STJ Diana L. (“Sidewalks of New York”) Leyden shows us the truth of G. B. Shaw’s saying “A thing that nobody believes cannot be proved too often.” I don’t know that nobody believes in the necessity of keeping meticulous records, but too many people don’t do it.

And that hurts them, especially records of time actually spent, when Section 469 material participation is on the menu. And it’s even more the case when one has been “workin’ on the rairoad.”

Second case first. I’ve blogged the interplay between Social Security and Railroad Retirement Board benefits before now. See my blogposts “I’ve Been Workin’ On the Railroad,” 4/27/15, and “I’ve Been Workin’ On the Railroad – Part Deux,” 11/22/22.

Although Judge Alina I. (“AIM”) Marshall uses Kenneth Steven Tuma, Sr., and Deborah Ann Tuma, T. C. Memo. 2024-71, filed 7/11/24, to run a how-to-do-it CPE course for preparers confronted with retired or disabled, or both, benefitted railroaders, I want to focus on one area where a slightly obsessive paperkeeping might’ve helped. Ken claims he made contributions to his retirement plan for which the SNODs (not, Judge AIM Marshall, the “NOD”s) did not credit him.

“With respect to this argument, respondent conceded at trial that an employee contribution amount of $51,393 was reported on Mr. Tuma’s 2015 and 2016 Forms RRB–1099–R. He also conceded that this amount ‘is recovered ratably over the period of time that Mr. Tuma receives the benefit. And so that’ll be a computation that is done once we determine what is or isn’t gross income. And that recovery will be computed.’ On posttrial brief, however, respondent asserted that, although Mr. Tuma would ‘ordinarily be permitted to exclude a portion of’ the contributory amounts shown on his Forms RRB–1099–R from his gross income, Mr. Tuma failed to provide information with respect to his annuity starting date and his age on that date needed to compute the proper recovery. And on this ground, respondent further asserted that Mr. Tuma should therefore be allowed no offset for contributions or, ‘[a]ssuming the Court is inclined to provide some offset,’ an offset that assumes the facts most favorable to respondent.

“Mr. Tuma generally testified that that he was entitled to receive benefits from the RRB as early as 2009 but that he did not receive any payments until sometime in 2010. Mr. Tuma did not testify to any specific dates, however, or introduce any documentary evidence to support the testimony that he did provide.” T.C. Memo. 2024-71, at p. 18.

Wherefore, Ken gets the longest spread-out of the $51K (30 years), when he could have gotten more sooner with a couple pieces of paper (hi, Judge Holmes).

Ditto Timothy L. Foradis and Jessica L. Moore, T. C. Sum. Op. 2024-13, filed 7/11/24. Tim claims he built his carriage house to rent out and worked at renting it in his spare time while working forty (count ’em, forty) hours a week at his regular job. STJ Diana L. (“Sidewalks of New York”) Leyden finds Tim’s testimony that his construction and renting out hours are more than half of all his working hours fails the Tokarski test, and therefore “the Court need not address the reasonableness of the receipts or logs and whether Mr. Foradis performed more than 750 hours of services during the taxable year in real property trades or businesses in which he materially participated.” T. C. Sum. Op. 2024-71, at p. 5

Apparently those logs didn’t show dates and hours worked, including time of day and activities performed. I had pointed out, as had many of my colleagues before me, that relatively cheap and generally accepted software is available to track those matters contemporaneously. If Tim had proffered such, would STJ Di have been so quick to toss his case?

And even if Tim took more time to perform such tasks than a skilled professional would have done, that is not necessarily fatal. See my blogpost “Disabled Veteran – Part Deux,” 12/23/14.

Back last October, Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan warned Pradeep Kumar Xplorer Pulappatta, Docket No. 17427-23, filed 7/10/24, in Docket No. 15791-23, filed 10/24/23, that he could lose his e-filing privileges if he continues with frivolity.

Today, CSTJ Lewis (“The Great Name”) Carluzzo does revoke Pradeep’s privileges “(B)ecause of petitioner’s continual submission of documents that contain impertinent matter.” Order, at p. 1.

Scarce judicial resources, anyone? How about a few Section 6673 frivolity chops, pour encourager les autres?

“Dear readers, I do not recommend trying that answer in the courtroom, or anywhere else.”

Nigh on nine (count ’em, nine) years ago, I opined thus in my blogpost “‘Tell the Judge I’m Busy,'” 11/15/16. IIRC, it did not end well for either attorney or petitioner.

The trusty attorney for Ginel Coeuranour, Docket No. 9270-24, filed 7/9/24, whom I’ll call JW, takes a similar tack. Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan is more friendly than Judge Chiechi was back in the day.

“…petitioner’s counsel [JW] filed a Notice of Unavailability. In that filing, [JW] indicates that he will be unavailable in connection with this case from July 17, 2024, through July 25, 2024, and requests that no hearings or other matters be scheduled during that time.” Order, at p. 1.

