In Uncategorized on 02/02/2023 at 16:44

This variation of the Michael Corleone gambit, “don’t ask me about my business,” is played today by Thiele Kaolin Co., KaMin, LLC , Imerys USA, Inc. and Imerys Minerals USA, Inc., and Arcilla Mining and Land Co., LLC. All nonparties, they are seeking to quash IRS subpoenae (this is Judge Patrick J (“Scholar Pat”) Urda’s case, of course) that ask the nonparties about their business.

The case is J L Minerals, LLC, Beasley Timber Management, LLC, Tax Matters Partner, Docket No. 17076-21, filed 2/2/23, who claimed a $16 million conservation easement deduction on the usual GA boondockery they bought for $1.6 million a year-and-a-half before taking the deduction.

The nonparty subjects of the subpoenae are the only miners of kaolin, a clay used “to produce paper, porcelain, paints, and other products.” Order, at p. 1. IRS wants 14 (count ’em, 14). categories of information from the nonparties covering three years. The J Ls claim the boondocks are stuffed with valuable kaolin.

The nonparties claim ” that the subpoenae sought broad swaths of confidential and potentially privileged information that would upend the kaolin market, which is small (there are only three major processors – Thiele, KaMin, and Imerys), secretive, and subject to government scrutiny (as a check against price-fixing). The nonparties asserted that the breadth of the requested information only a few weeks before trial presented a particular burden given that, with one exception, the nonparties had no connection to the issues before the Court.” Order, at pp. 2-3. (Footnote omitted, but it says years before KaMin leased the land to mine it).

Judge Scholar Pat says citizens must help the Government, but he’ll narrow the subpoenae to only the year at issue, and provide firewalls to protect confidential information. The nonparties are the only game in town when it comes to kaolin, and that would help Judge Scholar Pat figure this out, so they have to dish somewhat. IRS is not pulling a last-minute desperation search for a case, nor is this coming at the end of a long trial.

So the nonparties can testify by Zoomiegram for no more than 3 hours each, and while they needn’t provide paper, they must be prepared to testify about contracts, policies and procedures.

  1. Missing a relevant fact: The $1.6m purchase was for 644 acres – $2,500 per acre. Only 64.7 acres was contributed to the LLC and CE’d with the appraised value if $$16 m. – $250,000 per acre. Cool, eh? 


    div>I also believe Arcilla Mining removed a mining lease


  2. Mr Ellis, I stand corrected. That must be some valuable kaolin, that the seller didn’t know was there.


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: