Archive for April, 2021|Monthly archive page


In Uncategorized on 04/20/2021 at 17:14

Ch J Maurice B. (“Mighty Mo”) Foley has hit the daily double this afternoon. No, not at the track. Even from the briefest acquaintance with His Honor, I could not glean that he has the slightest interest in the sport of kings. Rather, this is the double of my practice peeves with USTC.

Omkar Singh is an innocent bystander. The case is Estate of Pratap Singh, Deceased, Estate of Mayauri Singh, Deceased, Omkar Singh, Executor, Docket No. 14816-20, filed 4/20/21.  It seems Omkar retained counsel from a well-respected Atlanta, GA firm that practices extensively in taxation law.

Said counsel petitioned on Omkar’s behalf. Ch J Mighty Mo had much to say on the subject.

“The petition filed to commence this case… did not bear the original signatures on the petition of counsels OJM and JNW as required by Tax Court Rules of Practice and Procedure. Upon review of the Court’s record, petitioners’ counsels are admitted to practice before this Court, however, will not be associated with the case until proper entry of appearances are filed with the Court. If petitioners’ counsels wish to be recognized as counsels of record in this case, it will be necessary at this juncture to electronically file an entry of appearances on behalf of petitioners in accordance with Rule 24 Tax Court Rules of Practice and Procedure. Petitioners’ counsels may obtain an Entry of Appearance form under ‘Case Related Forms ‘ on the Tax Court’ s website at” Order, at p. 1. (Names omitted).

Apparently another attorney in said firm filed a separate E of A. But each of OJM and JNW must file separate E of A forms.

Once again, I ask why not a firm entry of appearance? If I read their website correctly, this firm has three (count ’em, three) partners and five associates. It may be that Omkar’s case is so big that three of the firm’s attorneys must be involved; this would hardly be a novel circumstance. Moreover, future personnel changes cannot be unexpected. Law firms have existed in this country for at least 225 years. I doubt they will become extinct in the lifetime of any of my readers. I am still waiting for a reason why a firm entry of appearance doesn’t work. If it be objected that not every attorney in a firm is admitted to USTC, it’s easy enough to get them admitted.

Now for peeve the second.

“Because the Petition… was not properly executed and also fails to meet the original signature requirements pursuant to Rule 23(a)( 3) and 33 of Tax Court Rules of Practice and Procedure, we will order petitioner to file a ratification of petition in which he shall ratify and affirm the filing of that Petition in accordance with Rule 60, Tax Court Rules of Practice and Procedure.” Order, at p. 1.

On paper, of course, and “…preferably in ‘wet ink’ signature, not a photocopied signature). Petitioners should note that the ratification of petition may not be electronically filed.” Order, at p .1.

Once more, what price Rule 34(a)(1), as amended 11/30/18? “A petition may be filed electronically under the electronic filing procedures established by the Court, or a petition may be filed by properly mailing or hand delivering it to the Court.” Is this amendment a dead letter? Surely, if the Genius Baristas can get off-the-bench opinions up before Noon, breaking the hallowed three-o’clock-jump, they can devise a method to permit electronic petitioning, if set to the task.


In Uncategorized on 04/20/2021 at 12:56

In my book Brian Dean Swanson, Docket No. 6837-20, filed 4/20/21, is a dodger. He gave Judge Morrison all the old “wages is not income” and “the Sixteeneth Amendment is unconstitutional” jive, but IRS withdrew the three (count ’em, three) Section 6702 frivolity chops they originally handed Brian Dean.

In return, Judge Morrison gives Brian Dean an off-the-bencher, hitting him for taxes on his wages.

His argument that he got refunds based on his nonreturns (not enough information and no good faith attempt to comply) doesn’t fly either.

But Brian Dean, though now a schoolteacher, is also a veteran.

“He also received $1,667 in wages from the federal government, which was a military bonus for veterans who go into the teaching profession.” Transcript, at p. 4. This he reported in his 1040, as he said they weren’t wages.

Two years later, “(P)etitioner received $32,867 in military pension payments… from the Defense Finance and Accounting Service.” Transcript, at p. 5.

