No, not those from a much more exalted authority than even United States Tax Court. Rather, today Judge Albert G (“Scholar Al”) Lauber is engaged in a dictionary chaw over “petitions and requests filed or pending” from the post-7/1/19 Section 6501(e)(7), in Donna M. Sutherland, 155 T. C. 6, filed 9/8/20.

Donna signed off on a couple delinquent MFJs (hi, Judge Holmes) as her spouse was being sentenced. Donna says she was emotionally confused, and even though she had no independent liability, thought she had to sign. She did file innocent spousery, but didn’t check the mental-or-physical-problems box because she thought she needed a doctor’s note.

She got bounced, and went to Appeals, but her representative was convinced the AO would misapply the Regs. and NOD the bounce, so rather than put in all the evidence at Appeals, Donna went for the pre-amendment de novo review and petitioned pre-amendment. Now Donna wants to put in the missing evidence, but based on the amended Section 6501(e)(7) “newly discovered” rule, she can’t. So she wants remand to make it clear she can put into the administrative record all the evidence her representative didn’t put in.

Judge Scholar Al has to decide if the Section 6501(e)(7) amendment applies. Remember, Donna petitioned pre-amendment, but obviously her case isn’t yet decided.

In previous post-amendment cases effective date didn’t matter, so this is first impression, thus full-dress T. C.

“On its face the effective date provision is ambiguous. ‘[P]etitions or requests filed or pending’ could mean ‘petitions filed or pending, or requests filed or pending.’ Alternatively, it could mean ‘petitions filed or requests pending.’ If the former reading is adopted, so that ‘pending’ modifies both ‘petitions’ and ‘requests,’ subsection (e)(7) likely would apply here because this case was pending in this Court when the amendment was enacted. If the latter meaning is adopted, so that ‘pending’ modifies only ‘requests’ and ‘filed’ modifies only ‘petitions,’ subsection (e)(7) would not apply. Petitioner’s request for innocent spouse relief had been resolved by the IRS, and hence was not ‘pending,’ on or after July 1, 2019. And her petition to this Court was filed before that date.” 155 T. C. 6, at p. 10.

I’ve said it so often: a lawyer who can’t find an ambiguity should find another way to make a living.

“This is an example of structural (also called syntactic) ambiguity. It arises where a sentence is susceptible to more than one meaning because of the way the words or phrases are organized. Clues to the meaning of such sentences can be supplied by the context and by other linguistic and interpretive tools.

“For example, assume a municipal ordinance that is effective for ‘cars or boats parked or docked’ at a city marina after a specified date. This provision would logically be interpreted to refer to ‘cars parked or boats docked.’ That is because each adjective comfortably modifies only one noun.

“On the other hand, assume a sales tax that is effective for ‘cars or trucks sold or leased’ after a specified date. Unless the context suggested otherwise, this provision would likely be interpreted to refer to ‘cars sold or leased, or trucks sold or leased.’ Both adjectives comfortably modify both nouns, and it would be odd to have different tax treatment for similar transactions involving similar vehicles.” 155 T. C. 6, at pp. 10-11. (Citation omitted).

Judge Scholar Al goes for the second reading. It’s “requests pending” and “petitions filed.”

I’ll spare you the linguistic anfractuosities, because Judge Scholar Al, scholar though he may be, is a practical lawyer.

“But if subsection (e)(7) were to apply to cases such as this–where the conclusion of the administrative process and the filing of the petition both preceded July 1, 2019, but the case remained pending in this Court thereafter–a sort of ‘gotcha’ could occur. The taxpayer would have gone through the administrative process believing that the scope of review in this Court was de novo. But she would then learn, once the time came for trial, that the scope of review was not de novo and that she could be prejudiced for not having made a more complete administrative record.” 155 T. C. 6, at pp. 16-17.

No need for remand. Donna can put it all in on the trial.

Those are the real comfortable words.

I chose a double major in college, philosophy and political science. If a vacancy for post of philosopher-king came open, my resumé was ready. It still is.

In my studies, I found the debate between David Hume and Bishop Berkeley.

Hume posited that there is no objective reality; we only know what we perceive. Thus, Hume would say, neither I, nor my MacBook, nor you, dear reader, exist, save in my mind. Bishop Berkeley responded that this was nonsense; of course the world, and all that is in it, exists in the mind of God.

