In Uncategorized on 01/05/2023 at 17:54

XC Foundation, T.C. Memo. 2023-3, filed 1/5/22, found its 503(c)dom yanked retro to 1/1/2016. So XC petitioned, as simultaneously its former CEO and former Secretary found themselves looking at Section 4941 excise self-dealing taxes.

Meanwhile, the CA Franchise Tax Board, like an even more Exalted Authority, has its version of a winnowing fork and gave XC the Matthew 3:12 treatment. So IRS answers “no jurisdiction, because XC the non-exempt is also XC the non-existent.” No powers, per CA law.

XC’s trusty attorney says “but XC signed a Form 872 SOL extender, which says we keep appeal rights.” Judge Albert G (“Scholar Al”) Lauber says “(P)etitioner errs in contending that this statement in Form 872 preserves its right to petition this Court. The ‘appeal rights’ to which Form 872 refers are the rights to administrative appeal within the IRS, not the taxpayer’s ability to secure judicial review. An IRS Form cannot define this Court’s jurisdiction. In any event, Form 872 preserves only those appeal rights to which the taxpayer ‘would otherwise be entitled.’ A corporation whose powers have been suspended under State law is not ‘entitled’ to commence litigation in this Court.” Order, at pp. 4-5.

Nowise daunted, XC’s trusty attorney claims keeping out XC increases the litigation burden on former CEO and former Sec’y.

Hard lines, says Judge Scholar Al. “… any litigation burden a party may incur has nothing to do with our jurisdiction.” Order, at p. 5.

I was about to award XC’s trusty attorney a Taishoff “Good Try,” but she blew it by going a bridge too far. She attacks Rule 60, that says corporate status is determined by State law.

“Finally, petitioner contends that Rule 60 is unconstitutional and violates its rights to procedural due process, equal protection, and to the protection against cruel and unusual punishment. These arguments are frivolous, and we decline to consider them further. See Wnuck v. Commissioner, 136 T.C. 498 (2011); Aldrich v. Commissioner, T.C. Memo. 2013-201, 106 T.C.M. (CCH) 192, 194 (citing Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984)).” Order, at p. 5.

Yesterday, I wondered why Judge Alina I. (“AIM”) Marshall treated us to “somber reasoning and copious citation of precedent” when ” a simple cite to Crain and Wnuck would be enough for us professionals.” Judge Scholar Al got it right.


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