Judge David Gustafson really needed to apostrophize the best-selling author of “Games People Play,” as IRS has joined the party in full swing with gusto. Discovery is the subject, and games abound, in St. Andrews Plantation, LLC, Joseph N. McDonough, Tax Matters Partner, Docket No. 20849-17, filed 10/6/23. IRS hasn’t been doing all that great against the St. Andys; see my blogpost “Contesting the Unimprovable,” 3/4/21.

The FPAA said that the St Andys’ conservation easement violated Section 170, tout court. Naturally, the St. Andys want IRS to tell them exactly what part of Section 170 is the gravamen of the FPAA.

Judge Gustafson: “The FPAA cites section 170, which is well over 10,000 words long, to say nothing of the regulations promulgated thereunder; and the FPAA raises the issue of valuation.” Order, at p. 2.

IRS did list four (count ’em, four) bases for denying the $27 million Dixieland Boondockery deduction, but didn’t mention valuation or chops. The improvement bits, referred to in my above-recited blogpost, didn’t survive Hewitt, of course. IRS, nothing daunted, claimed “the right to raise additional positions depending on discovery.” Order, at p. 3.

Cute, but don’t try that in Judge Gustafson’s courtroom. He’d set a discovery schedule.

“…we deny the Commissioner’s claimed general ‘right to raise additional positions depending on discovery’. After the deadline we imposed, he has no such right. We will grant petitioner’s motion and will preclude the Commissioner from raising (or conducting discovery on) issues other than valuation, penalties, and the four contentions listed in his interrogatory response….” Order, at p. 5.

Now IRS didn’t raise valuation and chops in their Four Points, but Judge Gustafson finds the FPAA gave adequate notice to the St. Andys that these were on the menu.

Bottom line: “To prepare for trial, the petitioner—who will generally bear the burden of proof—is entitled to know what is in dispute, and the Court is obliged and empowered to assure that the parties disclose their contentions on a reasonable schedule.” Order, at p. 4.

Wits, wags, and wiseacres, at whichever table you sit, be advised: Discovery means discovery. Leave the games at home.

Footnote: Monday, 10/9/23, is a Rule 25(a)(5)(A) Legal Holiday, so Tax Court will be closed. Enjoy your holiday, whatever you call it.