Archive for September, 2021|Monthly archive page


In Uncategorized on 09/30/2021 at 16:42

So far, that is, at 4:42 p.m., Eastern time, there have been posted 539 orders on the Tax Court website. None has come from Judge James S. (“Big Jim”) Halpern; that is to say, none has come from Judge Big Jim that has been posted.

This morning I telephoned Chambers to find out when there would issue the order or decision embodying the result of Judge Big Jim’s 72 (count ’em, 72) page monograph on the publicity of the anonymous (for which see my blogpost “A. Nonymus, Serial Blower – Blown,” 9/28/21; you won’t find nary a page on the Tax Court website, as same is sealed, notwithstanding that I and the entire online law community have posted it “far and wee”).

Public Affairs responded that the order would post today. However, as I anticipated in my above-referred-to blogpost when I asked if A. would be outed in the order, Public Affairs told me that A. would be given a chance to appeal to DC Cir again.

The iron curtain has descended yet again.



In Uncategorized on 09/30/2021 at 10:52

Not Hardly

I do not know if Judge Albert G. (“Scholar Al”) Lauber is a particular fan of The Beach Boys. But as Congress yet again repeats the Wilson-Christian 1963 hit and starts to “tach it up tach it up” to shut somebody down, Judge Scholar Al is ready with plan in place to avoid being out-dragged when “comin’ off the line when the light turns green” at the CA dragstrip on Tuesday.

And whom else is on the card for the Los Angeles remote but my great source of blogfodder Gregory J. Podlucky & Karla S. Podlucky, Docket No.: 453-17, filed 9/30/21.

Judge Scholar Al: ” The Court is aware of the possibility of a Government shutdown beginning Friday, October 1, 2021. The Court has implemented a contingency plan that will enable the undersigned to conduct the trial session as planned. The Internal Revenue Service has informed the Court that its attorneys will appear for trial next week whether or not there is a Government shutdown.” Order, at p.1.

So get ready to try the case, guys.

And I want to express thanks from us journos, that Tax Court stands ready to keep ’em coming, whatever may happen tomorrow.


In Uncategorized on 09/29/2021 at 16:26

I want to begin with a Taishoff “Good Try,” to Vivian Hoard, Esq., even though Judge Courtney D (“CD”) Jones doesn’t buy her arguments about the Section 183 hobby deductions. Ms. Hoard, like The Great Chieftain of The Jersey Boys, transitioned to tax litigation from criminal litigation. The case for today is Carl L. Gregory and Leila Gregory, 2021 T. C. Memo. 115, filed 9/29/21.

We all know that Section 183 allows two (count ’em, two) types of deductions from fun money, that is, income derived from activities engaged in otherwise than for profit, in the case of Carl his boat chartering. The first class of deduction is where the service provides for a specific deduction; in Carl’s case, he gets his couple hundred dollars’ (hi, Judge Holmes) worth of taxes and licenses.

That only leaves north of $300K of expenses in each of the two years at issue. Vivian and Carl claim the 2% AGI floor in Section 67(a) doesn’t apply.

Judge CD says it does. “Section 63(d) defines itemized deductions as deductions other than (i) those allowable in computing AGI and (ii) the deduction for personal exemptions allowed under section 151. Section 183(b)(2) is not identified as a deduction allowable in computing AGI. See sec. 62(a). Consequently, section 183(b)(2) is properly viewed as an itemized deduction. The broader statutory scheme confirms as much; section 183(b)(2) is enumerated under Part VI, Itemized Deductions for Individuals and Corporations, of Subchapter B, Computation of Taxable Income. As the title of Part VI suggests, section 183(b)(2) is by default an itemized deduction, and nothing in the text of section 183 or another provision of the Code suggests otherwise.” 2021 T. C. Memo. 115, at pp. 8-9.

“Miscellaneous itemized deductions are defined as itemized deductions other than those described in section 67(b). See sec. 67(b). Thus, if an itemized deduction, such as section 183(b)(2), is not identified on the list provided under section 67(b), it is a miscellaneous itemized deduction and therefore subject to the restriction provided under section 67(a).” 2021 T. C. Memo. 115, at p. 9.

Judge CD says “The Gregorys misleadingly claim that the plain language of section 183(b)(2) supports their view that it is an above-the-line deduction, placing particular emphasis on the language in section 183(b)(2) capping the amount of the deduction to gross income derived from the underlying activity (less the deduction(s) allowable by reason of section 183(b)(1)). We find this line of argument unpersuasive.

