Attorney-at-Law

JUDGE HALPERN’S CONUNDRUMS – PART DEUX

In Uncategorized on 08/11/2022 at 00:38

Way back in 2018, I said in the case of Brian H. McClane, a pro se confronted with a bunch Judge Halpern’s conundrums (hi, Judge Holmes), “I can only commend Judge Big Jim for sending Brian H. to a LITC. I doubt Brian H. is prepared to deal with Judge Big Jim’s conundrums on his own.” See my blogpost “Judge Halpern’s Conundrums,” 3/13/18.

Chaps, you ain’t seen nuthin’ yet! Judge James S (“Big Jim”) Halpern has uncorked a sockdologer, swangdangler monsterpiece, in seven (count ’em, seven) pages of closely-wrought, artfully-crafted, lapidary prose, in YA Global Investments LP, F.K.A. Cornell Capital Partners LP, et al., Docket No. 14546-15, filed 8/10/22.

The issue seems straightforward enough: can YA write off an interest receivable deemed uncollectable? Somehow this never got dealt with on the trial two years back, and despite extensive briefing, Judge Big Jim has some questions.

Does he ever! Try this: “a. Do petitioners contend that YA Global’s financial reporting
determines whether accrued interest receivable is an asset separate from the underlying debentures for Federal income tax purposes? If so, on what authority do petitioners rely for that proposition?

“b. Can petitioners provide further explanation of their reliance on Treasury Regulation § 1.166-6(a)(2)? That regulation, again, addresses the treatment of mortgage debt after a foreclosure sale. How is that regulation relevant to YA Global’s circumstances? Do petitioners interpret the regulation as establishing a more general principle that supports their position? If so, what is that principle?

“c. Similarly, how are Revenue Rulings 81-18 and 2007-32 relevant to YA Global’s circumstances? Each of those rulings involved a federally regulated financial institution. The applicable regulatory standards required the write-off of past due interest. And under tax regulations that applied specifically to regulated financial institutions, each institution was allowed a corresponding tax deduction for its write-off, for regulatory purposes, of past due interest. Again, do petitioners derive from those rulings some broader principle that supports their position?” Order, at p. 4.

There’s much more, and there’s going to be a Zoomie on 8/31/22, when the parties get to answer the questions. So lay in the popcorn and the Anacin, and tune in at 2 p.m.

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