I’ve often said that any lawyer who can’t find an ambiguity should find another way to make a living. Judge Travis A. (“Tag”) Greaves provides even more proof, if any were required, that he is abundantly qualified as a lawyer, in Amgen Inc. & Subsidiaries, Docket No. 16017-21, filed 7/31/24. The issue is whether various offshore subsidiaries generated income for parent when they reimbursed parent for Healthcare Reform Fees (HCRs), another offspring of the much-contemned Patient Protection and Affordable Care Act of 2010. HCRs are fees paid by manufacturers and sellers of certain prescription drugs. No doubt Amgen Inc. is one such.

Amgen’s trusty attorneys, all 24 (count ’em, 24) of them, want summary J that reimbursement is not income. But Judge Tag Greaves finds them a wee bit light on specifics. Paying another’s debt is income to the other when the other is relieved of the obligation to pay. But the payor does not receive income when it is reimbursed for the payment of the other’s debt. However, when one pays a deductible expense and receives (or has the right to receive, even if conditional) reimbursement, one has no deduction.

Mere legal liability is insufficient to establish who is responsible for the debt and who can deduct payment thereof. Judge Tag Greaves says this is often Tax Court’s job, but Amgen hasn’t given him enough information. It’s all ambiguous.

“Petitioner failed to show as a matter of law that the HCR Fees are expenses of the reimbursing parties. Petitioner asserts that the HCR Fees are ‘indelibly tied to the revenue’ that [subs] received. Other than this conclusory statement, petitioner failed to set forth any specific information related to the income [subs] generated in relation to the licensed drugs or how the reimbursement amount was calculated. Petitioner also failed to provide what effect, if any, the sale of the licensed drugs to Amgen USA had on the ability to connect [sub]’s income to the branded drug sales. The same factual footfalls [sic] prevent our ruling related to the allocation between Amgen Inc. and Pfizer. Petitioner fails to offer specific evidentiary support tying Pfizer’s income to the HCR Fees. In fact, petitioner fails to set forth any drug sales resulting from the joint venture. Therefore, we are unable to determine as a matter of law whether at least a portion of the HCR Fees properly belonged to Pfizer.

“The same uncertainty exists regarding Amgen Inc.’s right to reimbursement. First, we reject petitioner’s argument that the HCR Fees statutory scheme required the parties to reimburse Amgen Inc. The statute does not require repayment from a subsidiary or unrelated party. Rather, the statute only specifies that the designated entity, in this case Amgen Inc., is responsible for paying the government.

“Petitioner has further failed to show that any of the commercial exploitation agreements established a right to reimbursement.” Order, at p. 9. (I think you meant “footfaults,” Judge, not “footfalls.”).

While there was perhaps an oral agreement that was memorialized ten (count ’em, ten) years after it was made, various written agreements covering HCR activities made during that time all contained the usual boilerplate merger and integration clauses (“entire agreement of parties and supersedes all prior understandings”), and none of them mentions reimbursement.

No summary J on income, and no summary J on chops.

Although the rollout of the “new online petition generator, a tool to help pro se petitioners and others file petitions with the Court” allegedly occurred at 0800 Eastern this morning, no mention thereof can be found on the Tax Court website. I suppose the pro se has to register with DAWSON before being admitted to the robosphere.

Who the “others” might be in the above set forth statement is likewise nowhere stated, as yesterday’s webinar stressed that the new jim-handy generator is for the self-represented only. Practitioners are relegated to their own preparation. Like Dorothy Parker’s fat hen, “You cannot persuade her with gun or lariat to come across for the proletariat.”

Natheless, I expect great things from the robopetitioner. It finally got rid of the endless orders directing redaction of SSANs and TINs from kit-prepared petitions. The new system supposedly routes that information straight to IRS, never reaching Tax Court’s files. Of course, redacting everything else still falls to the petitioner.

And regrettably, the invaluable introductory webinar aired yesterday, July 30, has joined darling Clementine and the snows of yesteryear, gone forever.

