Lawrence Leroy Henry, T. C. Memo. 2024-79, filed 8/22/24, ran a bunch consulting businesses (hi, Judge Holmes), wherein he incorporated his law school graduate wife’s principle: “[W]e teach you what is tax deductible, and help you convert your personal life into your business life and write it all off. Okay. We call it anyway expenses. You gonna eat anyway, ya might as well write it off, talk business.” T. C. Memo. 2024-79, at p. 7. In other words, “’convert your personal life into your business life and write it all off.’” T. C. Memo. 2024-79, at p. 28.

Of course, there are no separate records either for any of Mr. Henry’s businesses, or that separate his business activities from his personal ones.

Judge David Gustafson, obliging as always, cannot rescue Mr. Henry, despite multiple continuances and conferences followed by further document dumps from Mr. Henry that only further confound any attempts to unscramble the four (count ’em, four) years at issue.

But Judge Gustafson does absolve Mr. Henry from Section 6651(f) fraudulent failure to file, as IRS can’t prove intent (Mr. Henry relied on Mrs. Henry in good faith), and blows off $322K of COD, as IRS raised this as new matter post-SNOD (which Judge Gustafson insists upon calling a NOD, confusing me thereby), thus having BoP on solvency, which IRS can’t carry.

Judge Gustafson does find a few minor deductions beyond what IRS would allow.

But Mr. Henry’s lectures on how to “write it all off” cast a wee bit shade on his testimony.

I close with Judge Gustafson’s admonition: “On brief and during trial, the Commissioner provided evidence and argument that might support a finding that the Henrys’ businesses were counseling their clients to file fraudulent returns; Ms. Hunter-Henry provided tax advice to clients with the aim to avoid tax liability and ‘pay the IRS without using your money’ and encouraged clients to falsely characterize their personal expenses as deductible business expenses. But we do not address here any fraud that might have been committed by their clients, nor any criminal liability that might arise from conspiring with them to do so. See 18 U.S.C. § 371. We do not consider here Ms. Hunter-Henry’s failure to timely file a return, but only Mr. Henry’s failure. We do not consider false deductions claimed on or omissions of income from the returns that the Henrys eventually, belatedly, filed… but only Mr. Henry’s failure to file returns for [years at issue] when they were due in the succeeding years….” T. C. Memo. 2024-79, at p. 44.

Anyway, don’t do it.