In fact, Ch J TBS is positively genteel.

“If the Court should set this case for hearing or trial, the parties will be notified in advance of such hearing or trial date. If a party is unable to appear for such scheduled hearing or trial, that party may file an appropriate motion for continuance. The Court will then rule on that motion or take other appropriate action.” Order, at p. 1.

Taishoff makes so bold as to suggest to JW, Esq., that, given the leisurely pace of Tax Court litigation and the facts that (a) the petition was filed barely a month ago, and (b) the answer was filed today, he need have little fear that anything will happen in the next two weeks.

For Tax Court, but not for me. No opinions, and no orders worth noting.

But visiting nearest and dearest in TX, I got a ringside seat on Hurricane Beryl. Don’t ask.

The trusty attorneys for Aventis Inc. & Subsidiaries, Docket No. 11832-20, filed 7/5/24, are fellow fans of summary J. Although their case that the convoluted shellgame their clients concocted qualified per Section 860L, hence is a Financial Asset Securitization Investment Trust (FASIT), they’re trying to get Judge David Gustafson to agree that what’s under the shell is in fact debt, not equity, irrespective of whether Section 860L saves the game.

It takes three (count ’em, three) pages for Judge Gustafson to describe the machinations, which the Aventis crew claim will let the treat dividends as interest for US tax, and the same as dividends for French tax. Subsidiaries, siblings, and Chase bank shuttle in and out like line changes in a hockey game.

But Aventis is homeported in DE, thus 3 Cir learning, with its sixteen (count ’em, sixteen) factors for distinguishing debt from equity, bars any chance at summary J.

Too many facts.

Of course, this is an alternative argument, and as hereinabove set forth, whether or not the deal qualified per Section 860L is for another day.

As today is Our National Holiday, and as Tax Court is in lockdown per Rules 10(d) and 25(a)(5), there will be neither of the above from me.

It’s an old Tax Court maxim that Constitutional arguments don’t cut any Glasshouse ice, but Amgen Inc. & Subsidiaries, 16017-21, filed 7/3/24, claim IRS violated Due Process when they disavowed seven (count ’em, seven) closing agreements covering nine (count ’em, nine) tax years.

IRS gave Amgen annual audits for each of those years, with the adjustments culminating in the abovementioned closing agreements. But shortly thereafter, IRS audited another six (count ’em, six) subsequent years, adjusting all and adding chops to the last three, using a transfer pricing method deviating from that in the settled years’ agreements. Amgen petitioned all, but seeks summary J only as to chops in the last three. IRS cross moves as to all six, but Judge Travis A. (“Tag”) Greaves sorts it out.

There’s caselaw that government cannot change the rules justifiably relied upon without giving notice, but that applies to guidance. Here, there’s a specific agreement, covering only the years then at issue. Moreover, the agreements do not discuss the Section 482 transfer pricing methodology.

And Supreme Court learning says IRS isn’t bound by prior years. Another old Tax Court maxim is each year stands on its own.

“Petitioner had no legitimate reliance interest for future years derived from the closing agreements. The closing agreements unambiguously do not cover future tax years. The agreements are silent as to what transfer pricing methodology was to apply for years after [last year]. In fact, the closing agreements related to [last three] tax years made it clear that the IRS could make future transfer pricing adjustments regardless of any alleged prior approval. These closing agreements specifically stated ‘This agreement does not prevent further allocations under section 482 with respect to taxable events involving Amgen and [sub] that are attributable to taxable periods of Amgen for which allocations are not determined by this agreement.’ This clause put petitioner on notice that the IRS might make transfer pricing adjustments in future tax years. Additionally, none of the closing agreements used the phrases ‘best method’ or ‘arm’s length’ to describe the reallocation. Instead, the adjustments are simply those to which the parties agreed in settling the disputes before them at that moment. The closing agreements unambiguously do not cover tax years past [last year], and therefore, petitioner does not have a legitimate reliance interest created by the closing agreements.” Order, at pp. 6-7.

And Amgen could always have entered into advance pricing agreements.

“If petitioner sought to apply its transfer pricing methodology to future years, it could have attempted to negotiate a closing agreement that made the method applicable for future years. Petitioner likewise could have applied for an advanced pricing agreement that would have set forth a ‘binding agreement’ between petitioner and the IRS as to ‘the best transfer pricing method (‘TPM’) within the meaning of § 482 of the Code and the regulations.’ Rev. Proc. 2006-9, §§ 2.04, 10.01, 2006-2 I.R.B. 278. Had petitioner sought one of these options, it would have had a genuine reliance interest grounded in a binding contract. However, the closing agreements fall significantly short of creating a legitimate reliance interest.” Order, at p. 7.

Summary J to IRS.

Of course, the leading case on IRS mind-changing, Dickman v. Commissioner, 465 U.S. 330 (1984), just happened to be decided by the same Court in the same year that decided Chevron.

