This will put you out on the diamond, but in Tax Court it will defeat summary J. Long Branch Investments, LLC,  Greencone Investments, LLC, Tax Matters Partner, Docket No. 12249-20, filed 6/7/22, are GA boondockers claiming a $13.83 million conservation easement, which draws a FPAA.

IRS plays the “perpetuity” gambit, baseline variation. IRS says “…because the condition of a natural resource (at or near the time of conveyance), with regard to which the deed of easement contained express restrictions, was not established through baseline documentation as required under Treasury Regulation §1.170A-14(g)(5)(i); consequently… the conservation purpose of the contribution was not ‘protected in perpetuity’ under section 170(h)(5)(A).” Order, at p. 1.

The Longbranchs play the Hewitt countergambit. “… Treasury Regulation § 1.170A-14(g)(5)(i) does not apply to the contribution at issue, and that even assuming arguendo that it did, Long Branch satisfied the regulation nonetheless. Greencone also challenged the substantive and procedural validity of Treasury Regulation § 1.170A-14(g)(5)(i) under Chevron, U.S.A., Inc. v. Nat. Res. Def. Council,  Inc., 467 U.S. 837 (1984), and the Administrative Procedure Act (APA), respectively.” Order, at pp. 1-2 (Footnote omitted, but it’s the Hewitt you-didn’t-address-the-comments mainline play.)

The resource to be protected is the water on the property, which cannot be defiled, diverted, or discombobulated. Except “(T)he deed also reserves certain rights to Long Branch, including inter alia: (1) vegetation management, which includes planting and removing vegetation and prescribed burning; (2) forest management, which includes herbicide application and prescribed burning; (3) maintenance of existing roads and construction of new roads under certain conditions; (4) building and maintenance of a residential dwelling and associated structures, such as garages, sheds, pools, and gardens; and (5) construction, maintenance, and replacement of utilities, including power, water, and septic systems to support approved structures or uses on the Property.” Order, at p. 2.

Of course, the 501(c)(3) protector and defender must be notified of all, and approve of some, proposed exercises of the Longbranchs’ rights.

Reg § 1.170A-14(g)(5)(i) requires baseline documentation where reserved activities may impair the conservation of interests associated with the property. But could these reserved activities do so?

Judge Courtney D (“CD”) Jones isn’t sure, so let’s have a trial. And let’s duck the Hewitt counterattack while we’re at it.

“We conclude that this issue is not appropriate for summary adjudication.  Although respondent appropriately points to the deed’s express restrictions with respect to the Property’s water resources, his argument rests on the assumption that the exercise of Long Branch’s reserved rights ‘may impair the conservation interests associated with the property.’ See Treas. Reg. § 1.170A-14(g)(5)(i). Whether the exercise of any reserved right could impair the easement’s conservation purposes is a disputed question of fact. Because resolution of this question—which the parties are free to otherwise resolve via stipulation—will determine whether the baseline documentation requirements apply to the contribution at issue, we also conclude that it is inappropriate to consider at this time Greencone’s challenge to the substantive and procedural validity of Treasury Regulation § 1.170A-14(g)(5)(i) under Chevron and the APA, respectively.” Order, at p. 4.

Stipulate, don’t capitulate.

Who’d Ha’ Thunk It?

Mongolia?? Seriously chaps, Mongolia?!

It’s well-known I spent years chasing after a single reader in Bolivia, and finally got one this year. But I never wasted time or electrons trying to find a reader in Mongolia; while I could find that country on a map, I could never imagine any resident or denizen thereof, or even a sojourner, having the slightest interest in this my blog.

But someone there did. Today. She or he boldly went where no one has gone before.

Beam ’em up, Scotty.

Judge Vasquez affords Section 6015(f) innocent spousery (pre-6015(e)(7) stick-to-the-admin-recorditis) to Jan E. Pocock, T. C. Memo. 2022-55, filed 6/6/22.

But it’s a close call. Judge Vasquez has to go through 40-plus years of family history, bringing to mind Tolstoy’s famous opening: “Happy families are all alike; every unhappy family is unhappy in its own way.”