IRS wanted the 10% Section 72(t) whatever-it-is, per Section 4974(c),  but Judge Morrison says “negatory,” and man-‘splains that military pensions aren’t qualified retirement plans.

“Neither party cites authority relating to qualified retirement plans. Based on petitioner’s testimony that he did not participate in a Thrift Savings Plan, his testimony that his pension plan had the characteristics of a standard military pension plan (i.e., fixed nondiscretionary payments based on length of service and rank), and the explanation in Newell v. Commissioner, Tax Court Summary Opinion 2003-1, at page 5, footnote 2, that military pension plans are not section 401(a) trusts, we conclude on a preponderance of evidence that petitioner’s military pension was not a qualified retirement plan. Therefore, petitioner is not subject to the 10% premature-distribution addition to tax.” Transcript, at pp. 11-12.

Judge, I thought Sum. Ops. weren’t precedent and couldn’t be cited.

Howbeit, so Brian Dean owes tax, no Section 6702 frivolity chops, and no Section 72(t) what’s-its. What about Section 6662 accuracy-negligences? Well, as set forth supra, as my high-priced colleagues would say, those chops are only for returns, which wasn’t what Brian Dean filed.

Yes, but how about Section 6673 frivolity chops? Judge Morrison showed Brian Dean the yellow card, and Brian Dean has been here before, frivoling away (see my blogpost “Dealer’s Choice,” 7/29/20).

IRS wanted the full Section 6673 25K monty for Brian Dean, even though he dodges the Section 6662 chops by dint of his own frivolity.

“Although petitioner has continued to advance his frivolous constitutional argument, or some variation of it, even after being warned in our Order denying his motion for summary judgment that a section 6673 penalty could be imposed, he has successfully challenged in this proceeding the imposition of the 10% premature-distribution addition to tax. We decline to impose a section 6673 penalty.” Transcript, at pp. 14-15.

Can’t say IRS counsel covered themselves with glory this time.



In Uncategorized on 04/20/2021 at 12:05

Not for STJ Diana L (“The Taxpayers’ Friend”) Leyden, and not an entry in the Taishoff no-prize sweepstakes, but the excuse proffered by Kit T. Klekamp, Docket No. 14517-19S, filed 4/20/21, is very close to the story I heard a couple months ago (hi, Judge Holmes) from an old friend.

Kit was an IT type, who had a job and an S Corp. His return omitted the S Corp but provided Sched C. In any case, Kit’s numbers were sketchy.

“Petitioner relied upon his girlfriend to help him keep track of his receipts and expenses on her computer. Sadly, his girlfriend passed away in March 2017 and since then he has been unable to access her computer.” Order, at p. 6.

Of course, STJ Di is sympathetic to Kit’s loss, but his numbers can’t clear the Section 274 substantiation bar.

My old friend’s neighbor (friend for many years but not a “girlfriend,” as that term is commonly used) was a financial type who ran his bank accounts and stock portfolio, and apparently did very well for him, until she died. Fortunately, he had kept his account numbers and passwords, because her computer and all records were sealed at her death. Revoking powers of attorney and access authorizations was a burdensome and grievous task.

Takeaway- Always have a succession plan for your trusted people in place.


In Uncategorized on 04/19/2021 at 20:50

Got my first visitor from Aruba today. I was there four (count ’em, four) years ago. Glad to see someone from there stopped by the old blog.

Now c’mon, Bolivia, get with it!


In Uncategorized on 04/19/2021 at 10:57

I refer to Blues Traveler’s 1994 hit off the bat of John Popper. As Mr. P put it, “Is it a sure-fire way to speed things up? When all it does is slow me down.”

Well, Judge Patrick J. (“Scholar Pat”) Urda is no slouch, as the discovery tohubofu in Janet R. Braen, Docket No. 24929-17, filed 4/19/21, is reaching a crescendo.

