No, I’m not taking advertising; WordPress is doing that. So this does not concern the Ancient Mariner and his bitter lemon. Today Judge Elizabeth A. (“Tex”) Copeland is again exploring that “extraordinary method of discovery,” the taking of depositions of expert witnesses. The case is Anadarko Petroleum Corporation, et al., Docket No. 23018-18, filed 5/31/22.

Why depositions of experts should be extraordinary in The Glasshouse on Second Street, NW, still mystifies me even after all these years. The method is not extraordinary anywhere else. Every summer student law clerk learns that as soon as your pre-answer motions get tossed, you bang out your answer, first demand for bill of particulars, first notices to produce and to admit, interrogatories, and deposition notices. In every court, that is, except United States Tax Court.

Before my Empire State colleagues call me out, I am aware of Our Fair State’s special rules for special proceedings, and for expert witnesses, but I need not burden my international readers with that.

Judge Tex Copeland: “Our Court allows depositions of experts, but still treats them as ‘an extraordinary method of discovery.’ Rule 74(c)(1)(B). What this Division of the Court looks for in considering motions to depose is the general state of discovery, the stakes involved, and whether the depositions would materially aid the trial and possible settlement of the consolidated cases.

“The key fact here is that the stakes in this case involve a proposed deficiency that exceeds $850 million. The Court acknowledges the parties’ disagreements about how cooperative each has been in informal discovery, but in a case of this size there is bound to be toing-and-froing between two highly qualified teams of lawyers.” Order, at p. 5.

I’ll leave aside the particulars of this discovery jousting between “two highly-qualified teams of lawyers,” other than to note that one expert wild-carded in material from years outside the years at issue.

Unhappily, the clock has run out on formal commentary on Ch J Maurice B (“Mighty Mo”) Foley’s proposed Rule changes. “The door is shut; we may not look behind,” as a far better writer than I put it.

But why should allowing a routine discovery process vary among divisions in Tax Court?

If it be objected that the poor pro se, zeal for whom caused the Harvard Low Income Tax Clinic to heave a monumental monkey wrench into the entire IRS collection process, cannot afford either to depose or be deposed, then have a dollar cutoff. If you have to add a zero, as ex-Ch J L Paige (“Iron Fist”) Marvel suggested so long ago, then permit depositions only with leave of court. See my blogpost “Add A Zero,” 6/26/15.

Taishoff says why not use the Section 7623(b)(5) numbers? $200K gross income of petitioner for any year at issue, and the amount at issue for all years in the aggregate more than $2 million, adjusted for inflation. More than those, depositions on demand if Branerton play-nice doesn’t work.

Below that, leave of court only. Whatever numbers you like, Rule 74 needs an overhaul.

As this day is a public holiday in the District of Columbia and everywhere else in the United States of America, US Tax Court is closed, and so am I.

The holiday began, my source tells me, following the Civil War, to decorate the graves of those who died fighting for our country. The name was changed a century later. The purpose was not.

I shall not expatiate upon what the day has become, lest this blogpost become unfit for family reading.

I shall once again note that all gave some, some gave all, but no one has the right to give nothing.

No, not a remake of Robert Graves’ 1929 succès de scandale. I note that, with the Memorial Day holiday approaching, the expiration of term of service of Ch J Maurice B (“Mighty Mo”) Foley is upon us.

His record of reform and guidance is a model. I’m sure I’m joined by the Tax Court Bar and Tax Court barflies in congratulating Ch J. Mighty Mo and thanking him for his efforts. After a distinguished academic, governmental, and judicial administrative career, let us welcome him back to the trial bench.

He can then rest from such labors as Yolanda M. Johnson-Bryant, Dockets Nos. 76784-22, 11674-22, filed 5/27/22. He deserves a break from guiding Ch Clk Servoss and her minions through the following.

” ORDERED that the Clerk of the Court shall copy pages two and three of the Petition, filed May 24, 2022, at Docket No. 11674-22 and shall file them as of the date of service of this Order as petitioner’s First Amended Petition at Docket No. 7674-22.

” ORDERED that the Clerk of the Court shall copy page four of the Petition, filed May 24, 2022, at Docket No. 11674-22 and shall file it of the date of service of this Order in the correspondence file at Docket No. 7674-22 as petitioner’s Statement of Taxpayer Identification Number.

” ORDERED that the Clerk of the Court shall copy page six of the Petition, filed May 24, 2022, at Docket No. 11674-22 and shall file it as of the date of service of this Order as petitioner’s Motion to Proceed Remotely at Docket No. 7674-22.” Order, at pp. 1-2.

A client who called me back into service after his relationship with my successor proved less than salutary, finally told me “Lew, you’re turning into a curmudgeon.” Well, if my colleague Peter Reilly, CPA, thinks I’m a “grumpy old man,” then maybe they’re both right.

