Tax Court Judges and STJs have to din it into the ears of practitioners used to the automatic deposition notices in other Federal Courts (and most State courts): “Nonconsensual depositions are an extraordinary method of discovery that can only be taken pursuant to an order from our Court. These depositions are available only where a party or nonparty witness can give testimony that is discoverable within the meaning of Rule 70(b) and where such testimony practicably cannot be obtained through informal consultation or communication under Rule 70(a)(1), interrogatories under Rule 71, requests for production of documents under Rule 72, or consensual depositions under Rule 74(b).” This is taken from Carl B. Barney, Docket No. 5310-22, filed 3/15/24.

But Carl gets to depose Mr. Z, the RA Carl claims done him wrong. Carl claims Mr. Z arbitrarily, capriciously, and with malice aforethought refused to let Carl bail from his installment sale election, thereby costing Carl tax on $400 million. IRS claims privilege, but produces no privilege log or specific allegations. IRS claims record rule (it’s all in the administrative record, “all ye know on earth and all ye need to know”), and Greenberg’s Express (“the door is shut, we may not look behind.”).

But Judge Christian N. (“Speedy”) Weiler isn’t having any.

Yes, Carl can’t ask about the appraisal of some of Carl’s Sub Ss, as that goes behind the numbers in the SNOD, thus trenching on Greenberg’s Express and the deficiency trial de novo exam-is-irrelevant.

But here abuse of discretion is the issue, and the administrative record needs filling out.

“… we reject respondent’s contention that the administrative record contains all relevant facts; since at this stage in the case, we cannot accept that respondent’s potential abuse of discretion arises solely out of the administrative record. As such, the deposition of Mr. Z appears, at least in part, reasonably calculated to lead to the discovery of admissible evidence and fit within the scope of discovery as prescribed by Rule 70(b).” Order, at p. 4.

Besides, IRS has stonewalled Carl.

“Both parties agree that an issue for trial is whether respondent properly exercised his discretion in denying petitioner’s request to revoke his election out of the installment method. Relying on Mr. Z’s contemporaneous written explanation denying petitioner’s request, respondent contends how Mr. Z (some six years later) ‘cannot provide any additional information’ to help determine whether respondent’s actions were in fact an abuse of discretion. Similar to our finding above, we are not prepared to predetermine the relevance or usefulness of Mr. Z’s testimony and rely solely on his written explanation at this point in the proceedings. Ultimately, the deposition may (or may not) bear fruit for petitioner in his inquiry.” Order, at p. 5. (Name omitted).

Carl has checked all the boxes: can’t get the evidence any other way, this is not a substitute for cross-examination (Mr Z has direct knowledge of materials facts needed to decide the claim), and Carl has had no prior opportunity to get Mr. Z’s story.

Carl can’t ask about the Sub Ss, but he can ask “whether respondent properly exercised discretion in denying petitioner’s request to revoke the election out of the installment method.” Order, at p. 6.

Whistleblowers, innocent spousers, and record-rulers, please copy. While orders have no precedential value, this line of reasoning might get you some yardage.

Edited to add, 3/16/24: A Taishoff “Good Job, First Class” goes to Carl’s trusty attorneys, who “enjoy an unparalleled reputation for excellence and integrity in the tax community,” if they do say so themselves.