Archive for February, 2023|Monthly archive page


In Uncategorized on 02/28/2023 at 18:11

That’s the story of Estate of Richard D. Spizzirri, Deceased, John J. McAtee, Jr., Personal Representative, T. C. Memo. 2023-25, filed 2/28/23. Rich was a lawyer and biotechie who built up a gross estate north of $81 million, while having three wives, four kids with Wife One, and two kids, each with a different Mom while estranged from Wife Four, with whom he had an expensive, extensive, and much-amended Prenup, dealing with Rich’s Manhattan penthouse, Aspen house, Miami condo (which he owned with yet another lady), and Hamptons hangout.

I can’t say Judge Patrick J (“Scholar Pat”) is envious, but he carefully catalogues all the ladies to whom Rich paid heavy-duty cash, with not a 1099-MISC nor W-2 in sight, making all same gifts and thus part of estate.

Ol’ Rich was quite a lad. Until the end. Whereupon follows litigation with Wife Four in CO (Rich was a wee bit casual in complying with Prenup), his ex’r’s second request for extension to file Form 706 hits Section 6081(a), so late filing add-on; as estate isn’t individual, no Boss Hossery needed.

The various payments to Wife Four and her three (count ’em, three) kids from previous marriage fail for want of consideration. Waiving support is good consideration, but Section 2043(b) prevents turning taxable gifts into support obligations. The Prenup carefully divides all the various rights that Wife Four waives, and Judge Scholar Pat is not going to smoosh them together and redraft the Prenup. 

 “The Estate responds that the claims at issue were supported by [Wife Four]’s waivers of spousal support and equitable distribution, asserting that the value of the waivers exceeded the value of the claims at issue. The Prenup refutes the Estate’s argument, expressly specifying the property that [Wife Four] would receive in the event of a dissolution of marriage ‘in consideration of her relinquishment of any rights she has or might have at such time to maintenance or support and any claims she has or might have to equitable distribution.’ The property promised to [Wife Four] in Article V in consideration for the waiver of her spousal rights in the case of divorce is distinct from the property settled on [Wife Four] and her children in Article IV (as modified) in exchange for inheritance rights. We see no reason to redraft the parties’ agreement to reallocate the consideration that they specified for the relinquishment of certain rights.” T. C. Memo. 2023-25, at p. 15. 

Testimony for what the various ladies did for the cash they got isn’t enough for Judge Scholar Pat.

The ex’r couldn’t establish that repairing the decks at Aspen was necessary to preserve structural integrity (hence deductible), and not to fix up the house for sale (not deductible).

As for the late filing add-on, “(T)he Estate finally contends that the net amount due on the date prescribed for payment was zero because it remitted an overpayment before the filing deadline and that the penalty should be based on that amount. The penalty for the late filing of estate tax returns applies, however, even when full payment is made on time.” T. C. Memo. 2023-25, at p. 19. But IRS goofed on the deficiency number, omitting a timely payment the ex’r made, so the add-on gets reduced.

Now we tax geeks get the rap that we’re all about the numbers, recordkeeping, OCD types. But I can’t imagine even the geekiest among us handing out a 1099 after.



In Uncategorized on 02/28/2023 at 16:37

The reputed dying words of a Manhattan real estate dynast furnish forth the caption for Judge Tamara Ashford’s deep-dive into valuation of a closely-held family Sub S, owner of the largest residence in America still in the beneficial hands of the original owners’ family, Biltmore, in Asheville, NC, the home of the Vanderbilts, now a Gilded Age Disneyland.

This is the story of Estate of William A.V. Cecil, Sr., Donor, Deceased, William A.V. Cecil, Jr., Co-Executor, T. C. Memo. 2023-24, filed 2/28/23, conjoined with estate of Bill, Sr.’s deceased spouse Mary.

The late Bill, Sr., and the late Mary, ere they became the late Bill, Sr., and the late Mary, split-gifted (Section 2513(a)) a bunch voting and nonvoting stock (hi, Judge Holmes) in the family Sub S to trusts for the grandkids, and filed the requisite Forms 709. IRS responded with a $13 million SNOD.

