My usual Sunday readership comprises perhaps 30 views by perhaps 25 viewers. That number hasn’t varied materially for some years, and is generally the fewest views-viewers numbers of the week.

The greatest number of views (400) on a single day took place September 27, 2016, for no discernable reason, and has never approached that number since.

Today, Sunday, August 6, 2023, the statistics page of this my site recorded 611 views by 609 visitors. I rarely get 600 views in a week.

I ask again, an obvious spoof?

Del Monte LLC, Dev X Investment 2015, LLC, Tax Matters Partner, Docket No. 3411-21, filed 8/4/23, has Judge Patrick J. (“Scholar Pat”) Urda humming the 1958 Chordettes’ cover of Ronald & Ruby’s performance of Julius Dixson’s and Beverly Ross’ hit. The Montes have a historic façade easement case. As usual, IRS is trying to avoid a laborious and expensive valuation trial by attacking perpetuity, and here attacking whether the donation comprises real property.

The easement in gross to the 501(c)(3) included “‘Development Rights,’ which referred to ‘the right to develop the air space above and adjacent to the Building, encompassing all such air space of the Property.’” Order, at p. 2.

There is a companion case, Continental Downtown Properties, LLC, Historic Preservation Fund 2016 LLC, Tax Matters Partner, Docket No. 6084-21, filed 5/31/23, which I did not blog, as Salacoa Stone Quarry brought IRS’ summary J for chops into high relief that date. Scope out Continental Downtown for some further observations by Judge Scholar Pat.

But IRS has a twist that they didn’t assert against the Continentals.

“The Commissioner offers one argument that we did not consider in the related case, arguing that Del Monte’s donation of development rights is not a donation of a qualified real property interest.  The Commissioner contends that the development rights were encompassed in the definition of the façade relating to ‘height’ and thus were redundant. The Commissioner further argues that, to the extent that the development rights were not redundant, the restrictions on them ‘represent the contribution of a property interest which is far less than the entirety of the property, as required by Section 170(h)(2)(A).’ And the Commissioner asserts that Del Monte failed to satisfy various requirements (i.e., a contemporaneous written acknowledgement and qualified appraisal) for the development rights to be considered under section 170(h)(2)(C).” Order, at pp. 4-5.

And this very much matters, because the Montes’ appraisal of the worth of the development rights far o’ercrowed the worth of the restrictions on the façade.

“The [Montes’] appraisal determined that $52,000 of the diminution in value was attributable to the restrictions on the building façade, leaving $18,750,000 attributable to restrictions on development.” Order, at p. 3. So if the donation of the development rights was defective, the donation of the façade was worth bortscht. (Please pardon an arcane technical phrase).

Hence the title hereof. Development rights above the existing structure, where zoning and building codes would allow a vertical extension of the existing structure, can have great value. On this Minor Outlying Island off the Coast of North America, where I reside, we have the Villard Houses (landmarks) and the Palace Hotel, and Citicorp Center and St. Peter’s Lutheran Church (not landmarked, but the Church’s footprint allowed a skyscraper, with the Church below grade). Structures built over existing structures are known as “lollipops,” from their obvious resemblance. The right to erect a lollipop can have substantial value.

I award IRS’ trusty counsel a Taishoff “Good Move.” I don’t know which of the five (count ’em, five) IRS attorneys named in the docket search came up with this, but I know their adversary, The Great Chieftain of The Jersey Boys, will have a stunning response.

Because IRS doesn’t get summary J. “If we resolve doubts in favor of the non-movant (as Rule 121 requires), we must conclude that the deed contains considerable ambiguity with respect to the development rights (particularly in light of the reference to ‘height’ in the definition of the façade), which may necessitate a factual inquiry into the parties’ intent. That inquiry will also inform our consideration of the scope and applicability of the appraisal and contemporaneous written acknowledgement obtained by Del Monte. These issues are thus not amenable to summary adjudication.” Order, at p. 5.

