I was eagerly awaiting the six o’clock hour, not for the Gibson but for The Great Chieftain of The Jersey Boys’ Zoomielecture on Tax Court Law and Practice, scheduled for this evening. But an early e-mail told me the lecture was postponed a week hence. No explanation. I tried to re-register, in case that was needed, but the website told me I was already signed up.

Frantic Frank’s lectures are not to be missed if you are lining up for the Slaughter of the Innocents, a/k/a the United States Tax Court admissions examination. It is a brutal ordeal, with a minuscule passing rate. Frank Agostino, Esq., is well worth your attention, however long you’ve been practicing, or for whatever examination confronts you.

Howbeit, I may have found an answer, led there by Judge Albert G (“Scholar Al”) Lauber, who, I’ll wager, could give a lecture at least equally good. It would be great to have them both on a CLE panel.

Down to business.

IRS wants to depose a couple non-party witnesses (hi, Judge Holmes) in Oconee Landing Property, LLC, Oconee Landing Investors, LLC, Tax Matters Partner, Docket No. 11814-19, filed 10/12/21*, to which the Oconees and the non-parties object, so IRS moves to compel.

Since there’s a $20 million deduction on the table (see my blogpost “Preserving the Preservation Easement,” 8/18/20), I cannot suppose the non-parties have no relationship with the appraisal at issue here. Looks like IRS has dropped the “improvements out” gambit.

So the non-parties lawyer up. And look who’s representing them!  No wonder he’s busy tonight.

*Oconee Landing 11814-19 10 12 21

When visiting my nearest and dearest in The Lone Star State, I often saw the bumper sticker “Don’t Mess With Texas,” an adjuration to refrain from littering. Today, Judge Elizabeth A. (“Tex”) Copeland has a like admonition to Christian S. Silver, Docket No. 8805-18, filed 10/12/21* (a special day in our family on other grounds).

Chris is a protester. He featured in 2021 T. C. Memo. 98, filed 8/9/21**, which I didn’t bother to blog. I had Adams Challenger UK that day (see my blogpost “Always The Numbers,” 8/9/21), as well as A. S. Montero, “a top-class frivolite.” See my blogpost “The Octavia Rules – It’s Time,” 8/9/21, a much more interesting fact pattern.

Chris is back with Judge Tex Copeland, seeking a Rule 162 vacation. He hasn’t anything new, just the same-old, same-old stuff he lost back in August. Back then, Judge Tex Copeland showed Chris the Section 6673 yellow card.

“At trial the Commissioner made an oral motion for a section 6673 penalty to be applied here. Section 6673(a)(1) allows the Court to impose a penalty not to exceed $25,000 when it appears that a taxpayer’s position is frivolous or groundless. Whether to impose a section 6673 penalty is entirely within our discretion. See sec. 6673(a). Aside from this case, Mr. Silver has filed two other petitions with this Court. In neither case was he warned that a penalty under section 6673 might be imposed on him; further, the penalty request here was not advanced until the time of trial. Thus, we decline to impose a section 6673 penalty upon Mr. Silver at this time, but we warn him that if he continues to advance the same positions in the future it is likely that a section 6673 penalty may be imposed.” 2021 T. C. 98, at p. 8 (Footnote omitted, but it says Chris tried this twice before but got no frivolity warning).

Well, today Judge Tex Copeland hits Chris with the Section 6673 chop.

“Although we concluded in our opinion that Mr. Silver was not liable for the I.R.C. § 6673(a)(1) penalty, Mr. Silver, ignoring our warning in filing his Motion to Vacate or Revise the Court’s Order and Decision, continues to assert groundless arguments, maintain frivolous positions, and pursue matters that we have heard, reviewed, and decided. We conclude that his positions continue to be frivolous and groundless and are a waste of judicial time and resources; and therefore, we will impose an I.R.C. § 6673(a)(1) penalty of $2,000 upon him.” Order, at pp. 2-3.

Don’t mess with Judge Tex.

*Christian D Silver 8805-16 10 12 21

**Christian D Silver 2021 T C Memo 98 8 9 21

But Not In the District of Columbus

Tax Court is closed today, 10/11/21. It is a Federal holiday, officially Columbus Day, in many quarters Indigenous Peoples’ Day, but not a holiday in the District of Columbus (according to Google, the ultimate authority).

Howbeit (and this is a buzzsaw into which I’ll not stick a finger), there will be none of trial session, opinion, or order, so there will be no more from me.

