James William Avery, T. C. Memo. 2023-18, filed 2/21/23, is a lawyer who started as a car show fan with his 30-yr old collectible Ferrari, but finding that dull, transitioned to racing his rebuilt Dodge Viper. Jim was a wee bit casual about filing and paying his income taxes, and Judge Albert G. (“Scholar Al”) Lauber doesn’t care for that.

Jim does escape two (count ’em, two) years of Section 6651(a)(2) late-pay add-ons, because IRS doesn’t introduce the SFRs, relying on Jim’s late-filed returns instead, but since IRS processed only one year’s return, Jim avoids the add-ons for the other two years. See T. C. Memo.  2023-18, at p. 13.

Jim tried to write off $330K of “advertising” expenses, against his substantial law practice  income; Judge Scholar Al has tables showing what IRS allows and what they don’t. Jim claims he advertised his law practice on his Viper, but he raced in CO (where the Viper sat in a garage) and practiced in IN. There is some caselaw establishing that auto racing is advertising, but Jim doesn’t make the cut. Too much fun, ad space too small, and too little business attributable to the racing. See my blogpost “‘Rev Up Yer Engines!'” 4/7/21.

IRS admits Jim didn’t get the SNODs they sent him, so he is contesting from a denied CDP. IRS agrees to a remand once they sort out what Jim owes after Judge Scholar Al get through, so Jim can put in a CA.

Jim claims reliance on CPAs past and present for late filing, but that doesn’t fly. The duty is on the taxpayer and is non-delegable. Besides, Jim’s income is from his law practice, and he should know what he made.

I know what I made. Believe me, after COVID lockdown, dead and retiring clients, I know what I made.