The CLE-mongers haven’t yet picked up on “win your case with a motion in limine”, but IRS has them in their toolchest for every job. Here’s Judge Elizabeth A. (“Tex”) Copeland to show us how proffered expert testimony may survive exclusion, but suffer substantial weight reduction, in Estate of Anne Milner Fields, Deceased, Bryan K. Milner, Executor, Docket No. 1285, filed 2/17/22, part of a coupled entry.

Bryan wants to put in the expert reports of a doctor and some unspecified financial person, to what end is unclear, but IRS’ objections certainly are.

“Respondent does not appear to dispute that Dr. M is a qualified physician. And while we agree that the treating physician would likely provide a more robust and credible account of Ms. Milner Fields’ medical condition…, these challenges go to the weight and credibility that we should give to the expert report and not its admissibility. We do however note that attached to Dr. M’s expert report as Exhibit D is a declaration of Ms. Milner Fields’ treating physician, Dr. G, which declaration is clearly hearsay. However, under Federal Rule of Evidence 703, such a declaration can be used to explain the basis of Dr. M’s expert opinion. Exhibit D will not be received for the truth of its contents at trial but may be considered for the purposes of understanding or explaining Dr. M’s opinion. Based on the foregoing, we will deny the Motion in Limine that relates to Dr. M’s report.” Order, at p. 3. (Names omitted). (Citations omitted, but get them for your briefs file).

As for the financial person, IRS claims she only used ordinary methods, and that no specialized knowledge was necessary. IRS also objected that her numbers were wrong, but she pointed out that IRS’ rebuttal numbers were also wrong.

“Finally, Respondent argues that Ms. B’s opinion as to whether Ms. Milner Fields retained sufficient assets for her support outside of the assets contributed to [partnership] is a legal issue. We disagree as this issue relates to a factual dispute relevant to a legal issue in this case. Respondent’s challenges, other than Ms. B’s qualifications as an expert with specialized knowledge, go to the weight and credibility that we should give the expert report’s conclusions and not its admissibility. Because there remains an issue of specialized knowledge better addressed at trial, we will hold the Motion in Limine that relates to Ms. B’s report in abeyance.” Order, at p. 5. (Name omitted).

So the Doc weighs in, but in the lightweight category. The financial expert may not make the weight.

Yesterday the New York State Academy of Trial Lawyers provided us with an engrossing lecture on Our Fair State’s fifth shot at producing a short form (“short” being only eight (count ’em, eight) pages long) Power of Attorney. Nevertheless, our General Obligations Law Section 5-1513 thus entitles it; “and my unhallowed hands shall not disturb it, or the Country’s done for.”

The learned presenter dwelt on the difficulty many agents had encountered when seeking to get the statutory short form accepted by banks, brokerages, and other financial institutions. They were met with objections that the principal must establish current competence, even though the power of attorney expressly provided that it survived incompetence. There were demands that the principal show up in person. And the old standby, “just use our form.”

Now of course, the latest and greatest enactment’s exclusive remedy, a special proceeding to compel acceptance, comes with a garnish of actual damages and legal fees.

I wish Judge Elizabeth A. (“Tex”) Copeland had issued her order in Estate of Anne Milner Fields, Deceased, Bryan K. Milner, Executor, Docket No. 1285-20, filed 2/17/22, in time for me to show how they do it better in Judge Tex Copeland’s home State of Texas.

Bryan, principal beneficiary of estate of the late AMF, was also her agent per a power of attorney given him by the late AMF years before she became the late AMF. He used same to manage her assets, although the greatest part thereof were publicly-traded securities managed by Wells Fargo. Yesterday’s presenter stated that Wells Fargo was among the best of the banks that honored the statutory short form. How well they deserve that praise can be seen from how Bryan used the power of attorney.

Bryan set up various entities in the thirteen months prior to the late AMF’s demise. He transferred much, though not all, of AMF’s assets among these, and created partnerships ostensibly to manage same, using the power of attorney to sign both for AMF and himself.

Bryan says Section 2036 doesn’t claw back said assets into the late AMF’s taxable estate, and wants summary J. Among other reasons, he says he needed a new entity because banks didn’t honor his power of attorney.

Judge Tex Copeland finds a bunch questions material fact (hi, l Judge Holmes), which you can read for yourself, but the one I like best is “If Mr. Milner had issues with financial institutions accepting his power of attorney, then how did he transfer securities managed by Wells Fargo and shares of North Dallas Bank & Trust Co. to [new entity] so quickly?” Order, at p. 5 (Footnote omitted, but I’ll print it).