Judge Ashford, clearly a connoisseur of familial lockdowns, spends five (count ’em, five) pages of her opinion describing how the Vanderbilt heirs tied up, locked up, barricaded, and otherwise fortified the family patrimony against ne’er-do-well descendants, and predatory spouses current and ex; held semi-annual meetings to inculcate even in eight-year-old infants the duty to protect, preserve, and defend, etc.; entered into voting trusts, amended certificate of incorporation and by-laws…you get the picture.  T. C. Memo. 2023-24, at pp. 5-9.

With closely-held stock, you get valuations. Oh boy, do you get valuations! After IRS and Jr. put in two experts each, Judge Ashford swims through an alphabet soup of appraisal methods. IRS has one expert solely for the art works and collectibles. But at close of play, IRS’ lead expert has the best valuation, without the tax affect of Sub S vs C Corp (of which more hereinbelow) and without lack of control discount, although his lack of control number is taken into account. Jr’s lead appraiser furnishes the discounts for lack of marketability for each class and block of shares.

I thought Tax Court put paid to tax affect years ago. That’s discounting the worth of Sub S stock (no tax at entity level) to match with C Corp stock (entity level tax, then tax on distribution at shareholder level) for comparables. After citing all the cases that said so, Judge Ashford looks back to Judge Holmes’ blockbuster opinion in Estate of Jackson to sidestep the question, as Judge Holmes didn’t slam the door. And here, both IRS’ lead and Jr.’s lead opine that tax affect must play a role.

“As we observed in Estate of Jackson, there is not a total bar against the use of tax affecting when the circumstances call for it. Now given that each side’s experts… totally agree that tax affecting should be taken into account to value the subject stock, and experts on both sides agree on the specific method that we should employ to take that principle into account, we conclude that the circumstances of these cases require our application of tax affecting. While Messrs. [IRS] and [Jr.] do not agree on the specific rate that applies here to implement tax affecting (Mr. [IRS] determined the rate to be 24.6% while Mr. [Jr.] determined the rate to be 17.6%), we consider it appropriate on the basis of the record (and relying on Mr. [Jr.]’s opinion in this regard) to set that rate at 17.6%. We emphasize, however, that while we are applying tax affecting here, given the unique setting at hand, we are not necessarily holding that tax affecting is always, or even more often than not, a proper consideration for valuing an S corporation.” T. C. Memo. 2023-24, at p. 27. (Names omitted).

For Estate of Jackson, see my blogpost “The Opinion You’ve All Been Waiting For,” 5/3/21.


In Uncategorized on 02/27/2023 at 16:52

There’s a Lawsuit – Part Deux

And you can say that again! This one lasted ten (count ’em, ten) years, in Surrogate’s Nassau. This is the celebrated case of Estate of Pearl B. Kalikow, Deceased, Eugene Shalik, Executor, and Edward M. Kalikow and Laurie K. Platt, Limited Administrators, T. C. Memo. 2023-21, filed 2/27/23.

For my readers outside the two outlying islands and scrap of mainland North America that comprise Our Fair City, the late Pearl was the relict of an ultra-high real estate roller, and the life tenant of a QTIP holding interests in ten (count ’em, ten) high-class apartment buildings and some cash and stocks. The late Pearl was entitled to net income for life, with trustees having power to invade. Pearl’s QTIP was fully invested in the FLP set up to manage the properties.

Needless to say, we’re not dealing with pennies here. The battle royal involves Pearl’s estate claiming the trustees short-changed the late Pearl to the extent of $16 million in undistributed income, which was going to charity through her estate. The limited ex’rs claim the trustees overpaid $3 million. They finally settled in Nassau Surrogate’s for $9 million in income, estate administration commissions payable to ex’rs both general and limited, legals and accountings.

So what was in Pearl’s estate at DoD?

The ex’rs and the trustees file dueling Forms 706.