So if the cliché fits, I’ll wear it.

So, fair warning having been given, I can play the grammar police.

Judge Elizabeth A. (“Tex”) Copeland confounds the possessive adjective with the contraction, letting the apostrophe (a fossil that we should long ago have discarded) in where it shouldn’t be.

“…particular attention to Petitioner’s request that the Court vacate it’s January 25, 2022 Order granting Respondent’s Motion for Entry of Order that Undenied Allegations be Deemed Admitted Pursuant to Rule 37(c).” Order, at p. 1. (Emphasis added).

No, Judge, you mean “the Court vacate its January 25, 2022 Order.” You refer to the Court’s order, that is, the order of the Court, not “it is January 25, 2022 Order,” which makes no sense.

Again I apply for the post of official proofreader.

Oh yes, the order is Raphael Bershadsky, Docket No. 14021-20, filed 5/27/22.

Law office miscues are a fact of life. I remember a couple I’ve done that bring a cold sweat decades later. So please, reader, don’t think I’m indulging in schadenfreude when I tell the tale of Angela M. Hammock, Docket No. 5290-18L, filed 5/26/22, as related off the bench by Judge Ronald L. (“Ingenuity”) Buch.

Angela inherited her parents’ business. A close family friend who’d invested with her parents took over running it. The friend not only helped Angela, but helped himself.  Apparently to the company’s money. Angela hired a CFO, who discovers the family friend’s defalcations. So of course TFRPs rain down. Angela as treasurer and occasional checksigner is in the IRS crosshairs, so she retains counsel. The CFO lawyers up with the same firm as Angela.

Judge Ingenuity Buch takes up the story.

“…her counsel faxed the revenue officer a Form 2848, Power of Attorney and Declaration of Representative. Upon receipt of the Form 2848, the revenue officer notified one of Ms. Hammock’s lawyers that the form was not processible because it was not completed correctly. The form did not identify the tax form number or tax period for which counsel was representing Ms. Hammock. In response, Ms. Hammock’s lawyers submitted a corrected Form 2848 the following day, but that form was not signed by Ms. Hammock. Instead, the new form relied on Ms. Hammock’s…signature from the previous Form 2848. The revenue officer rejected the new Form 2848 for that reason. The revenue officer’s contemporaneous notes…indicate that Ms. Hammock’s lawyers were still trying to obtain Ms.  Hammock’s signature on the new form from her. The record does not show any further activity regarding securing or submitting a corrected or properly signed Form 2848 for Ms. Hammock until after the revenue officer closed the examination.

“In the meantime, a parallel process was taking place with respect to Mr. L, the CFO of [business]. He was represented by the same lawyers as Ms. Hammock. His initial Form 2848 was rejected for similar reasons; but his updated form was accepted.” Transcript, at pp. 6-7. (Name omitted).

So counsel never got the Letter 1153 for Angela, and couldn’t represent her at Appeals, as they hadn’t a proper POA. Angela claims she never got the Letter 1153, as she was out of town at a rodeo when it arrived. Except IRS has USPS certified mail receipts showing the Letter 1153 was delivered to an individual at Angela’s  last known address.

Nonreceipt by Representative doesn’t defeat a prior opportunity lockout, and Angela doesn’t have the interception evidence that saved Antonio Lepore. See my blogpost “You Didn’t Get It – Part Deux,” 5/31/13 for Antonio’s story.

Angela’s lawyers strive mightily, but the evidence is against them, and Angela has BoP and loses.

I doubt I’ll ever know what happened in Angela’s lawyers’ office, either during or after. But I don’t doubt it will not be pretty.

Takeaway is obvious: POAs are essential. Fill them out with care. Make sure each gets to the right IRS service center timely, and into the Central Authorization File. Get the CAF number inscribed on the file.

Unless thine is the power, thine will be neither the kingdom nor the glory.

The late A. G. Linkletter would find The Glasshouse That Vic Built an endless source of josh, banter, and the jocose. Today Judge Albert G (“Scholar Al”) Lauber encounters yet another specimen of what makes blogging Tax Court “a medley of extemporanea.”

Ifeoma Ezekwo, Docket No. 15454-21P, filed 5/25/22, wants “…the IRS to “release[e] her full monthly disability payment to her and rush[] a check of $107,076.60 within the next 7 days.” Order, at p. 1.

Ya gotta admire Ifeoma. Not even the Jersey Boys would go for the cup off the tee from a parking lot two miles from the golf course.

Judge Scholar Al is benignly literal. This is a passport case. All Tax Court can do is tell State to return Ifeoma’s passport. If she wins, that is.