A dozen days ago, Judge Scholar Pat tried to herd these cats toward the courtroom. See my blogpost “Discovery Tohubohu,” 4/9/21. But meanwhile, IRS was trying to enforce a subpoena on RSM US LLP, which my sources tell me is the accounting firm f/k/a Ira B. McGladrey. RSM moved to quash (grounds unstated, but I’m sure their high-priced whiteshoe counsel have a couple). The attempted quash was a week ago.

Today, Judge Scholar Pat gave IRS until tomorrow to respond.

Taishoff says it’s good to see judges who move cases and quash discovery tohubohu and like gameplaying.

See supra.

Edited to add, 4/19/21: Looks like Judge Buch is joining Judge Scholar Pat, shutting down a long-running waltz, in Robert A. Di Giorgio, Sr., et al., Docket No. 15675-12, filed 4/19/21. Robert Sr. wants to shift the BoP.

“This case has been pending for over 8 years. During that time, the DiGiorgios have joined the IRS in 8 motions for continuance. Now as the case approaches trial, Mr. Di Giorgio is blaming the IRS for delays. If he wanted to move the case forward, he could have objected to the motions for continuance. He didn’t.” Order, at p. 1.

Time to shift something besides the BoP.


In Uncategorized on 04/16/2021 at 09:52

Mirabile dictù, CSTJ Lewis (“Wotta Name!”) Carluzzo has an opinion for us on a Friday, before 9:00 a.m., EDT, a day and hour sacrosanct to the erstwhile hardlaboring intake clerks and formerly flailing datestampers at the locked down Glasshouse, whereon no opinion or decision would swim into the public ken at any time. I take back about a tenth of the obloquy I heaped upon the Genius Baristas; for this relief, much thanks.

True, it’s a small-claimer, off-the-bencher, but it beats scouring the usual couple hundred orders (hi, Judge Holmes), stupefying in their unending formulaity, hoping for some poor blogfodder. Truly, the blogger’s lot is not a happy one on Fridays.

But the unhappy tale of Kevin Wesley Gates & Kathleen Karen Gates, Docket No. 1475-20S, filed 4/16/21, as adumbrated by CSTJ Lew, falleth like the gentle rain of Heaven upon the parchèd earth, as the Swan of Avon put it.

Kev & Kath are just another couple enmeshed in the toils of Section 36B, the much-contemned Affordable Care Act of 2010. I have eschewed, again and again, a political rant. I have chosen to ban from this my blog even a reasoned policy discussion; in these times, rationality becomes fuel for further polarization.

Kev & Kath took an IRA drawdown to buy a house in CA. So they went to the ACA marketplace in CA to get healthcare cover.

“A representative of Covered California determined that petitioners were entitled to receive a monthly advance premium tax credit (APTC). On that advice, petitioners elected to receive an APTC of $1,573 to cover part of the cost of the monthly premium; this amount was paid on behalf of petitioners directly to their insurer. Petitioners paid the remaining $56.52 monthly premium.” Transcript, at p. 4.

They filed timely and included Form 8952 with their 1040 MFJ. The drawdown doubled their MAGI above the 400% poverty line. IRS whanged them for the full $14K APC they got.

“At trial it became clear that petitioners do not dispute respondent’s determination on technical grounds. Instead, it appears that Covered California incorrectly informed petitioners that they were eligible for the APTC for 2018. According to petitioners, they would not have purchased insurance through Covered California had they known that they would be ineligible for the premium assistance credit and would have had to repay the entire amount of the APTC as tax owed. See sec. 26B(f)(2)[sic; should be 36B(f)(2)].” Transcript, at p. 8.

Of course, CSTJ Lew can’t help. And strictures like “never take tax advice from someone whose qualifications are unknown to you, and who is trying to sell you something” don’t help, when you learn this at trial. I’ll bet the salesperson at CC never asked about the IRA drawdown, and just asked what their income was.

Now I’m not piling onto insurance salespeople. I’ve been on our State Bar Ass’n’s insurance sponsored committee these twenty (count ’em, twenty) years. I’ve worked harmoniously with insurers and their salespeople (except for suing a couple in the line of duty) for longer than that. But if you mean to employ any as tax adviser, ask for their qualifications. And tell ’em Kev & Kath sent you.


In Uncategorized on 04/15/2021 at 16:17

Back on 11/17/20, I pointed out that a petitioner couldn’t settle while Dawson’s Creek was in flood. See my blogpost “Ya Can’t Even Settle,” of even date therewith, as my expensive colleagues would say.

Turns out petitioner and IRS did settle right after the New Year. But nobody knows what they settled, because their stipulated decision is not available on the new, improved (come on, guys), jim-handy DAWSON website.

It’s Section 7461 time again.

And don’t tell us to surry down to the stoned soul picnic on Second Street in The Wannabe State, as the doors are still locked thereat.

If Ch J Maurice B (“Mighty Mo”) Foley can spare a minute from ordering petitioners to pony up the sixty George big blind (or seek waiver therefrom), and send in wet-ink original amended petitions that state something like a claim based upon which relief might be granted, I suggest he adopt our New York Rule 216.1.

Here’s the text: “(a) Except where otherwise provided by statute or rule, a court shall not enter an order in any action or proceeding sealing the court records, whether in whole or in part, except upon a written finding of good cause, which shall specify the grounds thereof. In determining whether good cause has been shown, the court shall consider the interests of the public as well as of the parties. Where it appears necessary or desirable, the court may prescribe appropriate notice and opportunity to be heard.

“(b) For purposes of this rule, ‘court records’ shall include all documents and records of any nature filed with the clerk in connection with the action. Documents obtained through disclosure and not filed with the clerk shall remain subject to protective orders as set forth in Rule 103.”



In Uncategorized on 04/15/2021 at 10:29

CSTJ Lewis (“Spells It Right”) Carluzzo can but sigh as he laments that another innocent taxpayer has been taken advantage of by the less-than-scrupulous Federally-unregulated preparer. And in this case, both taxpayers and preparer are located in CA; I am informed that CA is one of the very few States that seriously regulates tax preparers.

Vilma Hernandez & Rene A. Hernandez, Docket No. 3373-20S, filed 4/15/21 (don’t panic, filing date for individual returns extended to 5/17/21, but payment is not), an off-the-bencher, furnish the text both for CSTJ Lew and me.

“During the relevant period Mr. Hernandez was employed as a mechanic with the Los Angeles County Metropolitan Transportation Authority and Mrs. Hernandez was employed as a help desk coordinator, also with the Los Angeles County Metropolitan Transportation Authority.” Transcript, at p. 4.

It seems that the paid preparer was a wee bit inventive (not so say fictionist) in toting up the Hernandez’s deductions.

“Mrs. Hernandez, who is unsophisticated in Federal tax matters, relied on her return preparer to accurately prepare petitioners’ … joint Federal income tax returns. At trial, Mrs. Hernandez agreed that the determinations in the notice are proper. She explained that the overstatement of deductions resulted from her return preparer arbitrarily showing deductions unsupported by actual expenses. She was remorseful that she did not discover her return preparer’s errors at the time she signed the return and suggested that return preparers should in some manner or other be regulated.” Transcript, at p. 5.

Well, it isn’t for CSTJ Lew to give Mrs. Hernandez legal advice. And I’m not admitted to practice in CA, so I certainly can’t suggest she consult the CA Business and Professions Code, Division 8, Chapter 14, and contact the CA Tax Education Council, which regulates tax preparers in The Bear Republic, and requires them to be bonded.

But I can join with CSTJ Lew: “Many of us who repeatedly see the ultimate consequences of unscrupulous return prepares might very well agree with her suggestion.” At least as to the States where tax prep is a free-fire zone.

And maybe so even lobby for Federal regulation as well.


In Uncategorized on 04/14/2021 at 17:27

Folding more years into an IA at Appeals reappears, with no better results. And it doesn’t matter whether Einstein said it or not, doing the same thing again and expecting a different result doesn’t work.

We saw how Kennith Lee and Cathy Lee tried folding-in, in my blogpost “Unstealth,” 4/5/21. Well, STJ Daniel A (“Yuda”) Guy is no more willing to allow fold-ins than Judge Nega was, in Ivan T. Clover and Esther O. Clover, 2021 T.C. Sum. Op. 8, filed 4/14/21.

