Attorney-at-Law

MR. REILLY’S CONUNDRUM

In Uncategorized on 11/28/2022 at 16:39

As there is neither opinion nor order from United States Tax Court worthy of comment today, I withdraw my pass from a request from my colleague Peter Reilly, CPA. Mr. Reilly, as always manifests “the cool clear eyes of a seeker of wisdom and truth,” as Mr. Frank Loesser put it. During this Thanksgiving weekend, Mr. Reilly suggested that it would “(B)e great if you give the Taishoff treatment to that opinion.  It has a lot of interesting elements to it.”

“That opinion” is, of course, the hallowed Cohan v. Com’r, 11 B.T.A. 743 (1928), re’d in part 39 F. 2d 540 (2 Cir, 1930).. George M., theatrical legend whose graven image overlooks the cut-rate ticket outlet at 48th & Broadway on this Minor Outlying Island off the Coast of North America, starred in this epic. Judge Learned Hand’s famous suggestion, which later grew into a mandate less variable than the laws of the Medes and the Persians, in Cohan v. Com’r, 39 F. 2d 540 (2 Cir, 1930), at pp. 543-544 is, my sources tell me, one of the ten most-cited decisions.

“Absolute certainty in such matters is usually impossible and is not necessary; the Board should make as close an approximation as it can, bearing heavily if it chooses upon the taxpayer whose inexactitude is of his own making.”

OK, Mr. Reilly, my unhallowed hands shall now disturb the sacred Sinaiatical pronouncement; the country’s probably done for anyway.

Judge Arundell at the Board (of Tax Appeals, Tax Court’s forebear) found some seven (count ’em, seven) issues upon which to rule. T&E, advertising, and excise taxes, which George M.’s inexactitude gave rise to the famous formula hereinabove set forth, is only one.

There was the famous family partnership between George and Mom, which both Judges Arundell and Hand blew off as an assignment of income. George’s attempt to characterize a gift of the cash generated from certain royalties as an assignment of the right to receive the royalties failed at least as to a one-third share.

George dropped some annuities, and the losses he took survived. George’s short year manoeuver worked. A loan to George M’s former business partner was just that, and not deductible.

But what about the remand? What did the Board allow George M. on the T&E, advertising and excise taxes? Mr. Reilly would like to know. But Google is silent.

The answer lies, I suspect, in the archives of the old B.T.A. But how to access them? Can the Tax Court Copycats work their three-buck magic?

Suggestions welcome.

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