Memory calls me back seventy years to a sidewalk in The Bronx (and it’s always “The Bronx”; even tourists know that, although, barring the Zoo and the Botanical Gardens, tourists never go there). We played a simple child’s game whose echoes reached even to the Moon (“One Giant Step for Mankind”). Oh, the Steps, the  Baby Steps, the Umbrella Steps, and the Giant Steps! And Neil Armstrong didn’t have to ask “Mother, may I?”

But Earthlings approaching The Glasshouse in the City nonState are required to ask, and are oftentimes rebuked by the Ch J, for taking the wrong steps. And inasmuch as not all such steps are to be found in the Rules, Ch Js must spend a considerable amount of judicial time and effort in directing litigants into right pathways, playing Mother.

Here’s Julee H. Hafner, Docket No. 11144-20S, filed 10/8/21.* Ch J Maurice B. (“Mighty Mo”) Foley again expends scarce judicial resources on such as this.

“… the parties filed a Proposed Stipulated Decision. Upon review, the Court notes that the filing improperly incorporates both a Proposed Stipulated Decision and a Settlement Stipulation as a single submission. Conversely, the two items should be filed separately.” Order, at p. 1.

I cannot discern why the Heavens would fall if these were filed together. In any case, I’m confused. Rule 91(a)(2) says stipulations are to be “comprehensive.” They must embrace all facts, however obtained. The process of stipulation has more than once been described as “the bedrock of Tax Court litigation.”

So why must the parties be ordered to “…file, as separate docket entries, a Proposed Stipulated Decision and a Settlement Stipulation containing a statement of account (Form 3623)”? Order, at p.1.

Granted that IRM 8.17.3.3 (9/3/19) prescribes that form for computing the amount of any settlement at Appeals, and granted same may contain personally identifiable information (although the IRM instructions for preparation thereof are ambiguous, as SSAN is not included), it would be simple enough to seal the entire decision and everything with it. The Genius Baristas do that all the time, with no need for instruction from Ch J Mighty Mo. They even seal orders and opinions that are publicly available on the internet.

*Julee H Hafner 11144-20S 10 8 21

It is well-settled; that’s what a Judge says when someone’s case is going down the drain. Today Judge Courtney D. (“CD”) Jones says that to Kevin John, Sr. & Whitney S. Witasick, Docket No. 23069-16, filed 10/7/21*. Btw, to be precise, that’s “Mr. Kevin Witasick, Sr. and Mrs. Whitney S. Witasick (the Witasicks),” Order, at p. 1. I will not comment on this choice of nomenclature, as that might take us rather far afield.

Howbeit, Mr. Kevin went down in USDCWDVA for two (count ’em, two) years’ worth of Section 7201 tax evasion, related to excessive deductions for something called Stoneleigh. 4 Cir affirmed, and the Supremes passed. Arising therefrom, IRS wants partial summary J for the Section 6663 75% fraud chop, claiming collateral estoppel (issue preclusion).

Judge CD has bushelbasketsful of “somber reasoning and copious citation of precedent” that one who has taken a tax evasion fall has a fortiori either pled to, or been convicted on a trial of, fraudulently evading the payment of tax.

Mr. Kevin says “no, I did stipulate, but I did not capitulate.”

“For the years at issue, the parties stipulated that, ‘Respondent contends that if the Court decides that there is a deficiency for the [1999 and 2000 taxable years], petitioner, Kevin Witasick is collaterally estopped from challenging the fraud penalties for the [1999 and 2000 taxable years] because a jury convicted him of  federal income tax evasion pursuant to 26 U.S.C. section 7201. Petitioners dispute this contention.’” Order, at p. 3.

Judge CD says all that means is that Mr. Kevin and IRS agree there’s a dispute, not that IRS can’t move for summary J to resolve it. Mr. Kevin may disagree, but he had his chance to litigate it, and lost.

And neither facts nor law has changed since Mr. Kevin went down, at least not enough to decontrol the criminal conviction. The issue before Tax Court is the same Stoneleigh write-offs that were at issue in the USDCWDVA litigation.

However, Mr. Kevin can fight about the precise amount of the understatements of tax. He cannot fight about whether there were understatements. “While Mr. Witasick may dispute the amount of the deficiencies for tax years 1999 and 2000, we have repeatedly held that taxpayers convicted under section 7201 are precluded from denying the existence of underpayments for the years at issue.” Order, at p. 5. (Citations omitted).

Just add three-quarters of whatever comes out on the trial.