“Mr. Milner’s ability to use his power of attorney to direct financial institutions to transfer millions of dollars in assets to a newly-formed partnership potentially contravenes his assertion that he has had issues with financial institutions accepting his power of attorney.” Order, at p. 5, footnote 6.

No, Judge, it potentially contradicts, that is, asserts the opposite, not contravenes, that is, violates, his assertion.

But maybe Wells Fargo truly is one of the better banks that honors statutory forms of power of attorney.

Bobby Branch, mining and real estate expert, has his hands full, as IRS is playing the stealth hand, trying to set up little tête-à-têtes with individual partners in Green Valley Investors, LLC, Bobby A. Branch, Tax Matters Partner, et. al., Docket No. 17379-19, filed 2/16/22. And maybe so quick peek some documents and stuff.

Judge Christian N. (“Speedy”) Weiler granted Bobby’s crew a protective order, but IRS wanted reconsideration, and gets it.

First, IRS “…will initiate no further communications with the individual partners/investors of the donor partnerships until petitioner’s motions for protective orders are resolved, and … temporarily sequester any information received from an individual partners/investors or their attorneys pending resolution of petitioners’ motions for protective orders. Order, at pp. 1-2.

But then comes the good stuff.

“…petitioners and respondent are to jointly (or separately if preferred) advise the Court on the following issues: (1) how many of the individual partners/investors are represented by their own counsel (wholly separate from the TMP’s counsel); (2) to the extent respondent seeks to contact individual partners/investors who are not separately represented by an attorney, how respondent would handle any inadvertent disclosures of privileged information; (3) if respondent receives documents from individual partners/investors or their counsel, when and how would respondent be obligated to share those documents with petitioners’ counsel; and (4) what showing petitioners can make that the individual partners/investors, who are admittedly ‘constituents of the organization,’ and either ‘supervise[], direct[] or regularly consult[] with the TMP and/or organization’s lawyer concerning the matter, ha[ve] authority to obligate the organization with respect to the matter, or whose act or omission in connection with the matter may be imputed to the organization’ as contemplated by comment [7] to ABA Model Rule 4.2.” Order, at p. 2.

And for those of my readers who haven’t memorized the comments to the Model Rules, here is comment [7] to ABA Model Rule 4.2.

“In the case of a represented organization, this Rule prohibits communications with a constituent of the organization who supervises, directs or regularly consults with the organization’s lawyer concerning the matter or has authority to obligate the organization with respect to the matter or whose act or omission in connection with the matter may be imputed to the organization for purposes of civil or criminal liability. Consent of the organization’s lawyer is not required for communication with a former constituent. If a constituent of the organization is represented in the matter by his or her own counsel, the consent by that counsel to a communication will be sufficient for purposes of this Rule. Compare Rule 3.4(f). In communicating with a current or former constituent of an organization, a lawyer must not use methods of obtaining evidence that violate the legal rights of the organization. See Rule 4.4.”

IRS’ counsel has until March 14 to tiptoe through those tulips.

No, it’s not my horn I’m tooting. I’m calling once again for reform of standards for admission to practice before United States Tax Court. There should be an examination for attorneys, wherever else they may be admitted and however highly spoken of they might be in other venues. It’s going on ten (count ’em, ten) years since my “modest proposal” pancaked onto deaf ears. See my blogpost “A Book and a Modest Proposal,” 5/22/12.

I’m not going to go over STJ Eunkyong (“N’Yawk”) Choi’s Order in Isobel Berry Culp and David Culp, Docket No. 14054-21, filed 2/15/22. My sources tell me that Ms. and Mr. Culp are lawyers in the Philadelphia area. For that reason, they are entitled to automatic admission to the Tax Court Bar.

STJ N’Yawk Choi makes my point far better than I could. I most respectfully direct your attention to Her Honor’s Order.

Judge Patrick J. (“Scholar Pat”) Urda looks deep into the craft of steamfitter in James P. Harwood and Connie J. Harwood, T. C. Memo. 2022-8, filed 2/15/22.

“According to the U.S. Bureau of Labor Statistics, steamfitters ‘specialize in systems that are designed for the flow of liquids or gases at high pressure.’ What Plumbers, Pipefitters, and Steamfitters Do, Occupational Outlook Handbook, U.S.  Bureau of Lab. Stat., https://www.bls.gov/ooh/construction-and-extraction/plumbers-pipefitters-and-steamfitters.htm#tab-2 (last visited Feb. 10, 2022)” T. C. Memo. 2022-8, at p. 2, footnote 2.

Judge Scholar Pat must have a good deal of fellow-feeling for Jim, as each in his own way plies similar crafts. Jim deals with high-pressure gasses in industrial settings; Judge Scholar Pat gets his high-pressure gas delivered by counsel at trial or oral argument. And we need both steamfitters and judges, else neither pipes nor precedents would stand up under continuous high pressure.

