Attorney-at-Law

THE MISSING (DECEASED) WIFE TRICK?

In Uncategorized on 01/27/2022 at 18:23

Judge Elizabeth A. (“Tex”) Copeland provides a delightful conundrum today, as she revisits all 33 (count ’em, 33) pages of her opinion in FAB Holdings, LLC, 2021 T. C. Memo 135, filed 1/27/22; this is a “Corrected” version of the 11/30/21 opinion, which I blogged as “A Preparer Is Not a Promoter,” 11/30/21.

I cross-checked the uncorrected with the corrected, and the only change I could find is at page 33. The uncorrected text reads “Decisions will be entered for respondent as to the deficiencies and for the petitioners as to the accuracy-related penalties under Section 6662(a) in docket 21971-17 and under Rule 155 in docket 22152-17.” The corrected version reads .”Decisions will be entered under Rule 155.”

Not sure why there’s a difference, and Judge Tex Copeland doesn’t tell us. Maybe because, though consolidated for trial, briefing, and opinion per Order 9/30/19 (text unavailable), 21971-17 involves the pass-through LLC and 22152-17 involves Mr. Berritto and the late Mrs. Berritto personally.

IRS conceded the Section 6662(a) accuracy chops (2021 T. C. Memo. 135, at p. 3, footnote 2), but LLCs and other pass-throughs don’t pay chops, their passcatchers do (and you should have heard two of my fellow members of the NYSBA Association-Sponsored Insurance Program committee, one from Kansas City and one from Buffalo, on the subject of passcatchers at our meeting yesterday). So maybe no need to mention the conceded chops?

Or maybe because the late Mrs. Berritto became the late Mrs. Berritto in medias res, whereby the POA she gave Mr. Berritto automatically terminated eo instante. So any SOL extension thereafter purportedly agreed to by Mr. Berritto as representative was without effect. Though married couples may file jointly and become a single taxing unit, each is still a separate taxpayer. So deficiencies are subject to last lifetime SOL extension, thus freeing the late Mrs. Berritto’s estate from any liability therefor after expiry of said extension.

Am I right? Did I miss something? I seek enlightenment; if my readers cannot help, perhaps Judge Tex Copeland might be willing to expatiate.

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