Adam Sowards, T. C. Memo. 2023-99, filed 8/3/23, loses both Child Tax Credit and Additional Child Tax Credit for his numberless children, even though everyone agrees he has four (count ’em, four) who might qualify. Ditto for his EITC and recovery rebate credit, for his non-US citizen wife. Problem is, for years at issue, they had no SSNs.

Judge Gale judge-‘splains: “Petitioner’s spouse (whom he married in 2003) did not have an SSN because she was not a citizen of the United States. Petitioner also had not obtained SSNs for his children because he had intended (consistent with his religious beliefs, which include conscientious objection to public insurance and reliance on government benefits) to allow his children to decide at an appropriate age whether they wished to participate in the Social Security system.” T. C. Memo. 2023-99, at p. 3.

Adam had a back-and-forth with IRS (corroboration scarce) over getting ITINs, but we all know you can’t get an ITIN if you can get an SSN. So Adam’s claims for CTC and ACTC get bounced for Section 6213(b)(1), (g)(2) math or clericals, hence no SNOD, so Adam can contest at CDP (no prior opportunity). In the meantime, the argy-bargy over ITINs drags on until the PATH Act ups the ante for the credits, so when Adam finally caves, gets the SSNs for the kiddies, and files amended returns claiming the credits, Section 24(e) as amended by the PATH Act says he’s too late with the SSNs.

Adam also loses EITC and recovery rebate credit because Mrs. Adam had no SSN, as she was not a US citizen.

Adam turns to Chris Bourell, Esq., and his trusty Rocketguys at the University of Toledo Tax Controversy Clinic.

The Rocketguys claim unconstitutional retroactivity of the Section 24(e) amendment, but Judge Gale isn’t having it. “…the PATH Act’s amendments to the section 24(e) identification number requirements expressly apply to returns, and amendments and supplements to returns, filed after the date of its enactment. See PATH Act § 205(c)(1), 129 Stat. at 3081. Thus, by its terms, the amended version of section 24(e) applies only prospectively, to documents (like petitioner’s amended returns) filed after enactment of the PATH Act.” T. C. Memo. 2023-99, at p. 14. That it changed Adam’s expectation of what the law would continue to be doesn’t make it retroactive.

No one’s life, liberty, property, or sanity is safe while Congress…but this is a nonpolitical blog.

And of course any mistaken advice on the law from IRS’ agents doesn’t create estoppel.

Free exercise of religion doesn’t get it, either. See Miller v. Com’r, 114 T. C. 511, 6/23/00, at pp. 516-518.

Adam loses.

No, once again it’s nothing about tin whistles or foghorns; for that, see Lonnie Donegan’s 1959 cover of the 1924 Billy Rose, Ernest Breuer, and Marty Bloom chewing gum canzone.

Once again, Tax Court needs to unleash a full-dress T. C. because ex-Ch J Maurice B (“Mighty Mo”) Foley omitted from his last updating of Tax Court Rules of Procedure and Practice the equivalent of FRCP 41, allowing a petitioner to dismiss non-6213 deficiency petitions.

We all know that, in a Section 6213 deficiency case, once Tax Court has jurisdiction dismissal must simultaneously result in entry of decision for IRS in the full amount of the SNOD, per Section 7459(d).

Ex-Ch J Mighty Mo has the full list of Tax Court cases where a voluntary dismissal of the petition is permitted without entry of decision in Joseph E. Abe, DDS, Inc., 161 T. C. 1, filed 8/3/23, at p. 3.

