Jackson Crossroads LLC, Greencone Investments LLC,Tax Matters Partner, et. al., Docket No. 12235-20, filed 1/19/24 (a very special date in our family), ably represented by trusty (and I’m sure by their clients well-belovèd) attorneys, snipe away carefully at IRS’ wildcard reinforcements. Judge Christian N. (“Speedy”) Weiler is a great one for cutting down post-pleading attempts to wrongfoot adversaries.

In this latest installment, he reminds us of the parties’ previous attempt to tilt the playing field; see my blogpost “Why I Love Summary J – Part Deux,” 12/8/23.

Now the Jacksons claim IRS’ latest wildcards are (a) donative intent, (b) whether the syndicated members of the LLCs are really partners, and (c) whether or not the swath of Dixieland Boondocks at issue is inventory per Section 1221, and thus ineligible for Section 170 Dixieland Boondockery.

First, the obligatory procedural sparring. The Jacksons moved to strike those parts of IRS’ Pre-trial Memo which raised (for the first time) these issues.

“Respondent asserts that petitioner’s Motion to Strike is disguised as a motion in limine, since it is a pre-trial motion that seeks to exclude specific evidence or arguments from being presented during trial and the motion is untimely because it was not filed before the deadline for motions in limine, as set in the … scheduling order. We do find it is appropriate to treat petitioner’s Motion to Strike as a motion in limine. However, we find that the Motion to Strike was filed promptly in response to Respondent’s Pretrial Memorandum which for the first time, raised these two Issues with the Court.” Order, at p. 2. (Footnote omitted, but it says the Jacksons moved to strike within a week after getting IRS’ Pre-trial Memo.). Note “two issues,” because Judge Speedy Weiler says donative intent was disposed of in the above- referenced 12/8/23 order.

As to the remaining issues (Partnership and Inventory), they’re mixed law-and-fact, so arguing they involve a different legal theory alone (which doesn’t require additional or other evidence) won’t save IRS.

“We find the Partnership Issue (Issue 7) and Inventory Issue (Issue 8) to be mixed issues of fact and law. As such, these issues were required to have been pled under our Rules. Because the issues are not contained in any pleadings, and respondent did not seek leave to amend the pleadings prior to trial, permitting respondent to present evidence on these issues at trial will unfairly prejudice petitioner. Therefore, the Court will not consider the Partnership Issue (Issue 7) and Inventory Issue (Issue 8) at trial and on brief.” Order, at pp. 2-3.

At the risk of yet again wearying my readers with a repetition (not to say regurgitation) of Judge Holmes’ observation in Oakbrook, Dixieland Boondockery cases are well-suited to valuation resolution. Thomistical-Talmudical torturing of the language of Section 170 is time-wasting tohubohu. Go try the case.