“The language they point to in support of their argument concerns only the maximum permissible amount of the deduction. It does not instruct taxpayers to apply the deduction itself against gross income for purposes of calculating AGI.” 2021 T. C. Memo. 115, at p. 11.

IRS Pub 529 says the same.

Now there is Tax Court learning that says Section 183(b)(2)s are miscellaneous itemized deductions, and one CFC case, but no appellate learning. See 2021 T. C. Memo.115, at p. 9-10.

There’s enough on the table to make a trip to 11 Cir (Carl is in FL) worth considering.


In Uncategorized on 09/28/2021 at 17:20

Judge Buch has the reputation of being taciturn, not given to loquaciousness. Not abrupt, of course, courteous, but direct.

Today he demonstrates that many words are unnecessary when facts speak for themselves. Here’s Robert S. Clark, 2021 T.C. Memo. 114, filed 9/28/21

” In… the years at issue, Robert S. Clark owned an auto body shop, rental properties, a large home, and numerous trucks, automobiles, and utility vehicles. His ability to acquire these assets is a remarkable feat given that, according to his tax returns, he had taxable income of $114, $0, $0, and $0, respectively, during those years. Or he fraudulently underreported his income. The Commissioner established by clear and convincing evidence that he fraudulently underreported his income.” 2021 T. C. Memo. 114, at pp. 1-2.


In Uncategorized on 09/28/2021 at 16:24

A correspondent advises me that the Genius Baristas belatedly posted all 72 (count ’em, 72) pages of Judge James S (“Big Jim”) Halpern’s takedown of Whistleblower 14377-16W, 2021 T. C. Memo. 113*, filed 9/27/21, today, as I had missed it when they posted it late yesterday. Well, since 3:00 p.m., Eastern time came and went before I posted at 3:40 p.m. yesterday, I am hardly put out of countenance by this much-belated publication.

Judge Big Jim, clearly vexed by DC Cir’s right-about-face when he tried to blow the cover of A. Nonymous, Serial Blower (see my blogpost “A.Nonymous, Serial Blower – Anonymous,” 7/23/19), has a full-dress trial, wherein he blows up A’s claims of physical, economic, marital, and reputational harm (want of specificity on all counts), and, bowing to the protection of innocent third parties, deals likewise with Mrs. A and her business.

The key is whether the public’s interest in knowing who’s clogging the courts is weakened by the need to protect. A class representative’s identity isn’t important when the class comprises a multitude. Where the plaintiff (petitioner)(blower) is a one-off, harm from disclosure has to be shown beyond annoyance. As the hockey players say, “step on the ice and you’re gonna get hit.” But getting roughed, cross-checked, high-sticked, boarded, or speared is something else, and that won’t be assumed. No hurt, no cover.

A. is light on facts.

As IRS wants summary J, we’re back to Van Bemmelen; the record rule rules. In the usual case, if a material fact is disputed, there has to be a trial. But whistleblower cases go off on abuse-of-discretion, and the administrative record is “all ye know on earth and all ye need to know,” as a much finer writer than I put it. A. sinks himself by asking for discovery; if you want to supplement the record, you must specify what was left out. As for suppression or concealment by the agency, you must specify what was thus hidden. Conspiracy theories don’t get it. IRS wins; no payday for A.

Judge Big Jim promises us an appropriate decision and order. Will it feature A. Nonymous unmasked? Even if it does, won’t the Genius Baristas seal it anyway? So A. Nonymous remains A. Nonymous.

*Whistleblower 14377-16W 9 28 21


In Uncategorized on 09/27/2021 at 15:40

The current régime at the Clerk’s Office in The Glasshouse on Second Street seems to emit opinions one day a week, and Monday is not one such. Why this should be eludes me, as does the hesitancy to release opinions before 3:00 p.m., Eastern (US) time; why Europe and Africa should have to await the collective wisdom of the Tax Court bench until the morrow (unless they burn the midnight fossil fuel) seems unfair.

Howbeit, other than an order embodying a reprise of an admonition from Judge Morrison in a case I reported earlier this month (see my blogpost “Lord Chief Justice Campbell’s Dictum – Part Deux,” 9/8/21), which you can look up and read for yourselves if you’re looking to waste your time, there is nothing worthy of note.

I’m going to watch my daughter’s webinar; it’s much more interesting.