I urge all y’all to read the whole opinion, all twenty-seven (count ’em, twenty-seven) pages. We have the Vietnam veteran with PTSD, his wife who won’t seek divorce on religious grounds, her ailing mother, her abused children (now adults), and her borderline awareness of her husband’s taxdodging (and he looted his mother’ estate, from which he was removed as personal representative).

IRS has an interesting gambit that they play too late, trying to use the State fraudulent conveyances law to get back money and the family home that the husband gave the wife pre-audit; Judge Vasquez blows it off when it comes up on Simultaneously Answering Brief.

Anyway, by the time the CDP is decided both Jan and husband are in CNC. And he’s in counseling, and they’re both broke.

Judge Vasquez has a full-dress trial, with Jan and children testifying, and IRS Special Agent testifying for IRS. Jan is listed as pro se, but it sure looks like she was well-coached.

Now my astute readers will shoot out their lips and wag their heads, saying. “Yeah, but Section 6015(e)(7) does away with innocent spousery trials; whatever Jan produced on the trial wasn’t newly-discovered or previously unavailable, and since it wasn’t in the admin record (else why produce it at trial?), why do we care about this today?”

Because both Judge Vasquez and Count Tolstoy have a practice tip for y’all.

Whatever you’d produce on a trial like this, produce it at the CDP. CDP is the new trial. If the SO or AO refuses to let in your evidence, note your proffer and their refusal with particularity and include your statement of objections in the admin record; and at Tax Court, demand that the admin record be resettled to put in what was excluded by the SO or AO. And if that happens to be testimony, well, let’s take it now.

Remember, “every unhappy family is unhappy in its own way.” Just make sure the unhappy family isn’t unhappy with your representation.

Edited to add, 6/7/22: If the same astute readers object that all that will happen, if the admin record is successfully challenged,  is a remand, then the issue of witness credibility must be determined by the Judge. The SO or AO should not be the sole trier of fact. Remember Judge Vasquez’s famous dictum:”‘As a trier of fact, it is our duty to listen to the testimony, observe the demeanor of the witnesses, weigh the evidence, and determine what we believe.’ Kropp v. Commissioner, T.C. Memo. 2000-148, 2000 Tax Ct. Memo LEXIS 178, at *9. In Diaz v.Commissioner, 58 T.C. 560, 564 (1972), we observed that the process of distilling truth from the testimony of witnesses, whose demeanor we observe and whose credibility we evaluate, ‘is the daily grist of judicial life.’” T. C. Memo. 2022-55, at p. 15.

Everybody’s testimony looks like everybody else’s on paper; nobody’s testimony looks the same as anybody else’s on the stand.

If You Think You Are

As I’ve said before, my grasp of the Italian language is extremely limited; see my blogpost “Che Si Firma È Perdutto,” 2/17/17. Wherefore I beg pardon for my attempt at Englishing the title of Luigi (“Great Name!”) Pirandello’s 1917 proto-Surrealist drama.

But it does furnish me with another soapbox for my denunciation of Boechler and the Supremes’ endeavor “to bring some discipline to use of the jurisdictional label.” Boechler, at p. 3.

Jennifer Wagner’s petition was filed a mere 1,754 days after issuance of the SNOD, which petition she now wishes to dismiss without prejudice.

Well, why not? With equitable tolling and the Supremes’ indulgence, she can come back in another four years and try again. The 90-150 day cutoff in Section 6213(a) is now, like Mr. Depp’s pirates’ Code, “guidelines…aspirational goals.”

While Jennifer says nothing about her four-year delay, “…citing Internal Revenue Manual 35.8.1.3.1 (Aug. 15, 2019) (we note that petitioner incorrectly refers to this as part of the Internal Revenue Code)  and Fed. R. Civ. P. 41(a)(2), petitioner requests that the Court dismiss this case without prejudice because ‘this Court does not have to make a decision regarding the deficiency and the Commissioner will not suffer any prejudice.’” Order, at p. 1.

