In Uncategorized on 03/16/2022 at 16:54

Judge Courtney (“CD”) Jones doesn’t express it quite that way, but the meaning is clear for IRS’ counsel. You blew it once; trying again won’t help.

My readers may not all of them recall Julian Wolpert and Estate of Eileen Wolpert, Deceased, Julian Wolpert, Executor, Docket No. 3182-20, filed 3/16/22, and their law school counsel. If you’re one such, check out my blogpost “Another Taishoff ‘Oh Please’,” 4/22/21.

Post-trial, IRS’ counsel try to insert the “goofy regulation” hobby-loss argument (Reg. Section 1.183-2(b)), and want to try to resuscitate the Boss Hossery they didn’t think they had last year by arguing electronics.

“With respect to the first category of disputed content concerning whether petitioners engaged in the Schedule C activity with a profit motive, we conclude that such material is improperly raised in respondent’s seriatim answering brief. Respondent previously attempted to raise this issue when he moved for leave to amend his answer at the eleventh hour prior to trial. The Court denied that motion in an order issued on April 22, 2021, because permitting amendment would have denied petitioners fair notice and an opportunity to prepare. Consequently, the profit motive issue addressed in respondent’s seriatim answering brief has already been foreclosed, and we will not entertain respondent’s attempt to undermine our previous order.” Order, at p. 2.

As the late Bankruptcy Judge Adlai Stevenson Hardin wearily counseled my co-counsel before sinking our case without a trace, “Counsel, I gave an order, not a suggestion.”

Electronics to avoid Boss Hossery fares no better.

“Although there is some language to weakly support respondent’s contention (in his seriatim answering brief) that the section 6751(b)(2)(B) issue was raised in his pretrial memorandum (concerning taxable year 2017), respondent also stated therein that he would concede the section 6662(a) penalty for taxable year 2017 if he could not ascertain whether SB was the immediate supervisor for purposes of section 6751(b)(1). Such a statement leads us to conclude that respondent  (1) did not contemplate the applicability of section 6751(b)(2)(B), and (2) intended to sustain the penalty determination at trial solely by proving that written supervisory approval was timely obtained pursuant to section 6751(b)(1). We further note that the language respondent points to purportedly raising the issue in his pretrial memorandum has no basis in the statutory text of section 6751(b)(2)(B) (i.e., whether the penalty was ‘asserted computationally’ versus ‘automatically calculated through electronic means).” Order, at p. 2 (Footnote and name omitted).

As for Rule 41(b) tried-by-consent, as to the goofy part, trial took place five (count ’em, five) days after Judge CD Jones had taken Reg. Section 1.183-2(b) off the table. The law students rightly relied on Judge CD Jones’ order, so where was the consent? Not in this record.

Rule 41(b)(2) allows the Judge to let in evidence, even if objected to, in the interests of justice. I cannot very well characterize IRS counsel’s argument on that point in language proper for a blogpost meant to be read in the family circle. So I defer to Judge CD Jones.

“Respondent argues that ‘[g]ranting [r]espondent’s motion will serve the interests of justice by conforming [r]espondent’s answer to the evidence adduced at trial.’ To the extent respondent intended for this language to communicate why justice requires our grant of leave under Rule 41(b)(2), we disagree. To hold such reasoning sufficient would render superfluous Rule 41(b)(2)’s justice requirement.  Moreover, as previously elaborated upon, granting leave would unduly disadvantage and prejudice petitioners’ case given their reliance at trial on our April 22, 2021 order.  Consequently, we hold that justice does not require our grant of leave for respondent to amend his answer; we will not grant respondent leave to amend his answer under Rule 41(b)(2).” Order, at p. 4.

“Oh please” is too mild an expression.


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