In Uncategorized on 09/24/2021 at 13:38

When He Has an Envelope

Ex-Ch J Michael B (“Iron Mike”) Thornton will sink his metaphorical teeth deeply into whatever comes, even the humble envelope that supposedly brought the disputed SNOD to Cameron Stewart, Docket No. 6771-19L, filed 9/24/21.

Note that Cam’s POA [sic] mistakenly calls him/herself a “POA” (probably means representative designated in a Form 2848) and the Section 6213 notice of deficiency a “NOD” whereas IRS correctly calls it a “snod”; did I copy them or did they copy me?

But ex-Ch J Iron Mike eschews such blather, and goes to the paper. Did IRS timely send a SNOD to Cam? It looks like not, after ex-Ch J Iron Mike goes through IRS transcripts replete with unintelligible codes, dubious notations from SOs at Appeals, and the purported envelope wherein was mailed the SNOD. When ex-Ch J Iron Mike gets through deconstructing the envelope and peripheral documents, not even a scrap remains.

Appeals proffers a contest of underlying liability (deficiency), but that’s a nonstarter absent a SNOD.

“The notice of determination notes petitioner’s assertions in his Form 12153 that he had received no notice of deficiency and that the IRS tax transcript that had been provided to him did not show the issuance of any notice of deficiency. In response to these assertions, the notice of determination states with little elaboration, ‘The Appeals Officer determined that you should be given the opportunity to challenge the liability during the appeal telephone conference.’ From this response it would appear that Appeals sought in effect to cure any defect in the mailing of the notice of deficiency by conceding petitioner the opportunity to dispute his underlying liability. Allowing petitioner the opportunity to dispute his underlying liability does not, however, perfect an assessment made in derogation of section 6213(a).” Order, at p. 10. (Citation omitted).

So the only issue here is a grab of State tax refund in partial satisfaction of the alleged deficiency. Cam’s POA (representative) says there isn’t any deficiency, as no SNOD was sent to Cam’s last known address, hence no valid assessment, and SOL has run on that year.

IRS wants summary J, magnanimously admits Cam gets the benefit of every favorable inference, but ex-Ch J Iron Mike was giving Cam that anyway.

Relinquishing jurisdiction, ex-Ch J Iron Mike sends Cam and IRS off to go try the case.


In Uncategorized on 09/23/2021 at 17:31

Maria Isabel Goode, Petitioner, and James T. Goode, Jr., Intervenor, 2021 T. C. Sum. Op. 34, filed 9/23/21 had an on-again, off-again marriage that ended in divorce. Maria Isabel had a similar relationship with the U S gov’t, working with JT for DoD in NM and AZ, before moving to FL when JT fell ill. Maria Isabel and JT each took loans from the Federal savings plan for retirees, known as the Thrift Savings Plan (TSP). This was supposed to pay living expenses for selves and kids while they found jobs in FL, but FL civilian life didn’t pay like Uncle Sam.

They ultimately defaulted on the loans and got 1099-Rs, hitting them for $35K in tax after withholdings. JT’s mom prepared their joint return, and Maria Isabel knew neither JT nor she could pay. When they finally divorced, the decree said each owed half the debt. IRS and Maria Isabel now stip that 78.5% of whatever is now unpaid is her obligation.

Meantime, Maria Isabel, having shucked JT, rejoins Uncle Sam and has a six-figure salary.

Maria Isabel wants innocent spousery, but has no hardship. The protective order she got against JT was years after the tax liability was incurred, and no evidence of abuse before that.

But ultimately, whatever a mosey through the seven factors of Rev. Proc.  2013-34 may yield, it comes down to what Maria Isabel knew when she signed the return that gave rise to the liability.

Judge Vasquez: “In evaluating the relevant factors we conclude that the knowledge factor weighs too heavily against relief for petitioner. The … tax liability attributable to intervenor partially arose from defaulted TSP loans to which petitioner had consented. She knew the liability would not be paid when she signed the return. Given these facts, we find that it would not be inequitable to hold her responsible for the underpayment….” 2021 T. C. Sum. Op. 34, at p. 18.


In Uncategorized on 09/23/2021 at 15:46

Daniel Omar Parker and Chantrell Antoine Parker, 2021 T. C. Memo. 111, filed 9/23/21, is another employee business expense case, fact-bound and interesting only for IRS dropping the chops and the excess IRA contribution angle.