Ivan and Esther were short some self-reported $16K over four (count ’em, four) years. They claimed they’d paid, but IRS had allocated their payments to taxes and additions for years before the years at issue.

“Petitioners sent numerous checks to the IRS without designating the specific taxable period to which the payments were to be applied. Under the circumstances, the IRS was free to ‘apply the payment to periods in the order of priority that the Service determines will serve its best interest.” See Rev. Proc. 2002-26, sec. 3.02, 2002-1C.B. 746, 746. The record reflects that the IRS properly applied petitioners’ payments to offset their unpaid tax, additions to tax, and interest duly assessed for the taxable year [Year One], with the balance of the payments applied to the years in issue and taxable years thereafter.” 2021 T. C. Sum. Op. 8, at p. 7.

See my blogpost “Tell ‘Em,” 2/22/21.

Then Ivan and Esther tried the fold-in, with predictable result.

“As a final matter, petitioners assert that they accepted the Appeals Office’s offer to enter into a streamlined installment payment plan. The record shows that the Appeals Office offered petitioners a streamlined installment plan for the years in issue, whereas petitioners countered with an offer to enter into an installment plan for the years in issue as well as the taxable years 2015 and 2017. The Appeals Office did not accept petitioners’ proposed installment agreement.” 2021 T. C. Sum. Op. 8, at p. 7. And STJ Yuda finds no abuse of discretion.

Takeaway- Unless you have a squeaky-clean client, with only a couple years (hi, Judge Holmes) at issue, and a good story to go with it, don’t try a fold-in.





In Uncategorized on 04/14/2021 at 14:56

Unhappily for Erinn Theresa Doyle & David Devon Doyle, 6532-20S, filed 4/14/21, even with CSTJ Lewis (“A Most Delightful Name”) Carluzzo on the case in this off-the-bencher, the law is the sole consideration.

Dave wants “…the Court to allow for an exception to the 39-week rule under the circumstances of their case. They are looking for ‘leniency’, as they put it. Whether it’s called leniency, or equity, or fairness, or sympathy, in effect they are asking that the Court rule in a manner inconsistent with the results demanded by the application of a clear statutory scheme, in this case section 217, to an undisputed set of facts. This the Court cannot do.” Transcript, at p. 8.

To save you the online Google or the dive into your bookshelf, Section 217 governs moving expense deduction, and requires a 39-week stay in the new job unless involuntarily terminated (except for willful misconduct) or moved by the employer although reasonably expecting to stay in new job for the 39 weeks.

Dave’s story is that he moved from CA to HI. to take a job with the State. He quit after less than four (count ’em, four) months on the job.

“He resigned from the job and decided to move back to California for a number of personal reasons, including (1) his belief that certain atmospheric conditions and the frequency of earthquakes presented an unfit environment for his family (as it turned out the area suffered a natural disaster after he left), (2) petitioners’ attempt to sell their California house failed, and (3) Mrs. Doyle’s decision to remain in California in order to care for her father. When Mr. Doyle returned to California…he did not have a job waiting for him.” Transcript, at pp. 4-5.

“Returning to Califnoria [sic] to start a new job was not among his reasons. Consequently the portion of moving expenses allocable to Mr. Doyle’s return to California cannot be deducted, because he did not return there “in connection with the commencement of work at a new principal place of work”. Section 217(a).” Transcript, at p. 7.

Dave realized on the trial that he needs a break, with the law completely against him, but 400 Second Street, NW, in The City on the Potomac, is not the place to look for one.

“While we appreciate and commend petitioners for the decisions, they made in order to ensure and protect the security and health of the members of their family, we are bound in this case, more appropriately constrained, at least with request [sic; should be “respect”] to some of the expenses involved in the moving expense deduction to apply the law as written. Consequently, respondent’s disallowance of the moving expense deduction here in dispute is sustained.” Transcript, at p. 8.

Pore ‘il ole Tax Court has only sympathy, not equity.