Well, modern skepticism has little patience with that argument. But if anything has supplanted the mind of God as the source of objective reality, it is the internet. If it exists, it’s on the internet.

In proof whereof, I offer the story of the late Winston Tease, Sr., May 21, 1937 – August 23, 2020. Neither IRS nor Judge Mark V Holmes are certain of the late Winston Sr’s whereabouts in Winston Tease, Docket No. 15466-07L, filed 9/8/20.

This is a CDP from a TFRP (Section 6672).”We’ve remanded it twice to the IRS, and the second remand ended earlier this year. We ordered the parties to respond to this second supplemental notice of remand by August 28, 2020. A check of the docket showed no response from Mr. Tease, and the IRS attorney suggested informally that the reason may be that Mr. Tease has passed away.” Order, at p. 1.

Judge Holmes, unwilling to accept informal suggestions from IRS, orders a response.

“ORDERED that on or before September 30, 2020, Mr. Tease notify the Court in writing if he is still alive and, if so, state his response to the June 26, 2020 supplemental notice of determination.” Order, at p. 1.

Judge, according to the internet, IRS’ informal suggestion was right on the money. Try Google.

“If all the year were playing holidays,
To sport would be as tedious as to work;
But when they seldom come, they wished-for come,
And nothing pleaseth but rare accidents.”

It’s more than five years since I lamented the want of what we called in my young day head-banging in US Tax Court. See my blogpost “Old-Time Head-Banging,” 6/5/15.

Since it’s Friday evening before a three-day weekend, I suppose the last thing any reader wants to do is look at a five-year old blogpost, when they could look at a fifteen-year old Speyside single malt (up, no ice, no water), so I’ll tell you what I said.

“There were old-school judges, men (sorry ladies, this was in the Bad Old Days) who dragged into chambers and robing rooms recalcitrant litigants and badgered settlements out of them.

“We called it “banging heads.”

“And it saved a ton of time, money, vexation and effort, which otherwise would be wasted trying a case before a somnolent jury whose principal concerns were lunch and getting out of there.”

Well, today I’m glad to see the practice imported to The Glasshouse by STJ Peter Panuthos, in Peter Brancovich Turek, Docket No. 15447-19S, filed 9/4/20.

Now I’m not saying that Peter (the petitioner) was recalcitrant, or that his case lacked merit; I haven’t seen the papers, so how can I know?

But STJ Panuthos (finally about to earn a Taishoff cognomen) is equal to the task. Teletrial was set for 9/24 in my hometown.

“On August 28, 2020, respondent filed a motion for continuance. On August 29, 2020, petitioner filed his opposition to respondent’s motion. On August 30, 2020, petitioner filed a motion to change place of trial to Portland, Maine.

“On September 2, 2020, the Court held a conference call with the parties. During the conference call, and after an extensive discussion, petitioner agreed to concede all adjustments as set forth in the notice of deficiency. Respondent’s counsel advised that she would prepare a stipulated decision document and send it to petitioner for review.

“The Court will require the parties to submit settlement documents or to provide further information on the status of this case in advance of trial and will hold the aforementioned motions in abeyance.” Order, at p. 1.

“After an extensive discussion.”

Now that brings a nostalgic grin to my battered visage. Henceforth, STJ Peter Panuthos shall be herein referred to as STJ Peter (“HB”) Panuthos. The HB stands for…I’m sure you know.

I should know better than to express surprise at anything out of Tax Court. Honoré de Balzac, thou should’st be living at 3:30 p.m. Eastern, when The Glasshouse unleashes each day’s installment of your classic series.

No designated hitters or opinions, it being Friday, but John N. Magbual, Docket No. 7452-20W, filed 9/4/20, has six (count ’em, six) blower cases, all of like tenor. This aggregation lands on Ch J Maurice B (“Mighty Mo”) Foley’s workstation on a Friday before a three-day weekend.

To add insult to injury, John never anted the sixty clams for any of them. Nor did he redact name, rank, and serial number of the targets of any thereof.

Ch J Mighty Mo gives John the redaction letter.

