’t ask) with speculation isn’t my thing. I’ll invest fact, even though less remunerative than conjecture.

Today, Friday the Thirteenth, I’ll break my rule. Looks like Judge Christian N. (“Speedy”) Weiler has another Jawjuh conservatorium, Longwood Preserve Holdings, LLC, Longwood Preserve Investors, LLC, Tax Matters Partner, Docket No. 12421-19, filed 11/13/20. And they’ve gotten to the summary J stage, so it might could be maybe so that Swiss cheese is on the cards.

For the Swiss cheese take-out, see my blogpost “Perpetually Swiss,” 12/27/18.

But the Longwoods want a stay of proceedings, to which IRS objects. Judge Speedy Weiler doesn’t tell us why IRS objects, but maybe the grounds on which the Longwoods seek same might enlighten us.

They want the stay pending the appeal in Hewitt.

All y’all will recollect that Dave Hewitt saved his Daddy’s farm from the mobile homemakers (those who develop trailer parks, not itinerant household managers) with a syndicated conservation easement that blew up on Swiss cheesery (Dave left five homesites for his kids, locations to be determined later), with extinguishment coming up fast, but was saved from the 40% chop by Dave’s cool appraisers. If not, see my blogpost “Gude Faith, He Maunna’ Fa’ That – Part Deux,” 6/17/20.

Dave later turned Daddy’s farm’s salvation into a cottage industry, but Judge Goeke left that for another day.

Well, the Elevenses just hammered IRS’ Swiss cheesery argument in Pine Moutain [sic] Preserve, LLLP, f.k.a. Chelsea Preserve, LLLP, F Eddleman Properties, LLC, Tax Matters Partner, No. 19-11795, 10/22/20. Read Judge Newsom’s hammer-job, but forgive the typo in the caption: should be “Mountain,” Elevenses proofreader.

And Dave’s appeal, filed 9/30/20, is bound for the Elevenses.

I’ll wager IRS would sooner have a collective root canal than another Elevenses’ hammering. And so would the Tax Court Bench.

Starting Monday, November 16, 2020, you can do your hand-offs at The Glasshouse on Second Street, Nord-Ouest, in L’Enfant City.

Here’s the scoop.

No, not another Section 469(c)(7) dance-of-the-hours. Today we have Judge Holmes doing a history and an architectural portrait of The Queen City on the Lake, comparing and contrasting income-and-expense statements, doing brokers’ set-ups, checking out local economic conditions, patterns of building code enforcement, and generally mixing-and-matching dueling appraisals. A true real estate professional.

Beyond not dissing the partitive genitive, Judge Holmes shows an unusual understanding of what it is to “beg the question.” That’s petitio principi for scholars like Judges Albert G. Lauber and Patrick J. Urda. Speaking of the IRS’ expert’s appraisal, “K instead used the selected comparable properties to calculate pre-easement values and then begged the question of an easement’s effect by concluding that the after values would remain unchanged because “there is no credible support for a Facade Easement adversely effecting the market value of a property like the subject when the property is already encumbered with Historic Preservation Restrictions.” 2020 T. C. Memo. 153, at p. 33.(Name omitted). The proof assumes the proposition; circular reasoning, as opposed to “raises” or “invokes” or “invites” the question.

You have to read the opinion to see how Judge Holmes deals with the before-and-after appraisals. IRS’ appraiser comes nearest to what my colleague Peter Reilly, CPA, has called a Gunga Din appraisal: “Was nothin’ much before, An’ rather less than ’arf o’ that be’ind.”

The case is Anthony M. Kissling and Suzanne R. Kissling, 2020 T. C. Memo. 153, filed 11/12/20. Yes, they were here before, in my classic blogpost “The Stealth Subpoena,” 7/16/15.

Tony was a NYC real estate pro who, finding the Apple scene a wee bit rich, clichéd off to Buffalo, bought a couple run-down but landmarked relics of the early-Twentieth Century-gilded age (this is Judge Holmes, after all), gave them a facelift, and put on some historic façade easements. And though Tony got the mortgagees to sign aboard from the getgo, IRS stiped away any problems with grabs of proceeds from casualty or condemnation.

When Judge Holmes gets through shredding the appraisers (two for Tony, and one for IRS) and mixing-and-matching the shards (he has tables; oh, does he have tables!), Tony and Suz only overstated their deductions by 15%, so Section 6662(h) is off the table.

