Again

I lament the passing of the designated hitter, the order singled out by the Judge or STJ as worthy of the Bar’s and the blogosphere’s attention, to say nothing of humble journos like myself. Now we have to check the number of pages, as if the Genius Baristas have taken their text from Dickens’ Mr. Weller: “Vidth and visdom, Sammy, alvays grows together.”

Vell (sorry) Well, today Judge David Gustafson expatiates on why, since a Tax Court decision is strictly numbers, he can accept IRS’ folderoo on the captive insurance issues in Paul Puglisi and Ann Marie Puglisi, et al., Docket No. 4796-20, filed 10/29/21*. Paul wants an opinion that his captivity is legit, because it isn’t chickenfeed. Paul has a 1.2 million chicken operation, providing eggs throughout the mid-Atlantic States; a bad outbreak of avian flu would slaughter Paul as well as the chickens, and no third-party insurer will cover poultry diseases.

IRS yoicked Paul around for four (count ’em, four) years, demanding forests’ worth of paper and playing enough “win your case at discovery” gambits to provide a lifetime’s CLE. Paul says he needs an opinion to protect him and the other eggers-on from IRS’ chicken…you know the rest.

Judge Gustafson has discretion, and he uses it. An opinion here is advisory. IRS is willing to stip not only to the numbers upon which everyone agrees, but to stip out the next two years, allowing the deductions Paul took.

Judge Gustafson does a huge deep-dive into the scope of Tax Court’s jurisdiction to determine a deficiency (that’s a number, not its component parts; Judges need go granular only when a question of law is involved, to give guidance), and its discretion to accept a concession, sort of like a Ch 11 or Ch 13 plan in Bankruptcy Court, or a class-action settlement or a criminal plea bargain in an Article III Court. I’ll leave it to readers who need to know to read it all; I won’t try to abstract or paraphrase, lest I get it wrong.

But I note Judge Gustafson just glances at Cigna Corp. I summed that case up as Judge Gustafson sums this one up: “You Won, Go Home,” 9/13/12.

Note that Judge Gustafson is thoroughly hip to litigation strategy and tactics, as he pointed out in my blogpost “Crafty – Akin to the Weasel,” 7/24/17. And he cites to Matthew Dean Vigon, Order, at pp. 12-13. Paul and Matty are both entitled to a decision on their liabilities. But Paul wants a legal opinion why he wins, and that he won’t get.

Why not? Well, strategy.

“If it were true that the Commissioner’s concessions in these cases are merely tactical and simply reflect that ‘Petitioners’ cases are not the litigation vehicles that he wants to use to present his theories to this Court’ (Doc. 21 at 4), then our exercising discretion to accept the concessions in these cases is, of course, without prejudice to our exercising discretion in the management of future [insurance] ‘Series A’ cases. However, if petitioners are among ‘hundreds of other companies * * * [that] purchased insurance from Series A of Oxford Insurance Company LLC’ (Doc. 21 at 2; Doc. 24 at 4-5 & n.4), then we could not criticize petitioners, the ‘other companies’, or Series A if they had coordinated their efforts and pursued the instant petitions because they were more promising than others as ‘litigation vehicles’ for the taxpayers’ position; nor can we criticize the Commissioner for conceding cases in which his position is weaker in order to devote his resources to litigating cases that are more promising for his position.” Order, at pp. 16-17.

OK, Judge, I’ll always agree that you pick your fights to win wherever you can. But to yoick your adversary around for years pre-SNOD, and then fold when he calls, after he’s spent a ton on CPAs and attorneys, is beyond tactics. And of course, with the folderoo IRS ducks Section 7430 admins and legals, although Paul admits he and Ann Marie are “over the technical limitations” that scupper the same. Order, at p. 5.

Pop goes the weasel, again.

*Paul and Ann Marie Puglisi 4796-20 10 29 21