The trusty attorneys (whom I’ll call L&L) for Matthew M. Hutchings and Shari l. Hutchings, Docket No. 13321-20, filed 12/22/23, are on to something. Was the SNOD inartfully drafted, or is IRS trying to submarine the “goofy regulation” (Reg. Section 1.183-2(b), the hobby loss disallowance) into what seems like an ordinary indocumentado?

Judge Ronald L. (“Ingenuity”) Buch wants a hearing in the Mile-High City on L&L’s motions in Limine to Preclude Issues at Trial Not Raised in the Answer, and a Motion to Shift the Burden of Proof.

The Hutchings showed a Sched C net loss from their Happy Eating Nutritional Consulting Wellness Camp. But as the operation showed no income, the disallowance equaled the claimed expenses. Moreover, “(I)n his notice of deficiency, the Commissioner wrote that the amount was disallowed ‘because we did not receive an answer to our request for supporting information.’ In earlier correspondence, the Commissioner requested “copies of the records you maintained to substantiate the expenses you have claims under “other expenses” on your Schedule C.” The Hutchings highlight this chain of correspondence as indicating that the Commissioner’s notice of deficiency disallowed expenses for failure to substantiate.” Order, at p. 1.

Looks like a standard indocumentado to me.  Problem is, L&L are canny. “In November 2022, the Hutchings’ counsel wrote to counsel for the Commissioner, noting that the Commissioner seemed to be claiming that there was no trade or business.” Order, at p. 1.

Hence these motions.

So then present situation seems to reward ambiguous (not to say misleading) draftspersonship, and penalize the self-represented or those with counsel less sophisticated than L&L, who earn a Taishoff “Good Job.” Unhappily, good counsel are expensive (albeit not nearly as expensive as bad counsel), and these motions must have taken a few more than a couple hours (hi, Judge Holmes).

Taishoff says, Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan can fix this by expanding Rule 51. It is now limited to permitted responsive pleadings. Rule 70 discovery should be reserved for fact-finding. There should be the equivalent of our State court bill of particulars: what is the substance of the claim? If this results in a shotgun approach from IRS, so be it, but at least petitioners’ counsel can prepare, without wasted motion.