IRS says the $9 million settlement is included in Pearl’s estate. The limited ex’rs say the estate should be reduced by $4 million of undistributed income (stipulated in the settlement between trustees and ex’rs in Nassau Surrogate’s), and the rest as estate administration deductions.

We know Section 2044 loads the whole worth of a QTIP in second-to-die’s estate, even though s/he only had a life estate; that pays for first-to-die getting the trust corpus out of her/his estate. And the limited ex’rs and IRS stipulated that the worth of Pearl’s estate’s interest in the FLP (which was the trust’s biggest asset) was $54 million. But the limited ex’rs want to exclude the $4 million.

Ex-Ch J Michael B (“Iron Mike”) Thornton won’t wear it.

“We are unpersuaded. Having stipulated that the relevant value of the [QTIP] Trust’s [FLP] partnership interest was $54,492,712, the limited administrators cannot successfully argue for some lesser value of this asset on account of the undistributed income payment liability. In any event, the settlement agreement imposes the liability for the settlement payment jointly and severally upon the [QTIP] Trust, the Article Fourth Trust, and the Article Fifth Trust (the latter two trusts having been created by decedent’s husband’s will for the benefit of [son and daughter] to receive the residue of the [QTIP] Trust after decedent’s death). The liability for the settlement payment does not run to [FLP]. Consequently, there is no basis to conclude that this liability would affect the date-of-death fair market value of the [QTIP] Trust’s [FLP] partnership interest, i.e., the liability would not affect the price of this partnership interest as determined between a hypothetical willing buyer and seller as of the date of decedent’s death.” T. C. Memo. 2023-21, at pp.10-11. (Footnotes omitted).

As for the claimed administration deductions, those apply only when the estate is defending claims, not bringing them.

“The parties devote much of their arguments to the question of whether the various components of the agreed-upon settlement payment meet the limitations on deductibility as set forth in Treasury Regulation § 20.2053-8(b). These arguments are misdirected. The limitations on deductibility set forth in these regulations do not apply with respect to claims in favor of the estate that are includible in the decedent’s gross estate under section 2031. The obligation of the [QTIP] Trust to make the agreed-upon settlement payment to the estate does not give rise to any deduction by the estate. Rather,  the estate’s claim against the [QTIP] Trust is itself property to be included in the gross estate. Even if we were to assume, for the sake of argument and in the absence of any evidence in this regard, that the estate actually incurred the fees and commissions specified as components of the agreed-upon settlement payment, reimbursement of these expenses under the settlement agreement would preclude any deduction by the estate. See Treas. Reg. § 20.2053-4(d)(3).” T. C. Memo. 2023-21, at p. 13.

But IRS did concede a deduction of  $800K in paying out commissions, which gives ex-Ch J Iron Mike a SMH footnote.  “Without expressing any view about the legal correctness of respondent’s concession, we accept it in the interests of judicial economy. See Liljeberg v. Commissioner, 148 T.C. 83, 97 (2017) (“In practice, the Court will accept concessions of law in the interest of judicial economy unless justice requires otherwise.”), aff’d, 907 F.3d 623 (D.C. Cir. 2018). T. C. Memo. 2023-21, at p. 14, footnote 19.

For Liljeberg, see my blogpost “At Home Abroad – Part Deux,” 3/16/17.


In Uncategorized on 02/27/2023 at 15:46

Judge Ronald L (“Ingenuity”) Buch uses some ingenuity when applying the most-quoted approximation case of them all.

Kevin B. Cheam and Julie Lim, T. C. Memo. 2023-23, filed 2/27/23, ran a supermarket, but their records were almost nonexistent, even though they had five (count ’em, five) years to come up with them, T. C. Memo. 2023-23, at p. 4. IRS finally allows them their MoneyGram payouts and their Sched Cs on the trial, but for two (count ’em, two) of the years at issue, they have nothing to substantiate cost of goods sold. Their trusty preparer for those years is AWOL.

But to the rescue comes social worker and part-time tax preparer, whom I’ll call Taz. Taz prepared the Year Three return, and did keep records of items that could be included in COGS Although his spreadsheet showing same had some sketchy elements, which Judge Ingenuity Buch discards, the rest is reliable enough to be going on with.