While Jennifer moves the IRM into the IRC, she misses Section 7459(d), which says that when a petition is tossed otherwise than for jurisdiction, IRS wins whatever they asked for in the SNOD.

Judge Tamara Ashford is appropriately chastened by the High Court’s pronunciamento.

“In the instant deficiency case, it would be helpful for the Court to hear from petitioner regarding the aforementioned two issues that have not been addressed in her motion.” Order, at p. 2.

It seems Jennifer has counsel. l was unable to reach him directly at time of publication, but will attempt to reach him for comment by email. I will publish any on-the-record response unedited and in full. But the tactic is interesting, and I crave enlightenment.

Btw, the case is Jennifer Wagner, Docket No. 16891-21, filed 6/3/22.

The House That Vic Built, In The City of the Stateless, known as and by street number 400 Second Street, North by Northwest, reopens its doors to all and sundry having business before this honourable Court, on Monday, June 6, 2022, at 0800 hours local time.

Let all draw nigh and give ye good attention, and ye all may be heard (maybe), the Hon. Kathleen (“TBS = The Big Shillelagh”) Kerrigan presiding.

Here’s the skinny: https://ustaxcourt.gov/resources/press/06032022.pdf

That’s the title of the case; conveniently, it’s also the title of this blogpost. The case is W.T.F., Inc., Docket No. 2833-19, filed 6/2/22. It’s a handy springboard to a further rant anent Boechler and the Supremes’ idea of bringing rationality to Tax Court’s jurisdictional prerequisites.

Brief timeline: Petition filed 2/19. IRS moves to toss for lack of prosecution, 11/20. On return of OSC, W.T.F.’s representative (title unstated) shows on second call, and case continued. Although W.T.F. filed an ownership disclosure four (count ’em, four) days later, they filed nothing else then or since. So special remote trial set for 8/21. Again W.T.F.’s rep shows, IRS’ counsel moves to toss, but nothing happens. Meantime, IRS’ counsel has filed four (count ’em, four) status reports.

So Judge Elizabeth Crewson Paris orders that W. T. F. “…shall file a written response why this case should not be dismissed and decision entered against petitioner for the amounts and years set forth in respondent’s motion.” Order, at p. 1.

It hardly matters if equitable tolling is now permitted in deficiency cases, so that assessment and collection can be stayed months after the 90-150 day statutory deadline has passed, per Section 6213(a).

Here we have a stay of assessment and collection since 2/19, a mere three-and-a-quarter years, during which petitioner has filed one (count it, one) single-page form and a change of address.

I shall again note that, in Our Fair State’s courts, to get such a stay of proceedings one must show a meritorious claim, and may be required to post a bond.

Oh yes, response to Judge Elizabeth Crewson Paris’ latest order is due in ten days. Any takers for a bet on what happens?

Brian Perkins, Docket No. 1990-22, filed 6/1/22, gets what we former stamp collectors prized, a first day of issue.

Even though tossed for failure to ante the sixty George big blind, his is the first order to bear the signature of Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan as Chief Judge.

A collector’s item.

They stand, in my imagination this morning, “in ‘ollow square” next the reflecting pool. The Judges, Senior Judges, and STJs, with their law clerks deferentially a pace behind. The hardlaboring clerks and flailing datestampers form another side, with Ch Clk Servoss at their head. Maintenance and service personnel, the invisible hands who bring the Glasshouse on Second Street, NW, to life each day, stand in the sunlight with the “gear and tackle and trim” of their several trades held proudly. And the staff of the Judges’ Cafeteria, with their banners proclaiming cups coffee, pieces pie, and slices pizza (hi, Judge Holmes) complete the square.

Ch J Maurice B (“Mighty Mo”) Foley, solemn but affable as always, presents the Gavel of Chieftainship to Ch J Elect Kathleen (“TBS = The Big Shillelagh”) Kerrigan. They exchange a formal handshake.

Then off to the buffet table and coffee wagon for the reception.