In Uncategorized on 03/18/2021 at 18:06

For an explanation of the title first set forth at the head hereof (as my high-priced colleagues would say), see my blogpost “Add a Zero,” 6/26/15. And the need for a couple extra zeros (hi, Judge Holmes) is borne out today as Judge Elizabeth Crewson Paris shows us in her off-the-bencher Marc A. Julson & Cynthia D. Julson, Docket No. 25560-18, filed 3/18/21.

It’s Cindy’s story. She’s a hardworking car salesperson in OK in the year at issue, working strictly on commission and turning over 18 (count ’em, 18) cars a month. Notwithstanding the foregoing or anything else at variance therewith or contradictory thereto (see high-priced colleagues, supra), IRS disallows all of Cindy’s $8K unreimbursed employee business expenses. Naturally Cindy petitions the $1K additional tax this engenders. No mention of chops or add-ons.

But if you think Cindy was hardworking, her trusty attorney Brian C. Trent, Esq., blows the doors off the rest of us paperpushers.

Brian C. crushes IRS even before the trial starts. IRS stipulates and capitulates out nearly all of the disputed deductions. All that’s left is $50 for business cards (and IRS concedes that at trial), $100 in Christmas cards, which she sends every year to everyone who ever bought a car from her plus others, and $135 in thank-you cards, which Cindy sends to each person who bought a car from her that year.

Now you or I, having treated IRS before the trial like Muhammad Ali treated Sonny Liston, would tell the client to forget the tax on the $285 ($50 + $135 +$100), and call it a slam-jam win.

Not Brian C., who styles himself “a lifelong Okie who is originally from Enid.” He also says he “chose the tax field because it’s fast-paced and team-oriented work environment. He also is happy that it gives him the opportunity to help people facing tax problems.” Id.

So Brian C. goes to trial. Cindy goes on the stand, and Judge Paris agrees that the thank-you cards are a proper Section 162 expense, although she Cohans the deduction based on postage only.

“Petitioner credibly testified that she sold an average of 18 cars a month during [year at issue]2015 but could not substantiate her expenses for the cards. The Court takes judicial notice that in [year at issue] the Federal postage rate was 49 cents, and the Court finds that petitioners are therefore entitled to an expense deduction of $105.84 for Thank You cards. This amount consists of Ms. Julson’s rational basis for sending customers 216 cards in [year at issue] multiplied by the Federal postage rate of 49 cents per card.” Transcript, at p. 6.

I guess Judge Paris took pity on IRS’ counsel, thereby nicking Cindy’s deduction by $29.16, net effect zero. And as Cindy sent Christmas cards to persons other than past or potential customers, without differentiating among same, she loses.

OK, except.

My streetwise, hard-bitten, battle-hardened readers will be yelling “What about reimbursement? Did the dealership where Cindy worked reimburse employees? Cindy has to prove she didn’t get reimbursed.”

Cool it, chaps. Brian C. is on the case. Besides Cindy’s testimony about how her employer made her buy a computer and took the cost out of her pay, Brian C. shows a Broadway on the river.

“The Human Resources Director for the now-parent company of the dealership testified that the dealership had no written policy regarding Christmas cards.” Transcript, at p. 6.

Now don’t that beat all, as they say in Oklahoma maybe.

For a $100 deduction (subject to 2% AGI exclusion, so net to Cindy about another zero), Brian C. hunts out, convinces to testify, preps for trial, and puts on the stand a high-ranking officer of Cindy’s employer’s parent, in a case where the employer, parent and child, have zero stake in the outcome, have nothing to gain (there’s another zero for ya), to help a valued employee who’d probably stay with the employer no matter what.

A true happy warrior, Brian C. My kind of lawyer.

Now Brian C. may have done this all pro bono. Judge Paris doesn’t say. She does say Cindy and spouse reported AGI of $100K for year at issue (Transcript, at p. 3). Unless OK has the most unusual LITCs, I can’t think any would take taxpayers with AGIs in six figures. I can’t find any pro bono reference on Brian C.’s webpage, although with time constraints I couldn’t drill down.

I’ve reached out to him to ask. I’ve received no reply, but deadline is here, and I must go with what I have, however unsatisfying.

Even if Brian C. responds, I know I don’t deserve, and won’t ask for, an answer to the question I’d most like to ask: How can you negotiate a super settlement, do a top-class trial prep, and try a stormer of a case, where at most $1K of tax, net net net, is on the table, except for fun?

Or maybe a Taishoff “Good Job, First Class, Blue Max.”




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