It’s an old cliché that the law loves to talk. I spent a couple minutes (hi, Judge Holmes) the other day talking to a colleague out West about a cool tactical move he pulled, and we both gave Judge Elizabeth A. (“Tex”) Copeland a kind mention. Win or lose, you get a fair shake.

While perhaps the trusty attorneys for Point72 Asset Management, L.P., Point72 Capital Advisors, Inc., Tax Matters Partner, Docket No. 12752-23, filed 7/30/24, might grumble at the foregoing, voicing a couple objurgations and colorful metaphors, I’m sure they’ll calm down.

Because they got a fair shake.

Trying to get IRS’ understanding of abstract principles of law in discovery is a no-no. Maybe they might have done better had they been a wee bit subtle, but check out Order at p. 3, discussion of Interrogatory 2.  And IRS can produce business records in lieu of responses, per Rule 71(e).

But IRS should know by now that when they want to exclude documents or testimony based on privilege, they’d best brandish a privilege log, with chapter and verse.

Point72’s trusty attorneys can always try again as they keep on with discovery.

No, not the pop singing duo from the Beach Boys days; this is Christopher Holly (the “DAWSON Product Owner”) and Tenille Lenard (the “DAWSON Product Specialist”), live from The Glasshouse in the City Taxed but Unrepresented, debuting the all-new, user-friendly, jim-handy online petition generator. Apparently Chris is the man who gave us DAWSON, hence he is the “Owner.”

The robopetitioner is for the self-represented only; no practitioners need apply, although Judge Ronald L. (“Ingenuity”) Buch noted the extensive attendance of the LITC crowd. Glad they could make it, as this presentation was not recorded and won’t be repeated. I wonder how many of the 80% of Tax Court petitioners who are self-represented, and for whose benefit this platform was devised, were available at Noon Eastern Time on a Tuesday.

Judge Ingenuity Buch assures us that the generator uses no AI, but is run by and for the petitioner on his/her own device (laptop, desktop, tablet, or smartphone). So the answer to my blogpost “AI Comes to Second Street, NW?” 6/28/24, is definitely no.

It’s a simple online form-fill, takes only PDF attachments, full of warnings to redact PII, easy to return to previous pages to correct. No discussion of “Save” function, but I suppose it’s easy enough to save one’s submission, or print it from the docket page once it’s filed. I challenged the insufficiency of the product’s warning to doublecheck filing deadlines, but Tax Court eschews the complexities thereof, leaving the selfies to seek salvation in fear and trembling.

Would this product have saved Antawn Jamal Sanders? See my blogpost “In the Midnight Hour,” 6/20/23.

OK, so the product is definitely a good thing.

Now for Taishoff’s gripes.

Why was this webinar not recorded? Was it so far beyond Tax Court’s capabilities? The DEI series was recorded and is available on the Tax Court website. While that series is all very commendable, would not the hapless, feckless pro se, who, Judge Ingenuity Buch tells us, represents no less than eighty (count ’em, eighty) percent of all petitioners, be served at least equally well if s/he could watch this demonstration before venturing onto the platform?

As for the Captain, were I the one who perpetrated the rollout of DAWSON (see my blogpost “Up DAWSON’s Creek,” 10/12/21), I don’t know I’d exert any immoderate haste to claim parentage.

A source tells me that the United States Senate has approved a new Tax Court Judge.  It looks like STJ Adam B. (“Sport”) Landy has gotten the nod, and is the first STJ to move to the Big Bench since I started this blog twelve (count ’em, twelve) years ago.

I wonder, readers: should I change “Sport” to “Mustang”? That was the old US Navy term for an officer who started out as an enlisted personnel. I’ll take a vote.

Edited to add, 7/29/24: Of course, on Friday last, Judge Kashi Way, an 18-year veteran counsel to the Joint Committee on Taxation, got the Senatorial nod. Four (count ’em, four) more picks on the pattern. More judges, fewer delays, more blogfodder…what could be bad?