Taishoff says, post-Loper Bright and post-Boechler, P. C,  exactly what is any Rev. Proc. worth? Is Mayo Foundation still good law? What is any IRS Reg. worth? The Supremes are bringing “discipline” to tax law, all right all right. Yeah, roger that.

No ticket to Tax Court is formed by the conjunction of Notice CP220J and Letter 227-N. It’s surely excusable if you’re unfamiliar with these adjuncts of the much-contemned Patient Protection and Affordable Care Act. They’re IRS’ shots-across-the-bows per Section 4980H(d)(1), which provides for collection of the Employer Shared Responsibility Payment Penalty.

Check out the statute and see if you understand it. Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan says it means this penalty is assessable, that is, IRS can assess it (mark it on IRS’ books) off the bat; it doesn’t require a SNOD, just notice and demand.

Assistive Choices, Inc., Docket No. 14347-23, filed 7/2/24, asserts otherwise.

“… petitioner agrees that no notice of deficiency was issued to petitioner…. Instead, petitioner contends that respondent was required to issue a notice of deficiency to petitioner prior to assessing the ‘Employer Shared Responsibility Payment Penalty’. Petitioner maintains that, since the ‘Employer Shared Responsibility Payment Penalty’ is found in Chapter 43 of the Internal Revenue Code, section 6212(b)(1) requires a statutory notice of deficiency be issued prior to assessment.” Order, at p. 1. (Footnote omitted).

But once again, “as-if” comes into play. Section 4980H(d)(1) says “‘[a]ny assessable payment provided by this section shall be paid upon notice and demand by the Secretary and shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68′.” Order, at p. 2.

No SNOD needed, and no assistance for Assistive Choices, but a Taishoff “Good Try, Third Class,” to the Assistives’ trusty attorney, whom I’ll call Jay.

Jon K. Palsgaard and Kimberly A. Kelly, T. C. Sum. Op. 2024-11, filed 7/1/24, exhibit a never-say-die attitude, despite not being represented by their trusty attorney from the before-time, MTW.

For their previous foray six (count ’em, six) years ago, where MTW ran the Section 86 checklist straight into the brick wall erected by Judge Albert G. (“Scholar Al”) Lauber, see my blogpost “Secure and Taxable,” 6/14/18.

It’s the same story for a different year, but Jon and Kim (that’s Doc Kim, M.D., disabled) try again.

STJ Zachary S. (“Highrise”) Fried shows the becoming modesty that is the hallmark of the Special Trial judiciary.

“But for the years and amounts involved in the prior proceedings, the evidence parallels the evidence in this case. We could repeat the reasoning of the prior opinions here, but it is unlikely that we could improve upon it.” T. C. Sum. Op. 2024-11, at p. 4.

No, not a theatre review of the 1961 Michael Shurtleff groundbreaker that joined Alvin Ailey and Robert Duvall. This is the tale of “James Lindor,” Docket No. 217-23, filed 7/1/24. I use inverted commas, because, as CSTJ Lewis (“That Is His Rightful Name”) Carluzzo points out, “‘James Lindor’ is not petitioner’s name.” Order, at p. 4.

CSTJ Lew deals here with a flurry of motions, “James Lindor” goes 0 for 6, but does get couple byes (hi, Judge Holmes). IRS did fail to redact some PII, but covered up before any Nosy Parker tipped the Copycats for a sneak peek, so no sanctions. Order, at pp. 1-2.

And while “James Lindor” did get a Section 7345 certification for a passport grab, IRS’ motion to toss that part of his petition thereof for failure to state a claim didn’t mention any attempt to get a more definite statement.

“Although the petition is not as precise as we would like, and although we tend to agree with much of respondent’s motion, we consider dismissal at this point in the proceedings to be inappropriate given petitioner’s status as a self-represented litigant. Respondent has missed the opportunity to move for more specificity in the petition before answering the case. See Rules 36(a) and 51. At this point, informal and/or formal discovery can be used to focus on the exact nature of petitioner’s challenge to the certification process. Once identified, the matter can properly be prepared for trial, resolved by summary adjudication, or resolved upon agreement of the parties.” Order, at p. 3.

And as for the pseudonym, that doesn’t cut it in Tax Court.

“The Tax Court Rules of Practice and Procedure do not allow for the use of pseudonyms in the captions of cases commenced in this Court. See Rule 23(a). If petitioner’s use of the pseudonym is intended to allow him to proceed anonymously, then he must make an appropriate motion to do so. Within 30 days from date of service of this Order, unless petitioner submits (1) a motion to proceed anonymously, supported by sufficient grounds for such relief, or (2) a motion to voluntarily dismiss the case, the Court will amend the caption of this case to show petitioner’s proper name.” Order, at p. 4.

Though he didn’t ask me, I’d tell “James Lindor” that he’d better have some awful good reasons to seek anonymity (like tangible threats to life, health, and livelihood). Anything short gets short shrift. “Public’s right to know,” y’know. Section 7461 and all that.