“In nondeficiency cases filed pursuant to Code sections other than section 6213, this Court has previously granted taxpayers’ motions to dismiss or withdraw petitions. See generally Stein v. Commissioner, 156 T.C. 167 (2021) (administrative costs pursuant to section 7430(f)(2)); Mainstay, 156 T.C. at 100 (failure to abate interest pursuant to section 6404(h)); Jacobson v. Commissioner, 148 T.C. 68 (2017) (whistleblower awards pursuant to section 7623(b)(4)); Davidson v. Commissioner, 144 T.C. 273 (2015) (innocent spouse determinations pursuant to section 6015(e)); Wagner v. Commissioner, 118 T.C. 330 (2002) (collection actions pursuant to sections 6320(c) and 6330(d)). Section 6213 was not applicable to these nondeficiency cases and therefore section 7459(d) did not mandate entry of decisions in the Commissioner’s favor upon the dismissals. See, e.g., Stein, 156 T.C. at 169.”

Joseph D. Abe, DDS, is a CA corp which petitioned a revocation of its pension plan qualification per Section 7476, seeking a declaration that the plan was OK. Now they want to dismiss their petition. No background facts are given, so we are left unenlightened as to why they petitioned and why they want to dismiss.

Regardless, ex-Ch J Mighty Mo, seeing IRS doesn’t object to dismissal, tosses the petition.

Walt Whitman, thou should’st be living at this hour. Tax Court has unleashed the pamphlet electronic, with monthly up-dates front-running the semiannual bound vols.

Here’s the skinny: “The Tax Court’s published Reports are available as monthly or bimonthly pamphlets that provide the correct citation pages before the semiannual bound volumes are printed. Pamphlets are now available electronically below [On the website]. When the pamphlet opens, click a link in the Table of Cases to open an opinion.”

When 11 Cir got done with Section 6751(b) Boss Hossery (see Kroner v. Com’r., 48 F. 4th 1272, 11th Cir. 2022), we had a replay of ex-Ch J Michael B. (“Iron Mike”) Thornton’s dictionary chaw in Graev (see my blogpost “A Non-Christmas Story,” 12/26/16).

“Hard cases make bad law,” my old mentors on The Hill Far Above drummed into my barely-post-adolescent skull, and is that ever true in Kroner. See my blogpost “Imaginary Friend,” 6/1/20. Burt Kroner comes off as a heavy-duty wit, wag, and wiseacre, so 11 Cir wants his head on a platter. Ex-Ch J L Paige (“Iron Fist”) Marvel is no friend of such types, but she properly found IRS was out on chops leg before wicket, having hit Burt with a Letter 915 and then a Letter 950, each time attaching Form 4549, but no Boss Hoss sign-off had yet occurred. 11 Cir went back to “assessed” as entry on IRS’ books, which is where ex-Ch J Iron Mike concluded his dictionary chaw.

By 11 Cir logic, as assessment of a deficiency cannot occur until after judicial resolution (Section 6213(a)), Boss Hossery need not take place until after trial, appeal, remand, retrial, appeal, further appeal, and remand. Given the leisurely pace of Tax Court litigation, assessment may not take place until twenty (count ’em, twenty) years after chops first are mentioned.

True, 11 Cir did require that the Boss Hoss still retain supervisory authority at time of signoff. But as signoff need occur only at the end of the road, one can imagine IRS’ counsel dragging the Boss Hoss from his/her retirement party to scrawl “OK” on the document (which need not be on paper, need not have a wet signature, and need take no specific form), to wave at the last person standing.

This is farcical.

For an application of this schemozzle, see Steven Feller & Louise Feller, Docket No. 11581-02, filed 8/2/23. Unhappily, Steve’s & Lou’s witness made no notes of pre-Boss Hoss discussions of chops with IRS, so can’t specify names or dates, only generally mentioning some IRS types with whom he dealt. Judge Christian N. (“Speedy”) Weiler finds that insufficient to defeat IRS’ motion for (surprise, surprise) partial summary J, even if 11 Cir hadn’t held that Boss Hossery could take place in the sweet bye-and-bye.