I’ve pointed out before now that the evidentiary confines of Section 6015(e)(7), namely the administrative record and any “newly-discovered or previously unavailable evidence” make a mockery of the supposed de novo review of innocent spousery. But the trusty attorneys for Laura B. Schnackel, co-star of Gregory R. Schnackel and Laura B. Schnackel, T. C. 2024-76, filed 7/29/24, whom I’ll call Ed and How, earn a Taishoff “Good Job,” for slipping the surly bonds of the Taxpayer First Act.

Ed and How first raise innocent spousery in a pretrial motion for leave to file separate amended petition, after Laura and Greg petitioned the deficiencies for the three (count ’em, three) years at issue.

Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan notes the amended petition did not specify Section 6015(f), and Greg objected, but allows the amendment as an affirmative defense. IRS does concede innocent spousery, but Ch J TBS goes through the factors anyway, as Greg’s objection continues.

Note that here there is no administrative record, hence no Taxpayer First handcuffs.

“Section 6015(e)(7) prescribes the scope of review the Tax Court shall employ in cases such as this one. Paragraph (7) was added to section 6015 by Taxpayer First Act § 1203, 133 Stat. at 988, and applies to petitions for review of determinations made under section 6015 filed on or after July 1, 2019, and requests pending with the Internal Revenue Service on or after July 1, 2019. Section 6015(e)(7) does not apply because respondent did not issue a notice of determination.” T. C. 2024-76, at p 15, footnote 7. (Citation omitted).

Laura gets innocent spousery. She was educated as a nutritionist, only signed checks while at Greg’s engineering outfit, and didn’t get any extra benefits from Greg’s chicanery.

“Petitioner husband was deceitful in his relationship with his wife. He hid his affair and opened a secret credit card to hide spending associated with it. He funded the affair by diverting marital assets unbeknownst to petitioner wife. Considering all the facts and circumstances, petitioner wife did not have reason to know of the understatements.” T. C. Memo. 2024-76, at p. 17.

There’s a multi-million-dollar NYC condo (Kips Bay, with terrace), and a Range Rover, and the NE divorce court found Greg spent about $3 million on the affair.

Other than that, the case is mostly an indocumentado, Section 274 variation.

But add Ed’s and Howe’s tactical amendment to your toolbox, if you need a real trial for innocent spousery.

Whenever that is the question in anything but a Section 7623 whistleblower case, the answer is always the same; another question: what are the specific justifications? Generalities don’t o’ercrow Section 7461 and the public’s right to know. Show specific, demonstrable injuries to person or purse, or Tax Court will let it all hang out.

And same will be fair game for the trade press and the blogosphere.

Wherefore Judge Travis A.(“Tag”) Greaves adjures Amgen Inc. & Subsidiaries, Docket No. 16017-21, filed 7/26/24, as to both of their motions (the one to unseal pleadings in the HCR credit case and one to unseal the pleadings in their “Due Process” one), to supplement each with “a list of requested redactions with corresponding justifications.” Order, at p. 2.

Amgen wanted only parts of the respective pleadings redacted. But in support of their requests, “P)etitioner improperly filed versions of these pleadings with unagreed redactions. These documents will be stricken, and the Court will order petitioner to file properly redacted documents after ruling on these motions.” Order, at p. 1.

So, after tossing twelve (count ’em, twelve) documents, presumably prepared, reviewed, and submitted by one or more of the seven (count ’em, seven) attorneys from IRS, and twenty-four (count ’em, twenty-four) attorneys for Amgen, Judge Tag Greaves thus catechizes the platoon.

“There is a strong presumption of public access to court records. Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003). A party seeking to seal judicial records, including exhibits attached to dispositive motions, bears the burden of overcoming this strong presumption by showing a compelling reason for sealing such records. Id. at 1136. Petitioner has failed to set forth a specific list of the requested redactions and the justification for each redaction.” Order, at p. 1.