Jim’s contretemps with IRS stems from his now-mothballed unreimbursed employee travel expenses travel, which were live issues back in the day. Jim wandered “far and wee” but mostly through the jurisdiction of Plumbers and Steamfitters Union Local 598, whence came Jim’s work assignments; and when he wandered outside the 598 swath, he got his “travel card” ticket to work where other locals ruled.

But his heart, hearth and home were in Yakima, WA, where he and Ms Connie raised their family. When he wandered from job to job (that being the steamfitter’s life), he kept a log. Hard-hearted IRS said the Yakima homestead was for Jim’s convenience; as all Jim’s jobs for years at issue were short and of uncertain duration (lasting less than a year), Jim had no permanent tax home, so he had no travel expenses.

Judge Scholar Pat holds otherwise.

“We consider whether the taxpayer (1) incurs duplicate living expenses while traveling and maintaining the home, (2) has personal and historical connections to the home, and (3) has a business justification for maintaining the home.” T. C. Memo. 2022-8, at p. 10. (Citations omitted).

Jim definitely has two of the above. It’s the third that divides the parties.

“We are satisfied that Mr. Harwood had a sufficient business reason for living in Yakima. He was a member of a union local with a geographically disparate territory. Although he had not worked jobs in Yakima since 2005, almost all of his work during 2015–17 was within the Local’s footprint, with some assignments closer to his house than the hall in Pasco… and some further away…. We believe that his union membership, which gave him access to jobs within the union’s expansive territory, provided an adequate business justification for continuing to live in Yakima.” Order, at p. 11. (Citations omitted, but see my blogpost “I’m Stickin’ to th’ Union,” 9/21/11).

Judge Scholar Pat even judicially notices the map of Local 598’s territory, and includes same in T. C. Memo. 2022-8, at p. 2.

But there’s a noteworthy wrinkle here.

“…a taxpayer may deduct travel expenses between his or her residence and temporary work locations outside of the “metropolitan area” where the taxpayer lives and normally works. Thus, if a taxpayer usually works in Chicago, she may be entitled to deduct expenses if she drove back and forth to a worksite in Springfield. Although Mr. Harwood lives in Yakima, he does not normally work there, instead working throughout the disparate territorial jurisdiction of the Local. His travel accordingly does not qualify for this exception.” T. C. Memo. 2022-8, at p. 15, footnote 9. (Citations omitted).

Judge Albert G (“Scholar Al”) Lauber has acquired that sobriquet through much labor. My colleague Peter Reilly, CPA, a schoolmate of Judge Lauber’s at an elite boys’ high school (one of my nephews is also an alumnus), has remarked on Judge Scholar Al’s stand-out academics at the old school. But he must be echoing Sherlock Holmes’ famous remark “I am somewhat exhausted; I wonder how a battery feels when it pours electricity into a non-conductor?” after dealing with Gregory J. Podlucky & Karla S. Podlucky, Docket No. 453-17, filed 2/14/22.

Greg moves Judge Scholar Al to recuse himself.

“On June 21, 2021, he filed a 244-page motion asserting (among other things) that respondent has ‘perpetrat[ed] fraud [on] this Court by proceeding with the prosecution of the void Notice of Deficiency by and through a want of subject-matter jurisdiction.’ Later that day he filed a 199-page motion asserting that ‘the Federal Tax Statutes are clearly in derogation of personal rights and property rights.’ We denied both motions and reiterated our warning about frivolous arguments. Undeterred, petitioner husband filed on July 12, 2021, a 545-page document asserting (among other things) that there is no ‘enforcement clause in the 16th Amendment’ and that ‘the citing . . . of any statutes in Title 26 . . . [is] both unconstitutional and fraudulent.’” Order, at p. 2.

Judge Scholar Al, patiently: “At trial we reasonably characterized these positions as ‘frivolous.’” Order, idem., as my expensive colleagues would say.

But Greg is just warming up.

“Petitioners also assert that the Court showed bias by embracing respondent’s position on the central question in the case, namely, whether assets from petitioners’ corporation were diverted to them personally. In this passage the Court was urging Mr. Podlucky to use his time at trial to present testimony and evidence that were relevant to the issues the Court had to decide. The Court summarized respondent’s position and urged Mr. Podlucky to address it forthrightly rather than digress into facts that did not matter. In so doing the Court was attempting to help Mr. Podlucky, a pro se litigant, present his case more effectively.” Order, at p. 2.

Judge, it’s an old saw that should really be pensioned-off: “To present a case, you need to have a case.”

This is another instance of British Army slang going back more than 100 years. One authority defines it as “A soldiers’ greeting to a shower of rain likely to postpone a parade.” Although the “David” in the phrase is not otherwise identified, I maintain David refers to St. David, Welsh bishop of Mynyw during the 6th century, patron saint of Wales. Wherefore, the phrase may have started with a Welsh regiment’s distaste for regimentation in the rain, and their invocation of their homeland’s patron for deliverance.

However all that may be, today we have two Davids sending it down, Dave Hewitt, the victor in 11 Cir’s view of Reg. Section 1.170A-14(g)(6)(ii), and that Obliging Jurist, Judge David Gustafson. And the two Davids are sending down Habitat Green Investments, LLC, MM Bulldawg Manager, LLC, Tax Matters Partner, Docket No. 14433-17, filed 2/14/22, and two (count ’em, two) companions, all Bulldawg-managed and all whanged with Oakbrook pre-Hewitt.

There are consolidated motions for leave to file out-of-time reconsiderations. You’ll recall the Dawgs lost back in 2019, moved to reconsider in 2020, lost again, but then came Hewitt.

Of course, Judge David Gustafson, noting that appeals here go to 11 Cir, grants the late filing. But IRS is at its usual crafty maneuvering.

“The motions for leave state that the Commissioner does not object to those motions (i.e., does not object to the filing of the motions for reconsideration), and we will therefore grant the motions for leave and will file the motions for reconsideration that were lodged with them. However, the motions state that the Commissioner objects to the motions for reconsideration.” Order, at p. 2. (Emphasis by the Court).

So let IRS respond. But while IRS is trying to salvage the wreckage of its reading of the Proceeds Regulation, Judge David Gustafson sends down a wee reminder.

“We note that in response to an apparently equivalent motion in Oconee Landing Property, LLC v. Commissioner,  No. 11814-19, the Commissioner filed on January 27, 2022, ‘Respondent’s Notice of No Objection’. We do not insist that the Commissioner is obliged to take the same position in this case as in Oconee Landing, but that position does seem reasonable in light of the Eleventh Circuit’s reversal of Hewitt.” Order, at p. 2.

Another major silt-stir has arrived, with blogfodder galore. Send it down, David, indeed!

Judge Christian N. (“Speedy”) Weiler denies two appraisers the chance to intervene in opposing IRS’ motions to compel their depositions in Green Valley Investors, LLC,  Bobby A. Branch, Tax Matters Partner, et. al., Docket No. 17379-19, filed 2/11/22.

And he echoes Yeats’ Irish fighter pilot: “No likely end could bring them loss or leave them happier than before.”

Tax Court has no equivalent to FRCP 24; there are individual Tax Court rules, and Judge Speedy Weiler lays them out, Order, at p. 7.  Those, however, are for specific proceedings permitted by statute. But Tax Court can draw on FRCP 24 for the odd off-menu situation. See my blogpost “Snow(den) Job,” 7/18/16.

However, the would-be intervenor needs to show the outcome of the case would effect a seismic shift in their own life. The appraisers don’t make the cut.

“Messrs. V and W do not present any questions of law or fact in common with the main action in these cases. Messrs. V and W aver they are seeking intervention since they are both currently being investigated by respondent and respondent is also investigating several of their clients, and intervention is necessary to ensure that they and their clients’ rights are protected. As far as we can tell, however, Messrs. V and W fail to describe a ‘claim or defense’ they have, much less a claim or defense that they share with petitioners. Accordingly, we do not find the intervention of Messrs. V and W in these consolidated cases to be appropriate.” Order, at p. 8 (Names omitted).

IRS also wanted to depose the appraisers to ascertain basis for the Greeners’ reliance on their opinions, but the Greeners had already given IRS 8000 (count ’em, 8000) pages of documents, and Bobby Branch, the TMP, is the go-to party.

“First, we find that respondent has not demonstrated a specific need to take depositions in these cases. Respondent seeks information to determine whether the LLCs acted reasonably and in good faith in hiring the advisors and relying on their appraisals. Petitioners’ knowledge regarding the Properties’ transfer history, Mr. Branch’s professional background, specifically his experiences and knowledge in the real estate and mining industries, are important in determining these issues. However, while we previously found respondent needs to depose Mr. Branch to understand his personal knowledge, understanding, and beliefs at the time of the valuation as appropriate, we do not find that respondent has established such a need to depose the deponents. It is Mr. Branch’s state of mind, as the Tax Matters Partner, that is relevant in this determination. While reliance is at issue in this case, much of the information sought from the deponents is duplicative to that sought from petitioners and Mr.  Branch. Respondent has failed to show that the depositions would yield specific and precise factual information essential to the remaining issues in these cases or could lead to such admissible evidence that could not otherwise be obtained in the deposition of Mr. Branch.” Order, at pp. 6-7. (Citation omitted).