“Under section 6751(b), respondent is not required to make a negative showing that a formal communication did not occur. Rather, the taxpayer will be required to produce evidence of a prior formal communication since such communication, if it exists, would have been received by the taxpayer. An earlier communication between an examining agent and a taxpayer regarding potential penalty imposition would not insulate the taxpayer against a future formal determination of penalties. A formal communication by respondent of the penalty to the taxpayer, after supervisory approval has been secured, is the mandate of section 6751(b).” Order, at p. 3, footnote 2. (Citation omitted).

I most respectfully submit the foregoing formulation makes Section 6751(b) worse than worthless; it makes examination a free-fire zone where examining agents can threaten fraud penalties and worse to extort settlements, while Tax Court and 11 Cir piously clutch their dictionaries.

Maybe, says Judge Travis A. (“Tag”) Greaves, but even though Amgen Inc. & Subsidiaries, Docket No. 16017-21, filed 8/1/23, filed a motion to calendar, requesting Judge Tag Greaves to visit their manufacturing site on the Isla del Encanto, he must decline.

IRS says the trip will give a distorted view of the importance of the Puerto Rican site and its operation, because Amgen & Subsidiaries site their drug operations in various locales, and have adopted the profit split method for allocating income and deductions amongst the lot. So this is a Section 482 reallocation case, and the issue is who does what, where, and when, to keep Amgen & Subsidiaries from allocating the cherries to the low-tax places and the pits to the high-tax.

The only specific Rule is Rule 72(a) which allows one party to enter another’s land for discovery. True, Tax Court Judges have done site visits in the past. The USDCDPR checklist is “(i) the importance of the evidence to be obtained; (ii) whether a view will substantially aid the Court in reaching a correct verdict; (iii) whether the Court could visualize the scene from other types of evidence apart from a site visit; and (iv) whether site visits would be practical or logistically difficult.” Order, at p. 3. (Citations omitted).

“A profit split analysis requires the relative evaluation of the economic activities of all the parties to an economic venture. Respondent maintains that an AML [Puerto Rico] site visit (without visiting other relevant sites) would prejudicially emphasize the functions and resources employed by one controlled entity, while ignoring those of Amgen’s U.S controlled entities. We agree. Without the benefit of visiting the other relevant sites, the Court could not put AML’s operations in proper perspective in determining comparability with the other sites.” Order, at p. 3.

I note in passing that these are all U.S. operations, as Puerto Rico is United States territory.

Judge Tag Greaves will have to get his impressions of the other sites from “standard presentation methods such as videos, photographs, expert reports, testimony, or documentary evidence.” Order, at p. 4. No reason the same from the PR site could not serve as well.

And Judge Tag Graves is not pulling a Willie Nelson any time soon. “Finally, we recognize the possibility that the Court may benefit from visiting AML as well as several of Amgen’s numerous facilities throughout the U.S. The logistics, time commitment, and impracticality of crisscrossing the U.S. to do so, however, would be prohibitive.” Order, at p. 4.

I do give the trusty attorneys for Amgen & Subsidiaries a Taishoff “Good Try,” although which of the fifteen (count ’em, fifteen) attorneys listed for petitioner on the docket search came up with the idea, I do not know. Your colleagues should buy you a Bacardi 8 Años piña colada.

I don’t know if Suzanne Jean McCrory, T. C. Memo. 2023-98, filed 8/1/23, is a devotee of the I Ching, but she certainly has followed the oft-reiterated injunction therefrom first above-written at the head hereof (as my expensive colleagues would say). With the fruitless years behind her, and the apparently hopeless years before her, Suzanne Jean kept volleying those Forms 211 at the Ogden Sunseteers, while Chief Whistler John W. (“Hoppin’  John”) Hinman’s myrmidons gave her the Mandy Mobley Li treatment.

This time she fired off a salvo of seven (count ’em, seven), and she finally hit the jackpot. She got a post-sequester $1694.31 for the consolidated bunch. I think she’s still out of the money when you consider the postage for all the predecessor applications. So Suzanne Jean threw in sixty Georges out of her winnings and petitioned.

