Johnny Johnson (not the UK’s WWII ace of aces, rather the AK real estate wheeler-dealer) likes class lives. He likes them so much that, rather than deconstruct the entire Best Western and Extended Stay hotels he owned, he depreciated both buildings over seven years MACRIS, rather than the commercial building useful life of 39 (count  ’em, 39) years.

Now there’s nothing wrong with deconstructing; longtime readers of this my blog will recollect Ruel Hamilton, the disappearing TX deconstructor, who depreciated the kitchen sink (literally), as more particularly bounded and described in my blogpost “The Sum of Its Parts,” 3/12/12.

But Johnny didn’t follow Logic or Tears for Fears, and break it down. He depreciated the whole shebang in a lump.

Johnny couldn’t be bothered with minutiae, like getting an appraisal when he gave a building to an OR opera house, or a CWA from the opera company or for some fencing he have to a rehab center in HI.

Arriving at The Glasshouse in the Unstated City sub nom. John R. Johnson and Estate of Judith E. Johnson, Deceased, John R. Johnson, Personal Representative, T. C. Memo. 2023-116, filed 9/13/23, Johnny’s trusty attorneys fold the deficiencies. They’re fighting only about the Section 6664(c)(1) good faith reasonable cause out to the Section 6662(a) negligence or disregard 20% chop.

Unhappily for Johnny, it’s another case of trusty well-credentialed CPA who swears she never told Johnny to file a six-figure Form 8283 without an appraisal, or passed on his other shenanigans.

“Petitioners presented no evidence that their CPA told them that the seven-year depreciation schedule was applicable to commercial buildings or that the mortgage interest deduction could be claimed twice. Petitioners also failed to show that their CPA advised them that the county assessor’s valuation would suffice instead of a qualified appraisal for the building donated to the… Opera House. When asked whether she advised Mr. Johnson that the charitable contribution deduction could be claimed using the county assessor’s valuation instead of a qualified appraisal, petitioners’ CPA testified that she ‘never had that discussion with [Mr. Johnson.]’ Petitioners cannot claim to have reasonably relied on advice which was never given. In addition, Mr. Johnson was not credible when he definitively stated: ‘We thoroughly discussed the tests’ related to the donation of the building to the … Opera House. This was decidedly in contrast with his immediately following statement that details about the donation were ‘[t]oo far to remember.’” T. C. Memo. 2023-115, at p. 7. (Name omitted).

One wonders how much Johnny’s trusty attorneys sweated trusty CPA in trial prep. Hearing such testimony from a key witness might induce serious settlement negotiations before going to trial.