“The [Year Three] spreadsheet is reliable. [Taz] assisted with …Supermarket’s bookkeeping and accounting for 2016 and prepared the [Year Three] return. Using the Year Three] spreadsheet, he kept track of monthly amounts paid to various vendors, which he determined from invoices and check registers. The total amount paid to vendors in the [Year Three] spreadsheet equals the cost of goods sold reported on the [Year Three] return.” T. C. Memo. 2023-23, at p. 5.

Spreadsheets prepared by Taz for Years One and Two are unreliable because he wasn’t on the job for those years and Kev and Julie have no back- ups.

Not to worry, Judge Ingenuity Buch is on the case.

“…given the nature of their business, it is clear that Mr. Cheam and Ms. Lim incurred costs of goods sold greater than zero, as determined by the Commissioner. Because the evidence for [Year Three] is reliable, we will supply an estimate for [Years One and Two] based on a ratio calculated from [Year Three] data. We have used percentages to estimate a taxpayer’s cost of goods sold, and will do so here. For [Year Three], the cost of goods sold was 31.4% of … Supermarket’s adjusted gross receipts. Thus, the allowable amount for costs of goods sold for [Years Two and Three] is 31.4% of adjusted gross receipts for each respective year.” T. C. Memo. 2023-23, at pp. 7-78 (Citation omitted).

Social worker and tax preparer: just the skills you want to prepare your taxes.


In Uncategorized on 02/27/2023 at 11:31

Judge Ronald L. (“Ingenuity”) Buch need not exercise a great deal of his ingenuity in crafting a Rule 103(a) protective order for IRS, but in so doing he provides a useful checklist for objecting to inadmissible requests for admissions.

Now I’m a fan of requests for admissions. Rule 90 has no numerical limitation on the number of items as to which one may request admissions, unlike Rule 70(a) for interrogatories. So the crafty practitioner (or even craftier dodgeflogger) can duck the Rule 70(a) 25 item limit on interrogatories by framing her/his requests as requests for admissions.

Cf. Noel M. Parducci & Kenneth L. Parducci, et al., Docket No.: 20894-19, filed 2/27/23, but the real wag involved is Dennis Simpson, he of Docket No. 17771-21, of even date therewith, as my expensive colleagues say

Denny is on his Third (count ’em, third) request for admissions to IRS. This barrage causes IRS to bleat that Denny’s request consists of “171 apparently repetitive requests, is oppressive, appears designed to provoke annoyance, and subjects [the Commissioner] to undue burden.” Order, at p. 1.

Judge Ingenuity Buch is then forced to scrutinize Denny’s latest, and can salvage only two (count ’em, two) of Denny’s unguided missiles.

“Indeed, Mr. Simpson’s request is repetitive. It contains many requests that are duplicative within the Third Request for Admissions. It also contains many requests that overlap with, or are nearly identical to, requests in Mr. Simpson’s First and Second Requests for Admissions. The Commissioner responded to the first and second requests, and many of Mr. Simpson’s requests have been asked and answered. Additionally, the request repeatedly asks the Commissioner to admit to the contents of documents. Documents speak for themselves, and it is unduly burdensome to ask a party merely to verify that Mr. Simpson has properly restated the contents of a document. Another category of improper requests are several that are indecipherable because they are not complete sentences. Altogether, the Third Request for Admissions contains only two requests (nos. 131 and 132) that are understandable and neither ask the Commissioner to admit to the contents of a document nor to answer a request that he has already answered.” Order, at p. 1.

I’m thinking of adding this maneuver to my “Bamboozle Your Way to Victory At Discovery” archive. Thanks again to Judge Ruwe for a great idea. See my blogpost “Bamboozle Your Way to Victory,”4/27/20.


Word to Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan: While you’re considering ex-Ch J Maurice B (“Mighty Mo”) Foley’s proposed amendments to the Rules from a year ago this March, y’all might wish to consider amending Rule 90(a) to limit the permissible number of requests for admissions.


