Neither Judge David Gustafson nor I attended the institution whose gameday yell first appears at the head hereof, as my expensive colleagues who attended that institution would say. But the Bulldawgs are back, looking for reconsideration. Habitat Green Investments, LLC, MM Bulldawg Manager, LLC, Tax Matters Partner, et al., Docket No. 14433-17, filed 4/23/21 wants Judge Gustafson to oblige them by reconsidering the partial summary J he gave IRS back last June. See my blogpost “The Brush Hog Gives The Brush Off,” 6/30/20.

The Bulldawgs are citing orders in support of their motion, even though that’s a Rule 50(f) no-no, but maybe, just maybe, the Bulldawgs and their counsel started reading this my blog. Howbeit, parsing orders doesn’t turn the Bulldawgs’ bark into a bite. The issue is the impact of the reserved improvements on the 501(c)(3)’s takeout.

“We agree with the Commissioner that the TMP’s motion does not support a deviation from our precedent holding that a subtraction of the value of improvements to the easement property from the proceeds of an extinguishment prior to calculating the proportional share due to the donee under 26 C.F.R. sec. 1.170A-14(g)(6) fails to protect the conservation purpose of the property in perpetuity. The easements in these cases, like those in the cases the Commissioner has cited, do in fact provide for ‘improvements’ to be made on the property subject to the easement.” Order, at p. 4.

Still betting on Judge Holmes’ dissent in Oakbrook.

In spite of it all, I have a love-hate relationship with the Genius Baristas. These dudes keep The Glasshouse on Second Street, Nord-Ouest, in La Patrie de L’Enfant, forever on the twinkle. Their Dawsonian machinations give me blogfodder, rich beyond the ancient fleshpots of Egypt or the angelic bread of the wilderness.

Today, an off-the-bencher from ex-Ch J L Paige (“Iron Fist”)  Marvel furnishes forth the blogger’s table.  It’s Robert Marcel Aschenbrenner & Rediat Badeg Aschenbrenner, Docket No. 2676-20S, filed 4/22/21.

Or rather, it isn’t.

Because when one clicks on the link for the bench opinion on the “Today’s Opinions” pull-down, one gets only the first page of the opinion, directing the hard-laboring Clerk to send the transcript along to Rob & Red.

The rest is silence.

A further delve into the Docket Search does show entry of the decision, namely, viz., and to wit, that Rob & Red owe a $7K deficiency.

But ex-Ch J Iron Fist’s explication of the whys and wherefores remains shackled with fetters of brass to the storm-vext rock of DAWSON.

The Stealth Transcript has become one with The Stealth Subpoena, The Stealth Determination, The Stealth Judge, The Stealth Boss Hoss, The Stealth Status Report, and The Stealth Amendment. See my blogposts thus entitled.

It’s been a wee while, and maybe more than a wee while, since I last awarded a Taishoff “Oh, Please.” For those coming late to this my blog, I award a Taishoff “Oh, Please” to those who make arguments so specious, or so wanting in merit, that they barely escape a Section 6673 frivolity or delay-of-the-game chop. The award comes in various grades.

Today’s award, a Taishoff “Oh, Please” First Class, goes to IRS’ counsel in Julian Wolpert and Estate of Eileen Wolpert, Deceased, Julian Wolpert, Executor, et. al., Docket No. 3182-20, filed 4/22/21.

Trial was noticed for this Monday back in January. Pretrial memos were filed as scheduled at the beginning of this month. When Judge Courtney D. (“CD”) Jones did a pretrial phoneathon with the parties a week ago, she expected a stip of facts prontito.

She got a motion to amend the answer out of time, with a new basis for disallowing deductions. And a motion for a continuance ten (count ’em, ten) days before trial. Somehow IRS’ counsel were unaware that the file from Appeals hadn’t gotten to them before the phoneathon aforesaid.

Judge CD Jones is way more gentle than I would have been, with these facts.

“…petitioners state that granting respondent’s motion would cause them to suffer undue prejudice due to Mr. Wolpert’s age, medical condition, and impairment of their counsel’s resources. Their objection notes that the docketed cases have placed a large amount of stress on Mr. Wolpert and that he wants them resolved as soon as practicable. Moreover, their objection states, ‘Petitioners’ counsel has sufficient resources to bring the matter to trial now and may not be able to do so again until the end of 2021.’” Order, at p. 2 (Footnotes omitted).

Taishoff will summarize the omitted footnotes. Mr. Wolpert is 88 years old and suffers from several debilitating and chronic illnesses. Petitioners are represented by a legal aid clinic staffed by law students. Members of petitioners’ legal team will be unavailable after May 19, 2021 due to the conclusion of the school year. Mr. Wolpert is a surviving spouse. Both he and the Estate of Eileen Wolpert, of which he is executor, are petitioners.

As to the motion for continuance, “(R)espondent has not shown that the requisite exceptional circumstance exists. Nor has respondent demonstrated good reason for failing to make the motion sooner. Moreover, the Court is cognizant of Mr. Wolpert’s age, medical condition, and the likelihood of impairment to his counsel if the proceedings are delayed. Consequently, the Court deems the motion dilatory and will not continue the case from trial.” Order, at p. 3.

See Rule 133. Better have a real good story when you want a go-around on a short final.

As for amendments, leave is freely, right? Yes, when no prejudice.

“More than a year has elapsed since respondent filed the first answer in these consolidated cases, during which time he had ample opportunity to move for leave to amend. Instead, respondent moved ten calendar days before the New York City, New York remote trial session is scheduled to commence. The Court will not grant such a motion at the 11th hour, as doing so would deprive petitioners of fair notice and an opportunity to prepare. Given Mr. Wolpert’s advanced age and ailments, fair notice and an opportunity to prepare are particularly exigent in this case.” Order, at p. 3. (Citation omitted).

Tune in Monday morning for the trial.

Robert Craig Colton is back; you’ll remember Robert Craig was an entrant in my no-prize best excuse sweepstakes. If not, see my blogpost “Never Heard Of It,” 1/19/21. “It” is the Alternative Minimum Tax, 26USC§68. As I said back in January, “I wish I had never heard of it, also.”

So back come Robert Craig Colton and Alina Mazwin, 2021 T. C. Memo. 44, filed 4/21/21. Alina wants innocent spousery, but Judge Albert G. (“Scholar Al”) Lauber takes that off today’s menu. Today’s special is summary J for IRS for the $3K AMT Robert Craig owes.

AMT is a classic trap for the unwary. It readjusts, recalculates, hornswoggles and swangdangles one’s return as only Congress can do.

Robert Craig and his loved-once settled a litigation, the proceeds of which Robert Craig had to split with loved-once. The bank reported the whole $125K, and IRS hit Robert Craig up for all thereof. Robert Craig showed IRS that loved-once got half, and that the attorney who represented them in that lawsuit got a fee of $80K. I will not characterize the size of the fee in proportion to the recovery; I report, you decide.

The fee, alas, triggers the problem.

“Petitioners themselves reported the attorney’s fees as a miscellaneous itemized deduction. They do not contend that the settlement proceeds arose from a lawsuit involving a claim of unlawful discrimination or a whistleblower action, for which an above-the-line deduction for attorney’s fees might be available. See sec.62(a)(20) and (21).” 2021 T. C. Memo. 44, at p. 6, footnote 3.

OK, so the 2% AGI cutout of miscellaneous itemized deductions leaves Robert Craig with a $78K deduction. Whether loved-once should have gotten a piece of that deduction, seeing as how she got half the recovery, does not occur to Judge Scholar Al, IRS, or Robert Craig. Loved-once isn’t a party to this case, anyway.

But the kicker here is AMT. The culprit is Section 56(b)(1)(A)(i). Miscellaneous itemized deductions aren’t deductions for AMT.

I’ll let Judge Scholar Al explain.

“The IRS determined that petitioners had AMTI of $101,111–the sum of their regular taxable income of $14,958, personal exemptions of $8,100, and a miscellaneous itemized deduction of $78,053. See secs. 55(b)(2), 56(b)(1)(A)(i),(E). The IRS then subtracted from their AMTI an exemption of $83,800. See sec.55(b)(1)(A)(ii), (d)(1)(A), (4)(A)(ii). The difference between those amounts, or $17,311, was multiplied by 26%, the applicable AMT rate. See sec. 55(b)(1)(A)(i). That produced a tentative minimum tax of $4,501, from which the IRS subtracted petitioners’ regular tax liability, or $1,498, to yield an AMT liability of $3,003. See sec. 55(a).” 2021 T. C. Memo. 44, at p. 5.

Robert Craig also objects to IRS going after him while this case was pending, but the target was a C Corp in which Robert Craig has some kind of interest, hence no impact here.

Well, now, like the rest of us, Robert Craig has heard of AMT.

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 http://www.ustaxcourt.gov/case_related_forms.html.” 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 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.

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.

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!

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 tohubohu 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.

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.