Don’t Step in It

I note the Tax Court announcement of the death of Judge Ruwe today, and it brought to mind the recent death of a highschool classmate, whose urbane sense of humor was a delight so many years ago. The title of today’s blogpost is in his memory.

Judge Albert G (“Scholar Al”) Lauber finds a welcome bifurcation in Heinrich C. Schweizer, Docket No. 3679-18, filed 2/18/22.

The fight is over valuation of a donation of artwork. Heinrich never provided a qualified appraisal and attached same, and a summary thereof, to his return for the year at issue. IRS won partial summary J on disallowance, but Heinrich interposed the reasonable cause defense, a question of fact.

But both Heinrich’s trusty attorneys and IRS counsel agree that only two (count ’em, two) issues need to be tried: did Heinrich have reasonable cause to omit the appraisals, and, even if he didn’t and loses the deduction, was his faith good enough to avoid the Section 6662(a) chops?

Judge Scholar Al is down with that, because if IRS wins the first point, they needn’t try the valuation issue.

And I’ll wager that Heinrich and his attorneys are hoping a good showing on the trial will get them a good settlement of the case, without expensive dueling experts.

Bifurcation may be a useful addition to the toolchest.