IRS asks Judge Emin (“Eminent”) Toro to toss Suzanne Jean for want of jurisdiction, and incidentally to overrule Lippolis because it conflicts with Li, the Ogden Sunseteers’ get-out-of-work-free case. For the backstory on Lippolis, see my blogpost “The $2,000,000 Misunderstanding,” 11/20/14. IRS claims the award to Suzanne Jean was based upon Section 7623(a) (discretionary, hence nonreviewable), because the Section 7623(b)(5) $2 million predicate was not attained.

The Final Award Letter from the OS wasn’t a model of clarity.

“The Decision Letter listed all seven claim numbers in the ‘Re:’ line and stated that ‘[the WBO] has made a final decision that you are entitled to an award of $1,694.31.’ The Decision Letter did not identify which claim numbers the award related to, but explained the award computation in an attached Determination Report. The Report, also listing all seven claim numbers, stated that the ‘[f]inal tax, penalties, interest, and other amounts collected based on information provided by Whistleblower’ were ‘$179,672.20’ and that the recommended award percentage was 1%, subject to a modest reduction under the Budget Control Act of 2011, Pub. L. No. 112-25, 125 Stat. 240. The Report cited section 7623(b)(2) to justify the amount of the award and did not analyze the claim numbers individually.” T. C. Memo. 2023-98, at p. 4. (Footnote omitted, but it says the preliminary report said the same.).

So the Li toss, where the OS do nothing, is not in play here, because the OS did collect and did make an award. But only Section 7623(b) awards are subject to Tax Court review, and those awards must scale the $2 million/$200K minima of Section 7623(b)(5). Section 7623(a) awards need scale no such, but are nonreviewable. Of course, the label put on the award doesn’t determine its nature.

“As we have already noted, the D.C. Circuit held in Li that this Court lacks jurisdiction to review a threshold rejection issued by the WBO because, in such a case, the IRS takes no action with respect to a whistleblower’s claim. Li v. Commissioner, 22 F.4th at 1017. But the D.C. Circuit recently confirmed that our Court does have jurisdiction when the IRS proceeds with an action related to a whistleblower’s information and nevertheless declines to grant an award under section 7623(b). Lissack v. Commissioner, 68 F.4th at 1321. As the Commissioner’s Motion points out, the latter situation is analogous to one in which the IRS issues an award pursuant to section 7623(a) after proceeding with an action based on a taxpayer’s information and collecting proceeds. See Lippolis, 143 T.C. at 396 n.2 (observing that, when the WBO grants an award under section 7623(a), it implicitly denies an award under section 7623(b)). Thus, accepting the Commissioner’s own analogy, Lissack contradicts the position advocated in the Motion. Moreover, neither Li nor Lissack addressed specifically this Court’s precedent on the jurisdictional status of the monetary thresholds of section 7623(b)(5) or cast any doubt on that precedent.” T. C. Memo. 2023-98, at p. 7.

For the backstory on Lissack, see my blogpost “A Piece of the Action – Part Deux,” 8/17/21. And again, in the interest of full disclosure, Mr. Lissack was formerly a client of mine, many years ago and in an unrelated matter.

So Tax Court precedent, that the $2 million/$200K hurdles are affirmative defenses to a Section 7623(b) claim, and not jurisdictional (shades of Myers and Boechler, P. C.), means IRS needs to answer Suzanne Jean’s petition, and plead and prove the affirmative defenses.

Suzanne Jean is in line for the first Fighting Joe Insinga Memorial Award.

The day has come, whereon and whereafter all newly filed posttrial briefs filed by practitioners admitted to practice before United States Court and all newly filed amicus briefs filed pursuant to Rule 151.1 in non-sealed cases will be made available to the public remotely through DAWSON, the new, improved, jim-handy (yeah, right, ya think?!) electronic filing and case management system.

The above was foretold in my blogpost “Coming Down the Creek,” 5/5/23.

Hence, this notice appears as a matter of record.