“…when filing or lodging documents in this case in the future, the parties shall refrain from including, or take appropriate steps to redact the name, address, and other identifying information of the target taxpayer and, when appropriate, either (1) concurrently file or lodge under seal a reference list that identifies each item of redacted information and specifies an appropriate identifier that uniquely corresponds to each item listed or (2) concurrently file or lodge under seal an unredacted version of any redacted document that is filed or lodged. Documents filed under seal must be submitted to the Court in paper form.

“If utilizing the first method, the parties shall file or lodge redacted versions of documents accompanied by a reference list of redacted information, which must be filed or lodged under seal and specifically identify and state each item of redacted information (for example, when the target taxpayer’s name is redacted, the reference list must identify that redaction and also state the target taxpayer’s name). Subsequent references in the case to a listed identifier will be construed to refer to the corresponding item of information.

“If utilizing the second method, the versions shall be clearly marked as ‘Unredacted’ or ‘Redacted”, as appropriate, and the redacted version shall be an exact duplicate of the corresponding unredacted version, including attachments and exhibits, except for the redactions made with respect to the identifying information of the target taxpayer.” Order, at pp. 2-3.

And John, while you’re at it, file a proper amended petition, with lettered statements why the Ogden Sunseteers are wrong, and lettered statements of the facts you will adduce on the trial to prove they’re wrong.

And ante the sixty Georges.

All the above in three weeks.

I make the morning line 4 to 1 it doesn’t happen.

Yet another in the never-ending tale where stipulation brings capitulation is Norman W. Bascomb, Docket No. 19317-18L, filed 9/3/20.

Norm petitioned five (count ’em, five) years’ worth of NITLs, but as trial loomed, stiped out all of them. Thirty-two days after the stip, Norm moves for vacation per Rule 162.

Norm says “… that he had been hospitalized and suffers from various health problems, and that he misunderstood the effect of the decision document.” Order, at p.2.

Judge Nega: “While the Court may be sympathetic to petitioner’s health problems and although petitioner may have been confused in respect to the effect of the Court’s Decision entered January 23, 2020, petitioner has not shown any proper basis for the Court to relieve him of that Decision, nor has he shown any substantial error or mistake by this Court in reaching its Decision entered January 23, 2020, that might support a different outcome in this case. Confusion by one party as to the procedural effect of signing a stipulated decision does not rise to a level similar to lack of formal consent, mutual mistake, fraud, or another similar ground.” Order, at p. 2.

The last sentence of the immediately preceding paragraph should appear in every stipulation.

No, not a misspelling of the Mozart-Da Ponte classic. This is about what almost all charities do almost all the time when they get gifts of closely-held corporate stock…they redeem the stock with the corporation for cash to fund their charitable operations, because there is no public market for closely-held stock.

But IRS claims that what Fidelity Investments Charitable Gift Fund (Fidelity) did with the closely-held corporate stock Jon Dickinson and Helen Dickenson, 2020 T. C. Memo. 128, filed 9/3/20, donated to Fidelity was really Jon’s  sale of his stock to the corporation (triggering taxable gain), and then a charitable donation of the cash he got thereby. That’s because as soon as Jon donated the stock to Fidelity, Fidelity promptly redeemed the stock with the issuing corporation. Of course there was paperwork by Jon and the corporation approving the transfer of stock to Fidelity, stating the Fidelity could do whatever it wanted with the stock, no strings attached, and Fidelity is a legit 501(c)(3). IRS claims “nudge nudge, wink wink, say no more,” of course Fidelity was going to redeem.

Yes, but.

Judge Travis A. (“Tag”) Greaves says caselaw is clear: the donor must part with the shares completely before the stuff gives rise to income by way of sale.

On the first part, IRS has to show specific facts that Jon didn’t part with the stock completely. All IRS had was that Fidelity always redeemed closely held stock. Judge Tag: “…a preexisting understanding among the parties that the donee would redeem donated stock does not convert a postdonation redemption into a predonation redemption. Furthermore, neither a pattern of stock donations followed by donee redemptions, a stock donation closely followed by a donee redemption, nor selection of a donee on the basis of the donee’s internal policy of redeeming donated stock suggests that the donor failed to transfer all his rights in the donated stock.” 2020 T. C. Memo. 128, at p. 7. (Citations omitted).

Next, income by way of sale raises the question of assignment of income. Deals that move one party’s income to another (always a tax-indifferent or lower rate of tax) are taxable to the mover, not the movant. But the redemption has to be nearly certain, so that there’s income to assign. There was no plan of liquidation in place, and no corporate resolution allowing Jon to redeem when he made the gift to Fidelity.