In Uncategorized on 02/24/2023 at 13:11

If you take what you shouldn’t, but put it back, how much of it is taxable income? Ana M. Franklin, Docket No. 15054-21, filed 2/24/23, says none, IRS says all; in a companion case involving Ana’s deductions for legals and accountings, same story in reverse; Ana says all, IRS says none. In both, Judge Elizabeth Crewson Paris says we need a trial.

Ana claims “a misunderstanding of the facts,” Order, at p. 2, and wants summary J.

Judge Paris draws “reasonable factual inferences” from what Ana submits, and what IRS ripostes.

“If only by inference, the submissions of the parties show an obvious factual dispute that far exceeds a simple ‘misunderstanding’ and that is most certainly material. At this stage of the proceedings, we view inferences in favor of the nonmoving party, here the respondent. That being so, petitioner has failed to show that the material facts are undisputed and that a decision in these consolidated cases can be rendered in her favor as a matter of law. See Rule 121(b), Tax Court Rules of Practice and Procedure.” Order, at p. 3. (Citation omitted).

Seems like a run-of-the-mill order, unworthy of a blogpost. But what Ana took and put back, and the legals and accountings she paid or incurred, are an interesting story.

I offer the following for the fact that it appeared, and not for the truth or otherwise therein set forth.


In Uncategorized on 02/24/2023 at 12:08

Continuing my “Toolbox” series, I’m sure the wits, wags, and wiseacres, who follow US Tax Court proceedings without the need of this my blog, have cottoned on to IRS’ routine folds of Section 6662(a) accuracy chops, even when petitioners’ pleadings don’t show anything like a case, and when petitioners don’t even show for trial.

I’m sure a well-oiled counterpart of this useful tool features in every rounder’s toolbox.

Here’s Judge Goeke with another example, Ronnie Mickens & Gloria Jean Mickens, Docket No. 18326-21, filed 2/24/23, an off-the-bencher.

Ronnie & Gloria Jean claim a theft loss to offset their $15K deficiency and accompanying Section 6662(a) chop. IRS folds the chop at the non-trial.

“In their papers, which were filed pre-trial, Petitioners also argue various nontechnical and nonfactual bases to attack Respondent’s determination and this Court’s jurisdiction. They do not address, in any serious way, the adjustments in the Notice of Deficiency, other than to say they were cheated by a contractor. They don’t establish the basis on which such an argument could be sustained as a theft loss. Nor do they seriously attempt to substantiate any of the amounts in dispute in the Notice of Deficiency in any of their Pre-Trial papers.” Transcript, at p. 5.

Long-time readers of this my blog may remember James M. Urtis & Gaetana R. Urtis, who featured in my blogpost “We Wuz Robbed – Part Deux,” 3/5/13. Judge Goeke doesn’t mention Jim & Gaetana, although he wrote the opinion that found Jim & Gaetana did suffer theft loss when their contractor took their money. But Jim & Gaetana put in a case.

Ronnie & Gloria Jean didn’t.

“Petitioners made no attempt to make such an argument in their Pre-Trial papers and failed to appear orproduce any evidence prior to trial. Obviously, Petitioners did not intend to pursue a technical argument in this Court, but rather, argue without any basis that the Court lacks jurisdiction.

“Given Petitioners’ statement to Respondent’s counsel that they would not appear and the fact that they did not attempt to be here when their case was called for trial, we determine that their case should be dismissed for failure to properly prosecute and we sustain Respondent’s deficiency in income tax, although Petitioners prevail relative to the addition to tax pursuant to Respondent’s concession.” Transcript, at p. 6.

Notwithstanding petitioners’ no show, they still dodge the chop.


In Uncategorized on 02/23/2023 at 21:14

But No Section 41 Credit

Mr. Robert was President and COO of a Sub S that designed and built scoreboards for high school, college, and sports venues. When competitors began eating Sub S’ lunch, Scott Moore and Gayla Moore, T. C. Memo. 2023-20, filed 2/23/23, called in Mr. Robert to gin up the product line and turn things around. 