Danny O can’t tell Judge Albert G (“Scholar Al”) Lauber whence came the $64K Danny O and Chantrell deducted as an IRA contribution. If a rollover, like some of the other deposits they were consolidating into a new IRA, no deduction.

“Mr. Parker testified that he created the new ‘Solo 401(k)’ to consolidate petitioners’ retirement accounts. Evidence in the record (including petitioners’ prior tax returns) indicates that they had other retirement plan assets that could have been the source for the $60,444 slice of the cashier’s check. For 2013 and 2014 alone, petitioners claimed deductions totaling $82,363 for contributions to self-employed SEP, SIMPLE, and qualified plans. But they admit a rollover from their prior ‘Solo 401(k)’ of only $39,823. Viewing the evidence as a whole, we find that petitioners have failed to carry their burden of proving that any portion of the $60,444 contribution consisted of new cash rather than nondeductible rollover.” 2021 T. C. Memo. 111, at p. 13.

But here’s the headline-grabber that Danny O puts in his post-trial brief. He says he and Chantrell “…prefer to keep their savings ‘at home where they are protected * * * and safe from unscrupulous individuals including IRS agents.’” 2021 T. C. Memo. 111, at p. 13.

Judge Scholar Al comments with almost Olympian detachment, “This assertion does not satisfy their burden of proof.” 2021 T. C. Memo. 111, at p. 13.

Any further comment is superfluous.


In Uncategorized on 09/23/2021 at 15:27

High-flying insurance salesman Michael D. Brown, 2021 T. C. Memo. 112, filed 9/23/21, is back again, petitioning a NOD from a CDP, and still looking for the $80K TIPRA tip he plunked down with his OIC for the ten (count ’em, ten) years’ tax he owes. For the backstory, see my blogpost “High Flyer – Shot Down,” 9/16/19.

Well, Mike went to 9 Cir, who bucked the case back to Judge Kerrigan, asking her to sort out whether Tax Court has jurisdiction to order a refund of a TIPRA tip. TIPRA, the Tax Increase Prevention and Reconciliation Act, requires a 20% downpayment on the amount of your lump-sum OIC with the Form 656.

Judge Kerrigan: “Sections 6320(c) and 6330(d)(1) provide for judicial review of an adverse CDP determination. Therefore, the Court has jurisdiction in this case pursuant to sections 6320(c) and 6330(d)(1). Petitioner contends that pursuant to section 6512(b) the Court has express refund jurisdiction in a case in which the Court has already acquired jurisdiction. We disagree.” 2021 T. C. Memo. 112, at p. 5. (Citation omitted).

We all know that “no deficiency, no refund.” Tax Court has CDP jurisdiction here, not deficiency.

“Section 6512(b), contrary to petitioner’s contention, does not grant this Court refund jurisdiction in all cases in which the Court has already acquired jurisdiction. Rather, section 6512(b)(2) is an express grant of jurisdiction ‘to order the refund of such overpayment and interest.’ For a refund to be governed under section 6512(b), a notice of deficiency is required. The Tax Court’s jurisdiction in this case, however, does not derive from the mailing of a notice of deficiency. This Court’s jurisdiction under section 6512 cannot be invoked in this matter with respect to the TIPRA payment because this proceeding is not based on a postdecision action to modify a decision in a deficiency case under section 6213 or section 7481(c) or (d).” 2021 T. C. Memo. 112, at p. 6.

The two previous cases upon which Mike relies, his own and that of the famous Isley brother, went off on the finding that IRS did not abuse its discretion in bouncing the OICs there involved, so never considered if Tax Court could order a refund.

What might happen if an OIC was wrongfully refused and no refund made is another story. Note that Form 656 says the TIPRA tip is nonrefundable. And the legislative history shows “the legislative history of section 7122(c) refers to the 20% payment as a ‘partial payment’ or ‘down payment’ of the taxpayer’s liability. H.R. Conf. Rept. No. 109-455, at 234 (2006), 2006 U.S.C.C.A.N. 234, 420-421. The 20% payment of the offer amount is treated as a payment of tax rather than a refundable deposit under section 7809(b) or section 301.7122-1(h), Proced. & Admin. Regs. See Notice 2006-68, sec. 1.02, 2006-2 C.B. 105, 105.” 2021 T. C. Memo. 112, at p. 5.

So Judge Kerrigan tells 9 Cir that Tax Court has no jurisdiction.

Obviously, the TIPRA tip is Congress’ attempt to cool the ardor of the clientele of those who have turned making bogus OICs into a cottage industry.