Attorney-at-Law

THE DOVER MAILCOACH RULE

In Uncategorized on 02/04/2022 at 16:16

IRS wants reconsideration in Buckelew Farm, LLC f.k.a. Big K Farms LLC, Big K LLC, Tax Matters Partner, Docket No. 14273-17, filed 2/4/22, but Judge Christian N. (“Speedy”) Weiler holds fast to his 11/22/21 fact-finding, more particularly bounded and described in my blogpost “Insubordination,” of even date therewith, as my expensive colleagues say.

IRS claims Federal tax law prevents curative rewritings of a deal once it’s closed, whatever State law says about correction deeds. It’s the usual improvements-out-on-judicial-extinguishment, with a gloss from Mitchell. For the story of Ramona Mitchell and Lonesome Charley Sheek, see my blogpost “Subordinate or You Lose,” 4/3/12.

Judge Speedy Weiler isn’t convinced by IRS’ argument. “…this Court and the Courts of Appeals have expressed the view that ‘not even judicial reformation can operate to change the Federal tax consequences of a completed transaction.’ Yet in other instances, this Court has held that reformation does abrogate the obligation to pay Federal tax liabilities in certain situations. ” Order, at pp. 9-10. (Citations omitted, but read the cases cited.)

Although the Order is less than crystalline, it seems that whether there was indeed a mutual mistake of law is a question of fact. Except whether there was a mutual mistake, and whether it can be corrected, there remains the Federal tax version of Charles Dickens’ Dover Mailcoach Rule. As the guard said when he shouldered his shotgun “If I should make a mistake, it could never be set right in your lifetime.” (A Tale of Two Cities, Ch. II). IRS’ version is “if you should make a mistake.”

And Judge Speedy Weiler seems to agree with the Dover Mailcoach Rule.”Although the Court is doubtful that equitable reformation can operate to change the Federal tax consequences of a completed transaction; since the Court has found there remains a genuine dispute of material fact precluding summary adjudication, it is not necessary for the Court to determine now whether the facts of this case warrant the equitable remedy of reformation under Georgia law.” Order, at p. 10.

But wait, there’s more!

Judge Speedy Weiler blows off the Buckelews’ belated attack on Reg. Section 1.170A-14(g)(6)(ii), the much-contemned Proceeds Regulation (Order, at p. 5). No mention of 11 Cir’s blow-off of Oakbrook in Hewitt (for which see my blogpost “Taking The Bookies’ Money,” 1/3/22).

Taishoff says let neither side take the Pol Roger Cuvée Winston Churchill out of the cooler just yet. The Buckelews may survive the correction deed fight, but their $47.5 million noncash charitable contribution deduction might not survive the appraisal joust at trial.

So the Dover Mailcoach Rule may not matter much, after all.

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