And if this were a CDP case, all Tax Court could do is enjoin collection if a timely petition were filed from a NOD. “But this is not a CDP case. And even if it were, we would lack authority to enjoin collection action because petitioner has supplied no evidence that a notice of determination has been issued to her, much less that she effected a timely appeal therefrom.” Order, at pp. 1-2.

We really need another Tax Court Judicial Conference, just to sit around and swap war stories. Perhaps Chief Judge Elect Kathleen (“TBS = The Big Shillelagh”) Kerrigan might consider convoking one when she takes office.

This formerly pejorative (not to say offensive and objectionable) phrase certainly does not apply to Martha L. Albrecht, T. C. Memo. 2022-53, filed 5/25/22. Martha did donate a substantial collection of Native American jewelry and artifacts to the Wheelwright Museum of the American Indian, as substantiated by a five-page deed of gift.

But the Wheelwright’s draftership falls short of the Section 170(f)(8)(B) contemporaneous written agreement standard. The deed does not say that no goods or services were provided by the Wheelwrights, although there’s no suggestion that there were. Nor does the deed state that there is no other agreement respecting the donation.

Judge Travis A. (“Tag”) Greaves plays the literalist here.

“Although the deed in this case provides that the donation was ‘unconditional and irrevocable,’ it continues that ‘all rights, titles and interests held by the donor in the property are included in the donation, unless otherwise stated in the Gift Agreement.’ (Emphasis added.) Thus, the terms of the deed were subject to a separate agreement, but the Wheelwright Museum did not provide petitioner with this document before the return was filed.” T. C. Memo. 2022-53, at pp. 4-5. (Footnote omitted, but it says that even though the parties stiped that Martha got nothing, that was after the fact, so it doesn’t help).

And that there never was a “Gift Agreement” doesn’t help either, because the deed says there was. Besides, the drafter of the deed made the rookie error of omitting an integration clause, which should say that this deed sets forth the entire agreement and understanding of the parties with respect to the subject matter hereof, and may not be varied otherwise than in writing and signed by the party against whom any variation is asserted.

“We appreciate what appears to have been a good faith attempt by petitioner to substantially comply with the Code by executing the deed with the Wheelwright Museum. Substantial compliance, unfortunately for petitioner, does not satisfy the strict requirements of section 170(f)(8)(B). See 15 W. 17th St. LLC, 147 T.C. at 562. Thus, for the reasons given above, petitioner is not entitled to a charitable contribution deduction with respect to the donation as the deed does not satisfy these requirements.” T. C. Memo. 2022-53, at pp. 5-6.

For the 15 West 17th St. LLC story, see my blogpost “Executive Nullification,” 12/22/16.

Note well, I characterized that case as “one of those overblown façade farragoes.” With the façade and conservation chicanery, currently rife, IRS is going scalphunting. Charities and donors beware: those deeds of gift need to be bulletproof.

I’ll wager an ale or two that the drafter of this deed is getting The Phone Call.

This coming October will mark Year Fifty-Three (count ’em, Fifty-Three) since I shouted the above-captioned under the “blue and staring” Southeast Asian sky.

If the foregoing is obscure, consider yourself lucky; I cannot further explicate, as this blog is meant for reading around the family circle.

I am sure Ch J Maurice B (“Mighty Mo”) Foley is too well-bred to shout anything like that, but I am also sure he shares the feeling, with a scant week to go before he hands over the Chieftainship to Chief Judge Elect Kathleen (“TBS = The Big Shillelagh”) Kerrigan.

So today his order in Darcy Mae Englert, Docket No. 3464-22, filed 5/25/22, reflects his vision of “a truce, then, to our labors” that is so soon to come.

Darcy Mae has favored Ch J Mighty Mo with correspondence, but perhaps same is a trifle opaque. So rather than attempt to reconstruct, or request clarification (which can only lead to further opacity), Ch J. Mighty Mo orders the following.

]” …to the extent there is a request in petitioner’s Letter…that the place of trial in this case be changed to Cheyenne, Wyoming, that request is denied. It is further ordered that, to the extent there is any other request for relief in petitioner’s Letter… that request is denied.” Order, at p. 1.

Time for a Change

A reminder that tomorrow is the deadline for comments to Ch J Maurice B (“Mighty Mo”) Foley’s proposed amendments to the Tax Court’s Rules of Practice and Procedure. So get those incisive and insightful thoughts down in electrons, and get them to Ch Clk Servoss by 4:00 p.m., local time in the Stateless City, tomorrow.

Today STJ Eunkyong (“Sidewalks of N’Yawk”) Choi has an essay on a why Rule 90(c ) needs amending, so that it has some teeth and stops being a gameplayer’s delight.

