Judge Goeke sets up the Glasshouse mixmaster for IRS and Gary M. Schwarz & Marlee Schwarz, Docket No. 12347-20, filed 11/5/24, and gives them the recipe. Y’all will recall Doc Gary and his hunt-for-money operation, which foundered on Reg. Section 1.183-1(d)(1), another of the “goofy” hobby loss shootdowns.

What, no? I guess all this political stuff of late has addled everybody. So go vote (if you haven’t already), come back and read my blogpost “The Buck Stops Here,” 5/13/24.*

Doc Gary, Marlee, and IRS were working on the Rule 155 beancount when the Supremes unloaded Loper Bright Ent. v. Raimondo, 44 S. Ct. 2244, 219 L. Ed. 2d 832 (2024), which knocked over the Chevron station. Doc Gary wants a Rule 161 based on intervening change in controlling law, and gets it.

IRS says the opinion here never mentioned Chevron, and Doc Gary never challenged the Reg. So what, says Judge Goeke; the opinion here relies extensively on the Reg, unlike other cases where petitioners requested Loper-Brightery.

“Considering the parties’ filings, the issues in this case, and the relevant law, we will grant petitioners’ motion and consider whether Treasury Regulations §§1.183-1(d)(1) and 1.183-2(b) are valid. While petitioners’ motion was not filed within 30 days of the service of the Opinion in this case, that was excusable because Loper Bright was released after the 30-day period had expired. Considering the Rule 155 computations that were being worked on by the parties, we find petitioners’ motion to have been filed in a timely manner. Furthermore…, Chevron was clearly implicit controlling law at the time the Opinion was issued. Because Loper Bright overruled Chevron, we believe that reconsideration of the Opinion (in which we extensively relied on Treasury Regulations §§ 1.183-1(d)(1) and 1.183-2(b)) is appropriate.” Order, at p. 2.

So, chaps, since y’all didn’t consider the validity of the “goofy” regulation until now, Judge Goeke has seven (count ’em, seven) points to consider, including without in any way limiting the generality of the foregoing (as my high-priced colleagues would say), Congressional delegation of rulemaking authority in Section 7805(a); the Supremes’ statement in Loper Bright that merely following Chevron in a previous decision is not grounds for overturning that decision; that previous Tax Court opinions have said that the “goofy” regulation merely restated caselaw; and if Judge Goeke invalidates any part of the Reg., how that affects the outcome of the case.

“We are particularly interested in the parties’ arguments regarding the statement in Treasury Regulation § 1.183-1(d)(1) that ‘[w]here land is purchased or held primarily with the intent to profit from increase in its value, and the taxpayer also engages in farming on such land, the farming and the holding of the land will ordinarily be considered a single activity only if the farming activity reduces the net cost of carrying the land for its appreciation in value.’ The parties shall address whether this provision is arbitrary….” Order, at p. 3.

Oh, and if the parties have any other bright ideas, lay ’em on out.

And keep your coruscations to sixty (count ’em, sixty) pages.

Peter Reilly, CPA, please copy.

** https://taishofflaw.com/2024/05/13/the-buck-stops-here/

A couple items (hi, Judge Holmes) from the Glasshouse in the City At the Heart of the Storm.

First, Estate of Anne Milner Fields, Deceased, Bryan K. Milner, Executor, T. C. Memo. 2024-90, filed 11/4/24. And before you yell with one voice, readers, “Wait! Didn’t you cover this case back in September?” yes, I did, but this is a correction. The mathematical anfractuosities adumbrated by Judge Elizabeth A. (“Tex”) Copeland need a Rule 155 beancount to sort them out. Hence. that 9/26/24 opinion is toast, and the current version substituted.

Next, though it often falls to the deceased that they fall “to dumb Forgetfulness the prey,” as a much better writer than I put it, Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan finds anonymity of whistleblowers may vanish at their death. So it may be with Whistleblower 17543-19W Deceased, filed 11/4/24.

“The executrix indicates that she still wishes to proceed anonymously. We will order the executrix to show cause why, following petitioner’s death, we should not modify or lift our order allowing petitioner to proceed anonymously and change the caption of this case to reflect the real names of petitioner and the executrix. See Tax Court Rule 63(a).

“In support of petitioner’s Motion to Proceed Anonymously … petitioner represented that he would face adverse professional consequences if his identity as a whistleblower were revealed. We granted his motion for that reason.” Order, at p. 1. (Citation omitted).

However, anonymity is not perpetual. Circumstances change, but the public’s right to know does not. So let the executrix show cause why the veil must remain undisturbed, and incidentally, what her authority is to act as executrix.

Finally, another stamped approval of change of venue in a Dixieland Boondocker, over IRS’ objection. Here’s Cedar Creek Corner, LLC, Piedmont Private Equity Manager, LLC, Tax Matters Partner, Docket No. 22218-22, changing venue from Birmingham, AL to you-know-where. The tactic marches on? See my blogpost “The Lowest Bidder,” 10/28/24.*

* https://taishofflaw.com/2024/10/28/the-lowest-bidder/

I will not comment on the quality of the officiating at the recent World Series, at least not in print. I comment instead on Judge Emin (“Eminent”) Toro’s rebuke to the dilatory counsel in Sheriadia Thomas, Docket No. 11474-20, filed 11/1/24.

“Motion for Continuance DENIED – The case has already been continued four times.” Order, at p. 1.

A docket search shows each of the previous four (count ’em, four) continuances was requested by petitioner’s trusty attorney, but none of the three (count ’em, three) IRS counsel assigned to the case chose to object.

Judge Eminent Toro is apparently the only one not allergic to work. But why should it fall to the assigned judge to waste time, however minimal, on such stuff? Here in State court we have administrative judges, who ride herd on the calendar, encourage the diligent and rebuke the dilatory. Tax Court should have one, reprising the role of convoy commodore, those brave wartime captains who, through storm, shot, and torpedo, shepherded those who delivered to the battlefields the products of the “great arsenal of democracy.”

When appointed, the administrative STJ should take as his/her motto: “No litigant left behind.” Or perhaps “Marche où crève, mes enfants.”

Speaking of which, consider Maureece Parker, Docket No. 13390-23L, filed 11/1/24. Maureece never submitted the Form 656 and backups for the OIC he wanted during the four months Appeals gave him to do so, so Judge Tamara W. Ashford has no choice but to sustain the levy.

But read Maureece’s story.” I was in touch with two people regarding the IRS. One of which was sending me letters and another on the phone. I was originally on a payment plan but whom ever [sic] I was in contact with said my income and bills were too much so I can pause payments and just pay what I could. Then I’m getting letters from someone else who doesn’t seem to know anything I’m talking about and just telling a bunch of stuff and no one is giving me any clarification. I tried submitting an offer in compromise and it was rejected stating I needed a 1040. I’m confused on this process[.” Order, at p. 4.

How is it that no one at IRS, whether customer service or Appeals, thought to send Maureece to a LITC? Trial was scheduled in Philadelphia, PA (now not happening because summary J to IRS). Both Temple University and Villanova University boast prestigious law schools, with LITCs standing by, in that city.

IRM 13.8.1.1.1 (4) (10-01-2021) provides, in pertinent part: “IRS employees may refer taxpayers to LITCs, per section 1402 of the Taxpayer First Act. LITCs are independent from the IRS and represent individuals whose income is below a certain level and need to resolve tax problems with the IRS. This may include audits, appeals, and collection alternatives or U.S. Tax Court.”

Get with the program, guys.

Ch J Kathleen (“TBS = The Big Shillelagh”) should appoint me administrative STJ to sort this stuff out. Heaven forbid!