Those seeking sealing in their non-blower cases should read and heed, and not complain, if they can’t meet the Foltz standard. Specificity rules.

The above is the title of a book written by researcher-writer Debra Lea Jones-Mazotti, who appears in Robert Dean Mazotti and Debra Lea Jones-Mazotti, T. C. Memo. 2024-75, filed 7/25/24. According to Judge Courtney D. (“CD”) Jones, “Filthy Fingers was included as an exhibit, and the document identified as a book appears to be approximately two pages long.” T. C. Memo. 2024-75, at p. 3.

Ms. Jones-Mazotti testified extensively on the trial about her thirty (count ’em, thirty) years of researching and writing.

“During the tax years at issue, Ms. Jones-Mazotti took numerous trips, expenses for which were included on her Schedules C as deductions claimed for writer-researcher activities.

“During these trips to various locations—such as California and Florida—she purportedly conducted research for books, articles, and scavenger hunts she was creating. She also traveled to Hawaii in 2020 to allegedly study macadamia nuts for her books. Some members of her family, including her husband and daughter, typically traveled with her on these trips. During these trips, Ms. Jones-Mazotti purportedly took photos of fruits, vegetables, and trees for her writer-researcher activities.

“Ms. Jones-Mazotti testified that she traveled to California and to Disney World to research a family trivia game she wanted to write. However, Ms. Jones-Mazotti also admitted that the trip to Disney World coincided with a high school football function for one of her sons, where he played a football game.” T. C. Memo. 2024-75, at p. 5.

Obviously, it’s “goofy regulation” time. That’s Reg. Section 1.183-2(b), the hobby loss checklist. The scorecard: “The record shows clearly that the Mazottis reported $1,045 in gross receipts and $187,012 in expenses, resulting in a total loss of $185,967 over the three tax years at issue.” T. C. Memo. 2024-75, at pp. 14-15.

Ms. Jones-Mazotti’s trial testimony was also less than convincing to Judge CD Jones. “Ms. Jones-Mazotti testified that she has spent her entire life writing. However, the record is devoid of evidence as to precisely how much time she spent on the writer-researcher activities during the tax years at issue. Further, although Ms. Jones-Mazotti testified inconsistently about the work she produced during the tax years at issue, we found her testimony self-serving. For example, Ms. Jones-Mazotti stated that she traveled extensively to conduct research for her books. But the record reflects that Ms. Jones-Mazotti reported expenses from personal vacations as business expenses on her tax returns and used her interest in writing to justify these claimed deductions.” T. C. Memo. 2024-75, at p. 13.

With neither profit and loss statement, nor much substantiation, testimony counts for much.

“Ms. Jones-Mazotti did not keep formal books and records related to her purported writer-researcher expenses. And she has never run a profit-and-loss statement. Moreover, the Mazottis claimed deductions for personal expenses such as family vacations, clothing, food, home improvements, and vehicle maintenance and repair costs. When pressed about the nature of the deductions, Ms. Jones-Mazotti was evasive and often unable to explain how these personal deductions related to her purported writer-researcher business activities. A reasonable and prudent person would know that personal expenses may not be deducted under the guise of business expenses.” T. C. Memo. 2024-75, at p. 17.

No, not Judge David Gustafson, although he well merits that sobriquet. This time, it’s Judge Patrick J. (“Scholar Pat”) Urda, confronted with a request for aid from Frank Czerwinski & Karen Czerwinski, et al., Docket No. 20292-22, filed 7/24/24.

Frank & Karen are enmeshed in a captive insurance company dogfight, with multiple petitioners and status reports flying around. So Frank and Karen “indicated in the status report that they have ‘conferred regarding several potential avenues to limit trial time in this case,’ and requested direction from the Court.” Order, at p. 1. Frank & Karen must have learned that when lawyers are involved, talk is never cheap. Their trusty attorneys, all three (count ’em, three) of them, are part of a firm that boasts “40 practice areas, [and] our team of over 500 lawyers has an unwavering focus on providing unmatched client service and the highest quality legal advice.” See their website.