My ultra-hip readers, who no doubt have read all my façade easement and conservation easement blogposts, not to mention all the cases cited by Judge Holmes, have cried out with one voice “Hold on, Champ! Where’s the extinguishment fracas? If the easement isn’t forever, it’s nothing, and there’s nada to deduct! So any number is too much!”

IRS stiped away any extinguishment objections. But even so, “The extinguishment clause grants the Trust “a portion of the proceeds * * * equal to the same proportion that the value of the initial easement donation bore to the entire value of the property * * * as estimated by a state licensed appraiser.” (Emphasis added.) Though the Commissioner stipulated away any potential issue related to the extinguishment clause, this doesn’t run afoul of our recent decision in Oakbrook Land Holdings, LLC v. Commissioner, T.C. Memo. 2020-54.” 2020 T. C. Memo. 153, at p. 17, footnote 13.

Vintage Holmes. I’ll miss him when he retires.

Judge Buch comes on in relief of Judge Ruwe, to strike out Dewayne Bridges, 26519-16, filed 11/12/20. Dewayne wants a Rule 161 of his TEFRA loss, more particularly bounded and described in my blogpost “Bamboozle Your Way To Victory,” 4/27/20.

This was the irreconcilably inconsistent 1065 Dewayne and partner Steve unloaded on IRS, who gave it the Section 6231(g) “reasonable belief”, and small-partnershiped Dewayne and Steve out of TEFRA.

Judge Buch: “Recognizing the mischief that might result if the IRS follows the wrong procedures, Congress enacted section 6231(g), captioned ‘Partnership Return To Be Determinative Of Whether Subchapter Applies.’ That provision, in effect, provides that, if the Commissioner reasonably determines from the face of the return that TEFRA applies, then TEFRA applies even if – with perfect knowledge of the facts – it should not. Sec. 6231(g)(1). Likewise, if the Commissioner reasonably determines from the face of the return that TEFRA does not apply, then TEFRA does not apply even if – with perfect knowledge of the facts – it should. Sec.6231(g)(2). In short, Congress authorized the Commissioner to determine whether TEFRA applies based on the face of the partnership return.” Order, at p. 2. (Citation omitted).

Of course, captions don’t limit statutory language, but they help if there’s any ambiguity, Order, at p.3, footnote 2.

All Dewayne is doing in this reconsideration motion is rehashing. “Petitioner spills considerable ink highlighting all of the information gathered during the examination that conflicts with a determination that Mr. Bridges was a direct partner in … LLC. But in our memorandum opinion, we directly addressed the irrelevance of this information, stating that ‘conflicting information provided during the give-and-take of the examination * * * did not prevent * * * [the Commissioner] from relying on the returns to make a TEFRA determination.’ T.C. Memo. 2020-51, at *21.” Order, at p. 3.

How quaint: “spills considerable ink.” Judge, welcome to the Twenty-first Century. How about “discomposes considerable electrons” or “dumps a lot of toner”?

But as I said in my blogpost hereinabove-cited (as my high-priced colleagues would say), it’s Dewayne’s and Steve’s return. Did neither sign it? If neither, then who did? In any case, someone provided the information shown in the return, and it’s to that person Dewayne should turn if he’s unhappy. Remember, a partner who serves as tax matters partner (whether or not it’s a TEFRA partnership) is a partner first and a tax matterer second.

Now what will happen under the new Section 6223 “partnership representative” regime, where the PR only needs a name, TIN, onshore address, and phone number, and need not be a partner, is a fertile field for blogfodder. Watch this space.

f/k/a Armistice Day

It’s so strange, not to be putting on suit and boots, and making my way to Madison Square Park to march up Fifth Avenue with my Post. I usually am part of the detail that carries our banner, twelve feet across. A warm day like this, at first pleasant, becomes oppressive; but it certainly beats Veterans’ Day 2017, when Our Fair City set the record for the coldest November 11 since 1869. We froze.

But today is strange. Every day is alike now.  I went to the Tax Court homepage to check if today was an opinion day, or, if not, to scan the orders for potential blogfodder. It wasn’t until I saw that yesterday’s T. C. Memo. was still up, and no orders had been posted today, that the penny dropped.

National holiday. Tax Court closed.

It just doesn’t feel right.