No doubt there was increased research, as Sub S’ engineering team delivered tornado-resistant scoreboard trusses, scoreboards that relayed scores, time remaining, and other goodies to fans’ personal electronic devices, cheap ribbons for scoreboards showing ads and pictures, hand-held programmers for scoreboards, and a slim shot clock impervious to errant basketballs flung at Second 23.

But were Mr. Robert’s handsome salary and bonuses creditable to increased research? He did meet with the chief engineer, an admitted researcher, and rode herd on new products. In fact, he spent north of 60% of his time on product development, despite being responsible for supervising the entire staff. True, Gayla, the Sub S owner, did a lot of management, and Scott oversaw the rest; they wanted Mr. Robert focused on new product.

But merely being involved in product development isn’t enough.

Judge Colvin: “An employee performs ‘qualified services’ by either ‘(i) engaging in qualified research, or (ii) engaging in the direct supervision or direct support of research activities which constitute qualified research.’ § 41(b)(2)(B).” T. C. Memo. 2023-20, at p. 8.

True, Mr. Robert had his name on two patents that came out of the research, but he had no timesheets, and the experimentation and technological tinkering was mostly done by staff engineers. His suggestions were certainly useful, and he was lead on some projects, but without specifics of time spent, that doesn’t qualify.

Mr. Robert met extensively with the chief engineer, but it was the chief engineer who supervised the research. Mr. Robert claims he provided “direct support”, but that means secretaries who type up results or machinists who make models, per Reg. Section 1.41-2(c)(3)(ii).

The Moores lose the research credit for the hefty salary and bonus they paid Mr. Robert.

Taishoff says a cheap time-billing computer program on Mr. Robert’s PC or smartphone, such as we attorneys have used for decades, would have saved its cost many times.


In Uncategorized on 02/23/2023 at 20:26

Leigh C. Fairbank and Barbara J. Fairbank, T. C. Memo. 2023-19, filed 2/23/23, are enmeshed in the toils of the Foreign Bank Account Registration multiplex reporting whirligig, but it’s Barbara’s story.

Judge Christian N. (“Speedy”) Weiler has the story. Barbara’s loved-once, from whom she split 41 (count ’em, 41) years ago, was a high-rolling CPA who dodged $18 million in tax by shoveling cash from his oil companies to Liechtenstein, Switzerland, and New Zealand, finally fleeing to New Zealand but settling with IRS for a couple years’ (hi, Judge Holmes) worth of his skullduggery. Though Barbara gets innocent spousery for some years, her current problem begins with the divorce settlement

In the course of renegotiating the property split-up, Barbara had cash sent to a Swiss establishment, a trust. She also used a BVI corp, officered by her Swiss bankers, to funnel further moneys to Switzerland, specifically UBS.

You can see where this is going, especially when Judge Speedy Weiler discusses Barbara’s and Leigh’s tax returns.

“For the tax years at issue, petitioners timely filed their joint Forms 1040, which were prepared by RH, a CPA in California. In preparing petitioners’ annual tax returns, Mr. H would send them a tax organizer, on which petitioners generally checked ‘No’ to the question about foreign bank accounts. Consequently, the tax returns contain no information concerning UBS account… or Establishment. Moreover, for the tax years at issue, petitioners did not report any income or deductions relating to UBS account…, make an election under either section 1295 or 1296, file Form 3520, Annual Return To Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, or file Form 3520–A, Annual Information Return of Foreign Trust With a U.S. Owner, with respect to … Establishment. Furthermore, for the tax years at issue, on Forms 1040, Schedules B, Interest and Ordinary Dividends, Part III, petitioners answered ‘No’ to the questions of whether they ‘have an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account, or other financial account’ or whether they ‘receive[d] a distribution from, or were . . . the grantor of, or transferor to, a foreign trust.’” T. C. Memo. 2023-19, at p. 11. (Name omitted).