Well, Judge Scholar Pat isn’t going to second-guess this high-class, high-priced talent. ” Ultimately, the parties are free to prosecute the cases as best serves their clients….” Order, at p. 1.

But.

Judge Scholar Pat will try to oblige those who seek his aid.

“… the Court has a suggestion. We suggest that the parties identify a single case or one consolidated group of cases as a lead case. All the other groups of cases could then be disposed of under a stipulation to be bound to the outcome of that lead case. Failing that, the parties should work towards agreeing to a small number of lead cases with attendant stipulations to be bound, respectively.

“The Court anticipates that the good-faith efforts of the parties may reduce the total trial time needed in these cases. However, the Court views the sheer number of such cases not as a reason to delay trials any further, but rather as a reason to take up these cases expediently. The Court remains committed to conducting all necessary trials in these groups before September 2025.” Order, at p. 1.

So tell Judge Scholar Pat what case or cases are the leads, or if y’all can’t agree, tell Judge Scholar Pat how you’d reduce trial time. And, as this rodeo may need hours before summer, 2025, how are y’all fixed for April and May, 2025?

That’s judge speak for “nudge nudge, wink wink, this ballgame is going to extra innings, chaps, so y’all had best choose a couple good lead cases, or  forget what’s in your wallet.” (hi, Judge Holmes).

We know depositions of nonparties, SOP in most if not all courts other than Tax Court, become extraordinary when one sets foot in Second Street, NW, in the Capital of the (former) Country for Old Men. But Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan has still another reason for blowing off IRS’ request to depose a couple nonparties (hi, Judge Holmes), in Nat S. Harty and April D. Harty, Docket No. 23354-21, filed 7/23/24.

“Rule 81(e)(3) provides that ‘[n]o deposition may be taken before a person who is a relative or employee or counsel of any party, or is a relative or employee or associate of such counsel, or is financially interested in the action,’ except ‘with the consent of all the parties or their counsel.” Rule 81(e)(3) is similar to Federal Rules of Civil Procedure 28(c), 29(a), and 30(b)(5)(A). ‘[T]he policy informing’ Federal Rule of Civil Procedure 28(c) is ‘to assure impartiality in the creation of the record of the deposition.’ Sheppard v. Beerman, 822 F. Supp. 931, 941 (E.D.N.Y. 1993). It is appropriate to quash a subpoena that purports to subject a deponent to a deposition taken by an interested person absent the parties’ consent.” Order, at p. 1.

OK, so who’s the interested party?

“The subpoena issued by respondent identifies respondent’s counsel as the ‘officer or recording company’ by whom ‘[t]he deposition will be recorded.’ This runs afoul of Rule 81(e)(3). In addition, the parties’ Stipulation to Take Deposition of SC and SV does not evidence petitioners’ consent for the deposition to be taken before respondent’s counsel. To the contrary, petitioners agreed that a named court reporting company would transcribe the deposition, not respondent’s counsel.” Order, at p. 2. (Names omitted).

I don’t want to jump on IRS’ counsel, whom I’ll call Jordy and Kim, just gently suggest they read subpoenas before they serve them.

Howbeit, Ch J TBS wouldn’t let them correct this rookie error without more.

“Even if this technical defect could be cured, we would still quash the subpoena. Deposition of a nonparty witness is an extraordinary method, and may only be used when the information sought cannot be obtained in documents or through informal communication or consultations. See Rule 74(c)(1)(B). Respondent has not shown that the only way to obtain the information being sought is by issuing a subpoena. We will therefore quash the subpoena. We expect the parties and their counsel to cooperate in making nonparty witnesses available in this case. In addition, this Order does not prohibit respondent from serving a new subpoena… that cures the defects and shows that a subpoena is the only method for seeking the information.” Order, at p. 2.