Judge Mark V. (“Vittorio Emanuele”) Holmes, whatever his expertise in English grammar, certainly has spent much of his illustrious Tax Court career assessing the worth of expert testimony and those who propound it. So as trial approaches, the parties in Kimberly Road Fulton 25, LLC,  Kimberly Road Manager, LLC, Tax Matters Partner, Docket No. 17852-21, filed 5/25/23, gird their loins and give Judge Holmes the usual boatload of motions in limine, trying to KO each other’s experts before they enter the ring.

Dixieland Boondockery is the blogger’s delight.

First up, the Kimberly’s landscape architect and planner, who wants to regale Judge Holmes with what might be built on the syndicated marked-up site, notwithstanding “its steep terrain and meandering water course.” Order, at p. 1. IRS says she isn’t qualified as to economics, her notions were unknown to the Kimberlys when they did the deal, and her opinion didn’t touch any matter at issue. Judge Holmes will let her in, as highest and best use at granting of easement is material, and the expert is knowledgeable about the locality.

Next, IRS’ valuation expert, who relies on an engineering report concerning the terrain, but the engineers aren’t testifying, hence the Kimberlys call hearsay. “It is not unusual for an expert to rely on hearsay from others with different expertise in the course of formulating their own opinions. Federal Rule of Evidence 703 allows experts to do so if they have been made aware of them and experts in the field would reasonably rely on them. The advisory committee notes cite as an example a physician who relies on the observations and opinions of nurses, technicians, and other doctors.” Order, at p. 2.

That said, IRS’ expert can expect “a vigorous cross-examination.” Dude best bring body armor, Kevlar helmet, and a couple extra mags (this is Judge Holmes, after all).

Last but hardly least, IRS has an expert appraiser to testify about standards of appraisal. The Kimberlys say he’s testifying about the legal issue of whether the appraisals submitted with the Form 8283 are qualified per Section 170, and that’s an ultimate issue in the case. If Kimberlys’ appraisals are bogus, an overvaluation chop, or no deduction at all. “We disagree. Mr. K (himself an appraiser) will be testifying as an appraiser about the standards of appraising. We understand that this is a very important issue in these cases, and that the failure of a taxpayer to attach a qualified appraisal to its return may trigger the disallowance of its deduction. If so, that might well make Mr. K’s opinion an opinion about ‘an ultimate issue’ in these cases. But with the exception of expert testimony in a criminal case about a defendant’s mental state, Federal Rule of Evidence 704 allows such opinion testimony about ‘ultimate issues.’” Order, at p. 2. (Name omitted).

Takeaway- Good stuff for the next USTCP admission exam.