Of course, when the Swiss dished on the nasties they were pulling, Barbara got The Letter (the one UBS sent to their customers with targets on their backs), IRS swooped in, and Barbara spilled the legumes on Switzerland and the BVI.

Barbara then filed Form 5471 and the FBARs, which earned her a bunch SNODs (hi again, Judge Holmes) at no extra charge.

Barbara’s trusty attorneys claim the Establishment is a CFC, but all the Swiss paperwork says “trust.” Form of entity doesn’t matter, function does. And as no US Court had jurisdiction over Establishment (paperwork says all disputes to go Liechtenstein), Establishment is a foreign trust, and subject to FBAR.

While IRS can’t establish that Barbara was the owner of the trust, which her loved-once had set up, she had enough command and control over the corpus to put her under the Section 678 mandate.

Now for SOL: Section 6501(c)(8) says the magic three-year SOL runs from when the taxpayer gives IRS the Section 6038 skinny. Barbara’s trusty attorneys say they gave that to the RA at Exam, which triggers SOL, as no specific form is provided for in the statute.

“Petitioners’ citation of section 6501(c)(8) and their argument on brief that the period of limitations has run is incomplete. Section 6501(c)(8) refers the reader to the requirements under section 6048; therefore, a detailed analysis of a taxpayer’s statutory obligations under section 6048 is necessary. We conclude that Mrs. Fairbank, as the deemed U.S. owner of… Establishment, has failed to provide any written return to respondent setting forth a full and complete accounting of… Establishment’s activities for the years at issue. See I.R.C. § 6048(b)(1). Similarly, we conclude that Mrs. Fairbank, as… Establishment’s U.S. beneficiary, has failed to make any return that includes the name … Establishment and which outlines the aggregate amount of distributions she received during each of the tax years at issue from… Establishment. See I.R.C. § 6048(c)(1).” T. C. Memo. 2023-19, at p. 24. (Footnote omitted).

Besides, clarity is needed here; if Tax Court suggested something less than a full filing would do, the uncertainty would help neither IRS nor taxpayers.

IRS used the partial summary J gambit back in November to establish Boss Hossery, and Barbara’s claim of reliance on Mr. H. goes nowhere, as the tax organizer said nothing.


In Uncategorized on 02/23/2023 at 12:13

I haven’t seen a Tax Court dispute about venue in years, maybe because Zoomietrials make venue obsolete. Oh, there are still pro ses who want regular trials where only small-claimers are heard, but those are quickly disposed of.

Today’s blogpost brings a venue dispute to Judge Albert G (“Scholar Al”) Lauber, Tax Court’s resident GA boondockery expert. North Donald LA Property, LLC, North Donald LA Investors, LLC, Tax Matters Partner, Docket No. 24703-21, filed 2/23/23, wants the trial next year (or maybe later) in Birmingham, AL.

IRS says they can’t get dedicated space in The Magic City for the four (count ’em, four) week trial Judge Scholar Al foresees; the Donalds say they’ll need two weeks for their case, after enough discovery to put trial off for a year, so Judge Scholar Al is prepared for four weeks of dueling appraisers.

Here’s the tip-off, as Judge Scholar Al gets a wee bit plaintive over the scuffle.

“It appears that many potential witnesses may reside in Georgia. We ask the parties to consider whether Atlanta (or another city in the Southeast where the Court has dedicated space) would be a reasonable venue for trial instead of Birmingham.  Although the Court generally defers to individual taxpayers’ requests for place of trial, the equities may differ where (as here) the taxpayer is a partnership with numerous investors residing in different locations.” Order, at p. 1.

I’ll bet the “numerous investors” couldn’t find this particular scrubland with a Cub Scout and a roadmap. But Sir Paul McCarney’s and the late great John Lennon’s 1966 classic sums up the syndicated easement fallout: here, there, and everywhere.

PS- On one of our State Bar Association’s listserves, a colleague inquired about a bargain sale of realty to a charity. I referred her to the syndicated easement battles, for insights into necessary appraisals. I reckon the fallout from the boondockeries will spread to other charitable deals, here, there, and everywhere.