In Uncategorized on 07/15/2021 at 15:44

Jesse C. Morreale, 2021 T. C. Memo. 90, filed 7/15/21, substantially prevailed; his trusty attorney got USBCDCO to let him fight out the SNODs IRS gave him in Tax Court rather than in Bankruptcy Court.

The two big issues were Jesse’s basis in his Sketch restaurant, and his use of the accrual method of accounting. When Jesse filed in bankruptcy, he hadn’t filed two (count ’em, two) years’ worth of tax returns, so IRS detailed RA T (Name omitted; ex-Ch J L Paige (“Iron Fist”) Marvel details RA T’s failings sufficiently) to prepare substitutes at no extra charge. RA T ignores e-mails from Jesse’s trusty accountant that dispose of the basis and accounting method issues, and IRS sticks with RA T’s miscues until Appeals tells them Jesse is right.

Jesse’s trusty attorney goes for Section 7430 legal fees.

The justification test in 10 Cir, whence Jesse is Golsenized, is Johnson. Pre-Johnson, IRS was justified issue-by-issue. Post-Johnson, the rule is holistic. Let it all hang out.

Jesse’s trusty attorney says that means IRS is always justified, because Section 7602 says IRS can audit anybody any time.

“While we share some of petitioner’s concerns with regard to the interplay of the Johnson standard and the unique provisions of section 7430, we believe that petitioner’s hyperbole is misplaced. Upon careful inspection, the Johnson standard–in practice–works in harmony with section 7430 and our caselaw construing it. Accordingly, we next consider how–in practice–this Court should apply the Johnson standard. To start, the ‘inquiry should focus holistically on ‘whether the government acted reasonably in causing the litigation or in taking a stance during the litigation.’  This means that a trial court ‘should focus “not on the government’s success or failure [on a particular issue], but on the reasonableness of its position in bringing about or continuing the litigation.” And while ‘the statutory language of § 7430 * * * does not use the terms “issue” and “position” interchangeably’, a trial court may consider the various contentions taken on individual issues as part of its overall analysis of the holistic position of the United States. This is because, under the Johnson standard, this Court must consider the totality of the circumstances, including the possibility that “a more egregious example of [governmental] misconduct might, even if confined to a narrow but important issue, taint the government’s “position” in the entire case as unreasonable’. 2021 T. C. Memo. 90, at p. 15. (Citations omitted, but get them for your memos of law file).

OK, IRS folds, and is concededly unjustified.

But trusty attorney can only recover fees for what work he did on the Tax Court case. The Bankruptcy motions and stuff are off the table. And ex-Ch J Iron Fist had twice to remind said trusty attorney to file his Rule 232(d) affidavit specifying his claimed costs with enough particularity to let ex-Ch J Iron Fist figure out what they were. So he has to eat whatever time he spent getting it right.

And the usual “nobody will take a case like this anywhere in CO for $200 per hour” claim founders for want of proof, and ex-Ch J Iron Fist, whose career spans all kinds of big-ticket white-shoe litigation, says this case wasn’t so tough. So here’s $14K.

But trusty attorney does get the Sixty Georges filing fee and $14 mailing.



Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: