Is Its Own Reward

While I awarded Champions Choice Vivian D. (“Golden”) Hoard, Esq., a Taishoff “Good Job, First Class” when the Elevenses scuppered Judge Pugh’s opinion (see my blogpost “A Nuthatch, A Knotweed, A Fox Squirrel, and A Busted Benderdinker,” 10/17/22), now that she’s seeking Section 7430 admins and legals, that may be all she gets.

Judge Pugh finds IRS was substantially justified in raising the conservation issue; the Elevenses shot down IRS and Judge Pugh, but didn’t say either was irrational or unjustifiable. This was a fact-intensive analysis. Champions Retreat Golf Founders, LLC, Riverwood Land, LLC, Tax Matters Partner, T.C. Memo. 2023-134, filed 11/8/23.

The Champions wanted to put in an internal appraisal that IRS used pre-FPAA but that didn’t get into evidence on the trial.

“The internal appraisal that is the basis for the hearing request was not admitted into evidence although petitioner’s expert considered it in developing his opinion. We excluded the appraisal from evidence because trial was de novo and respondent’s position was the one taken in the FPAA and his Answer. See Greenberg’s Express, Inc. v. Commissioner, 62 T.C. 324, 327–28 (1974) (‘As a general rule, this Court will not look behind a deficiency notice to examine the evidence used or the propriety of [the Commissioner’s] motives or of the administrative policy or procedure involved in making his determinations.”). Petitioner has not explained how the position taken in an internal appraisal before the issuance of the FPAA or filing of respondent’s Answer is relevant to our evaluation of the reasonableness of respondent’s position in the FPAA or the Answer. The opinion offered in that appraisal does not make respondent’s litigating position more or less reasonable. And whether respondent adopted or rejected the analysis in the internal appraisal, we still must evaluate whether his position was reasonable on its face. Therefore, because it is not ‘clear from [the motion papers] that there is a bona fide factual dispute that cannot be resolved without an evidentiary hearing,’ Rule 232(a)(2), we will decide the Motion without a hearing.” T. C. Memo. 2023-134, at p. 5.

A reversal of a Tax Court opinion on appeal doesn’t mean Tax Court or IRS was always unjustified, or the reverse. See T. C. Memo. 2023-134, at p. 8. It is “significant,” however, that IRS won in Tax Court.

No admins or legals.