*Witasick 23069-16 10 7 21

That’s Judge Nega’s admonition to Anthony J. Todisco, Jr., in April J. Gonzales f.k.a. April J. Todisco, Petitioner, and Anthony Todisco, Intervenor, 2021 T. C. Sum. Op. 35, filed 10/6/21*. The fight is about the tax prep fee and the unreimbursed business expenses from Anthony’s construction employment.

It’s the usual indefinite-vs-temporary workplace, and undocumented and reimbursed expenses, but the key concept is what happened to Anthony when he intervened. There were two (count ’em, two) years at issue. Anthony and April jointly petitioned Year One, but only April petitioned Year Two, because there were five (count ’em, five) years between the two years at issue, and Anthony and April got divorced in between.

Anthony intervened for the second year (which only April petitioned). April also sought innocent spousery for both years, and had amended the earlier joint petition to seek only innocent spousery for that year, not to fight the deficiency.

IRS hadn’t ruled on April’s innocent spousery, but folded on the trial. IRS also folded the chops on the trial.

Anthony wanted to fight the deficiencies for the two years, but only got to fight one.

Judge Nega explains.

“As an intervening party, Mr. Todisco is not granted rights or immunities superior to those of the other parties, may not enlarge the issues or alter the nature of the proceeding, and must abide by the Court’s Rules. Since Ms. Gonzales did not, and does not, dispute the underlying deficiency for [Year Two], Mr. Todisco may not independently raise a dispute as to the underlying deficiency. Mr. Todisco passed on his opportunity to do so when he failed to timely file a petition of his own or join Ms. Gonzales’ petition. Therefore, as to Ms. Gonzales, we sustain respondent’s deficiency determinations for the [Year Two] taxable year as set forth in the notice of deficiency….” 2021 T. C. Sum. Op. 35, at pp. 12-13. (Citation omitted).

But since April is getting off on innocent spousery, the sustentation of the deficiency is a nonissue.

Of course, this leaves open the question whether the Year Two SNOD was served on Anthony’s last known address. Judge Nega says Anthony and April separated three years before IRS issued the second SNOD, and April was always timely with her tax filings. It seems Anthony never raised the issue,  but he was pro se and April had attorneys from the Albuquerque Legal Aid LITC. Maybe Anthony only knew about the SNOD when April petitioned it and Anthony got the invitation to intervene. As we don’t know what Anthony filed, or when he filed, or from where he filed, the question remains.

*Todisco 2021 T C Sum Op 35 10 6 21

As the sailors’ chorus sang in Act III, Scene I, of the original version of Ben Britten’s, Eric Crozier’s and E. M. Forster’s 1951 sea opera Billy Budd, “This is our moment we’ve been waiting for these long weeks.”

Yes, the ponderous doors of The Glasshouse on Second Street will swing slowly in the wind as they open on October 12, 2021 (a significant day in our family, but not for that reason).

The reboot kicks off with Facebook Inc., and Subsidiaries, but only litigants will be admitted, and no livestream will be provided.

Here’s the skinny from the Glasshouse website.

“In anticipation of its return to in-person proceedings, the Court has posted a new publication, Court Standards and Protocols to Protect Public Health. The Court has also posted Administrative Order 2021-02 which provides protocols for attending in-person proceedings in the Washington, D.C. courthouse. The standards and protocols from both documents will apply to the Court’s first in-person proceedings since March 2020, scheduled to commence on Tuesday, October 12, 2021, at 10:00 AM Eastern Time, in Docket No. 21959-16, Facebook, Inc. & Subsidiaries, Petitioner v. Commissioner of Internal Revenue, Respondent. Livestream audio is not provided for in-person proceedings. The United States Tax Court building remains closed to non-trial-related visitors. For more information, see the Press Release and refer to other materials available on the COVID-19 Resources page.”

So the doors reopen: stealthily.

Not the Las Vegas variant of Texas Hold ‘Em, rather some Section 6700(a) phony shelter-mongering, for which only the ten-year limit in Section 6502(a) applies. So says Judge Albert G (“Scholar Al”) Lauber; and if you ask why Judge Scholar Al is getting all these electrons, I answer that he’s writing the opinions, and the other Judges will get equal time when they put theirs online.

Here’s the Maltese Falcon, John M. Crim, 2021 T. C. Memo. 117, filed 10/4/21*. John is the Maltese Falcon, because he alleges he lived in Malta when he petitioned, 2021 T. C. Memo. 117, at p. 2..

I had a busy day yesterday and missed this one, as midnight fell before I could get to it, and the Genius Baristas and the 18Fs locked me out.

John went down for a six-stretch for flogging phony offshore trust deals. There’s argy-bargy about whether John got the NFTL whilst a guest of us taxpayers in Taft, CA, but he did get other mail from IRS and answered it.

And Judge Scholar Al throws a strike. ” The person with the most direct knowledge of whether petitioner received the… lien notice is presumably petitioner. His attorneys have filed mountains of paper in this case, but the one thing they have not submitted is an affidavit from petitioner himself averring, under penalties of perjury, that he did not receive the lien notice. Indeed, nowhere in the record is there any first-hand indication from petitioner himself that he did not receive that notice.” 2021 T. C. Memo. 117, at p. 12-13.

John’s trusty attorney (whom I’ll call Joe Di) tries the 28 USC §2462 five-year statute, but that’s for commencement of actions, suits and proceedings, and an assessment of Section 6700 chops is none of the above. And Section 6700 chops are applied to actions, not filing of returns.

The Maltese Falcon is grounded.

*John M Crim 2021 T C Memo 117 10 4 21

No, this is not a new flick, coming soon to the never-ending stream. This is the end of the story of Taryn L. Dodd, 2021 T. C. Memo. 118, filed 10/5/21.*

Of a surety y’all recollect Taryn? No? Then see my blogpost “Two Good Ones,” 8/22/19; IRS put four (count ’em, four) lawyers on a dead-loser summary J, when they should have put one SO who actually read the file on the CDP.

Well, Taryn got her shot, but loses.

Judge Albert G. (“Scholar Al”) Lauber man-‘splains.

Taryn was the office manager in a DC law firm specializing in real estate and construction (my kind of guys). Taryn and a name partner were members, and Taryn was the managing member, of an LLC that owned and operated rental real estate. Taryn’s stake was 33.5% of the capital account. Not bad for an office manager; in my checkered career I never saw an office manager get that kind of a piece of the action. And it was a mighty sweet piece, as you’ll see infra (as my expensive colleagues with a piece of the action would say).

As managing member, Taryn “…regularly signed agreements, tax returns, and other documents on [LLC]’s behalf. “2021 T. C. Memo. 118, at p. 3.

Taryn signed the loan agreement with the bank that provided financing for the LLC’s various properties. In year at issue, the LLC unloaded property to the tune of $4 million gross, net $3.203 million. The property secured the bank loan, so the bank had a due-on-sale in the agreement, and took a check at the closing. No bank I ever saw let the borrower walk from a sale with the scratch without taking a pound of cliché.

My jaggedly-sophisticated readers have already said “Phantom income,” without needing to see the title of this blogpost.

Taryn says she never got nuthin’ because the money paid off the law firm’s credit line. And the accountant who did her return (and the LLC’s box-checked 1065 and Taryn’s K-1) mistakenly gave Taryn $169K of tax. Except Taryn signed the line of credit (LOC) documents as “co-borrower and guarantor.” 2021 T. C. Memo. 118, at pp. 8-9.

“During the supplemental CDP hearing petitioner contended that the proceeds of [LLC]’s 2013 sale were used to pay off, not only LLC’s $1,843,758 loan from [bank], but also [law firm]’s $1.5 million LOC. But she offered no documentary evidence to substantiate the latter contention. The AO ultimately informed SO2 of her conclusion that petitioner ‘constructively received’ the $1,073,312 gain reported on her return and ‘will be taxed on it.’ Petitioner supplied SO2 with Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. That form reported assets in excess of $300,000 but did not include as an asset her 33.5% membership interest in LLC. Upon review of petitioner’s financial information SO2 concluded that she could fully pay her… liability. ” 2021 T. C. Memo. 118, at p. 9.

Whatever the story with law firm’s LOC, Taryn’s claim (accommodation party? contribution? constructive trust? Good bar exam question) is a State law claim that Tax Court can’t consider.

Section 702 is clear: a partner owes the partner’s share of gain, whether they got cash or not. And Taryn apparently got $210K out of the sales proceeds, enough to pay the tax in full. 2021 T. C. Memo. 118, at p. 14.  Doubtless the LLC operating agreement contained an anti-freeze clause (see my blogpost “Anti-Freeze,” 3/13/17).

Taryn could’a paid up. Appeals offered her an IA, but she said nothing for months, so Appeals kicked her yet again, and Judge Scholar Al is down with that.

*Taryn l Dodd 2021 T C Memo 118 10 5 21