Y’all can read for yourselves STJ Eunkyong’s exegesis of the Rule’s current verbiage, but at close of play, all she can do is punt, after three (count ’em, three) years of artistic stalling by Lony Tap Gatwas, Docket No. 11575-17, filed 5/24/22.

Note I’m not faulting Lony’s trusty attorney, James R. Monroe, Esq.,, whom I’ve often praised in the past. See, e.g., my blogpost “‘When You’re Down and Out’ – Part Deux,” 6/28/16. If there’s a valid argument you can use to get your client off the hook, you must use it.

Here’s STJ Eunkyong’s take on her options, and IRS’.

“Rule 90(c) requires specificity as to a denial of a matter only if such matter is denied in part. The Rule does not prohibit a party from wholly denying a matter without specifying a reason for the denial. See Rule 90(c). A party may wholly deny a matter if the party believes that the matter presents a genuine issue of trial. See Id. However, such an outright denial is subject to Rule 90(g), which provides that if a party unjustifiably fails to admit the truth of a matter as requested, the party requesting the admission may apply to the Court for an Order imposing such sanction on the other party or the other party’s counsel as the Court may find appropriate. Id.; see also Rule 90(g).

“The only relief this Court may grant respondent is (1) deeming admitted the matters asserted in respondent’s First Request for Admissions, (2) ordering petitioner to serve an amended response to respondent’s First Request for Admissions, or (3)  making a final disposition of respondent’s motion at a later, more appropriate time.  Rule 90(e). Because petitioner’s Response to First Request for Admissions was timely,  and because Rule 90(c) does not prohibit a party from wholly denying a matter asserted in a request for admissions, we do not find petitioner’s responses insufficient.” Order, at p. 4.

Of course, IRS’ counsel has an out.

“However, based on the record before us, we do find that respondent may apply to the Court for an order pursuant to Rule 90(g).” Order, at p. 5.

But in the meantime, nothing happens.

Of course, since Lony got two years of the three aforesaid by asking the Court to wait until he got out of jail, it will be interesting to see if there are any preclusive effects that shoot down his denials in the judgment that sent him there.

And I must recommend reading IRS’ requested admissions; Lony is quite inventive.

Howbeit, Rule 90(c) needs overhauling. If the requested admissions are baseless, let the Court strike them. If the responses are unresponsive, let the petitioner (or respondent) amend, or be sanctioned.

But endless punting accomplishes nothing but provide fresh CLE fodder: Stall Your Case At Discovery.

No, not the basic combat orientation of my long-ago days; I remember none of it. But today Judge Christian N. (“Speedy”) Weiler utilizes the judicial equivalent in escaping from the clutches of 11 Cir’s Hewitt decision in Michael Davis & Amy L. Davis, Docket No. 14870-20, filed 5/23/22.

It’s the usual striking gold in GA boondocks. Mike and partner buy just shy of 10 acres for $6K and take a $2.51 million conservation write-off. Those hills must be alive with dilithium crystals; or something. And of course the conservation easement deed is the usual improvements-out, although there’s a subsequent correction deed putting them back in.

But the improvements themselves is what Judge Speedy Weiler grabs to escape Hewitt and evade IRS’ motion for summary J.

“Under the deed, [the partnership] reserves the right to make improvements to the property, including the right to construct trails and footpaths on the property, install signs and other marks, construct low impact amenities, maintain and manage the property to prevent erosion, and install picnic tables, benches, and the like.” Order, at p. 2.

My astute, battle-hardened readers will shout as one “Improvements de minimis!” And quote Oconee and Little Horse Creek.

Judge Speedy Weiler doesn’t know, but that’s enough to scupper IRS’ motion for summary J.

“In short, the property has no existing improvements, and the permitted future improvements appear to consist of modest use intended for conservation, recreational, and educational purposes. At trial, petitioners may be able to establish that these improvements (if built) would be unlikely to increase the property’s fair market value in a material way (if at all). If any increase in value attributable to improvements would be de minimis, petitioners could contend that the deed’s ‘donor improvements’ clause would not cause [501(c)(3)] to receive less than its proportionate share of the proceeds in the event the property was sold following judicial extinguishment of the easement.” Order, at p. 6.

Value of improvements is fact-specific, hence ill-suited to summary J.

But IRS’ Boss Hossery is sufficient to allow them summary J for chops…if they get that far.

Having turned their $6K investment into a $2.5 million tax write-off, I doubt Mike and partner will spend a whole lot on improvements.

There’s a T. C. Memo. today, Genecure, L.L.C., Frank Y. Tung, Tax Matters Partner, T. C. Memo. 2022-52, filed 5/23/22, but it’s indocumentado meets Tokarski, and IRS messing up the Boss Hossery. Not worth noting.