Remember, depositions, which are free for the asking everywhere else, are “extraordinary” in US Tax Court.

Those who at best lament, and at worst disparage, the hypertechnical, dry-as-dust arcana that (they believe) constitute tax practice really miss the human comedy (or tragicomedy), that is played out before them.

I didn’t blog Nikta Fatemeh Abdolrahim and Melvin Collins, T. C. Memo. 2020-50, filed 4/3/20. I thought the three (count ’em, three) orders I posted that day were more interesting than another preparer-gone-wrong story. And Nik and Mel had appeared before; see my blogpost “Residuals,” 4/25/18, which spoke of the fraud chops wherewith Nik and Mel were mulcted by Judge Tamara Ashcroft.

Today Judge Ashcroft enters decision (that’s what we State courtiers call a “judgment”) per Rule 155, the rule that is supposed to shield judges from having to do arithmetic to decide who owes what, a variant on our State “settle judgment on notice” judicial gambit (see my blogpost “Settle Order on Notice,” 6/23/17).

Of course Nik and Mel try to relitigate the numbers in the beancount, and lose. I’ll blog the order at Docket No. 9650-14, filed 2/10/22, not for the maneuvering, but for the result. And that’s what the human tragicomedy is about, “hearing oftentimes/The still, sad music of humanity.”

Year One, deficiency $8400, Section 6663(a) chop $6300. Year Two, deficiency $8800, Section 6663(a) chop a poetical $6664. I know, add a zero, as ex-Ch J L Paige (“Iron Fist”) Marvel so wisely put it. Both Nik and Mel had extensive educations, and income that most would envy. But I don’t know, and can’t know, what stresses they were under. Much less can I pretend that I would, or did, or could, do better in like circumstance.

But this is really what tax practice is about: real people, real stress.

So, to my brethren and sistern at the personal injury, criminal, and family law bars, all law is ultimately about people. Even our little corner of the world.

This is a tactic worth considering. Piedmont Breeze, LLC, Greencone Investments, LLC, Tax Matters Partner, Docket No. 12011-20, filed 2/9/22, uses it to narrow the issues for trial by trotting out their motion before even the show-and-tell, play-nice, of Tax Court’s usual discovery quadrille.

It’s another marked-up GA boondock conservation easement.

The Breezes claim that they “…had “satisfied all section 170 elements’ needed to sustain its charitable contribution deduction. It filed this motion before respondent had had the opportunity to pursue informal discovery or engage in discussions regarding stipulations of fact. Petitioner allegedly filed its motion at an early stage of the litigation in order to spare the Court from the ‘backbreaking burden in having to endure ersatz disputes on the scores of incontestable section 170 elements.’ Petitioner subsequently filed a motion for oral argument.” Order, at p. 1.(Footnote omitted).

Now I’d expect a Branerton lecture from Judge Albert G (“Scholar Al”) Lauber, extolling the merits of collaborative fact stipulation and issue-framing.

But there’s no need, as IRS has used the interval between the Breezes’ motions to engage in some informal discovery and “… appears to agree that (1) Piedmont conveyed a valid real property interest, (2) the property interest was granted in perpetuity, (3) [501(c)(3)] was a ‘qualified organization,’ (4) Piedmont obtained sufficient ‘baseline documentation,’ (5) Piedmont obtained a sufficient ‘contemporaneous written acknowledgement,’ (6) the land was not secured by a mortgage, (7) the easement deed contains no ‘judicial extinguishment’ problem, and (8) Piedmont obtained a ‘qualified appraisal’ prepared by a ‘qualified appraiser’.” Order, at p. 3, footnote 3.

OK, so what is there to try? My ultra-sophisticated boondock-bashing readers will cry with one voice “Valuation!”

Yes, but.

Judge Scholar Al seems to think there’s some problem with the Breezes’ reservation of rights respecting hunting stands, viewing platforms, picnic tables, fences, and ponds, as to all which the Breezes needn’t consult the 501(c(3). Order, at p. 4. This impacts perpetuity, and perpetuity is a fact question. Order, at pp. 4-5.

So two (count ’em, two) fact questions. Of course, post-Hewitt, I’d not lean too heavily on “highly contestable readings of what it means to be perpetual,” especially when I’m leaning on picnic tables in GA scrub.

But the Breezes’ early attack moved the football; Go Dawgs!, as they say in Georgia.