“The parties point us to Rev. Rul. 78-197, 1978-1 C.B. 83, a “bright-line” rule… which focuses on the donee’s control over the disposition of the appreciated property. This Court has not adopted Rev. Rul. 78-197 as the test for resolving anticipatory assignment of income issues, …and does not do so today. The ultimate question… is whether the redemption and the shareholder’s corresponding right to income had already crystallized at the time of the gift. Regardless of whether the donee’s obligation to redeem the stock may suggest the donor had a fixed right to redemption income at the time of the donation, …respondent does not allege that petitioner husband had any such right in this case. Accordingly, respondent’s resort to Rev. Rul. 78-197, supra, is unavailing.” 2020 T. C. Memo. 128, at pp. 9-10. (Emphasis by the Court). (Citations omitted).

Judge Tag doesn’t consider legislative intent (see my blogpost “Settlements,” 8/31/20), so why should he consider Rev. Rul.s?

Taishoff says of course there was a deal to redeem in advance. The charity needs to do its charitable thing, not hold stock in a closely-held for which there is no public market. Since there is no public market, the charity has no choice but get the stock redeemed for cash. And closely-held corporations are closely held to keep the good stuff for the insiders, who don’t want charities with boards of trustees checking out the cookie jar for insider fingerprints. And heavy-hitting insiders in closely-helds who need a quick charitable write-off to offset a big capital gain when the closely-held goes public can do a sale-and-gift mix-and-match, selling some stock and giving away some.

Whatever, IRS loses summary J.

My esteemed colleague and delightful luncheon companion (whom this pandemic prevents me from joining for lunch in his hometown), Peter Reilly, CPA, has suggested that my blogposts have become too elliptical. A schoolmate of his (and presumably of Judge Albert G (“Scholar Al”) Lauber) said my blogposts used too many obscure terms.

I reminded Mr Reilly of my blogpost “Maybe Not So Obvious – Part Deux,” 1/22/15, but that’s now so long ago that a refresher is called for.

As I said back then, no readers need play guessing-games here; Tax Court and tax law are sufficiently obscure.

So here’s a brief glossary of terms and abbreviations, with more to follow if time (and reader interest) permits. And if some items are really obvious, I nevertheless include them because, as G. M. Fraser once remarked, “someone, somewhere, is sure to clamor for enlightenment if I don’t.”

Appeals – Internal Revenue Service Independent Office of Appeals. See https://www.irs.gov/appeals/appeals-an-independent-organization

CAP – Collection Appeal Process. Like a CDP (see below), but no Tax Court review.

CDP – Collection Due Process hearing. See 26USC§6320 and 26USC§6330.

CFR – Code of Federal Regulations. All the published regulations of Federal Administrative Agencies. Available online from http://www.law.cornell.edu

Ch J – Chief Judge

Chops – Penalties, e.g., Sections 6662s, 6663, 6694.

CPA – Certified Public Accountant. For my non-US readers, the equivalent of a Chartered Accountant.

CSTJ – Chief Special Trial Judge. Section 7443A.

Designated Hitter – A Tax Court designated order. For more details, see https://www.ustaxcourt.gov/InternetOrders/TodaysOrders.aspx

EA – Enrolled Agent. See 31CFR§10.4.

EE – Employee.

“Elevenses” – United States Circuit Court of Appeals for the Eleventh Circuit.

FRCP – Federal Rules of Civil Procedure. Available online from http://www.law.cornell.edu

FRE – Federal Rules of Evidence. Available online from http://www.law.cornell.edu

Glasshouse – United States Tax Court courthouse, 400 Second Street, NW, Washington DC 20217

Glasshouse Gang – Those stationed at The Glasshouse

IC – Independent contractor.

NFTL – Notice of Federal Tax Lien.

NITL – Notice of Intent to Levy.

NOD – Notice of Determination. Usually from Appeals after a CDP or equivalent hearing, but can come from Whistleblower Office (the “Ogden Sunseteers”) determining a whistleblower claim. Sometimes also from revocation of 501(c)(3) status, worker classification, or disqualification of retirement or deferred compensation plans.

Off-the-bencher – A Tax Court opinion rendered from the bench after hearing. See 26USC§7459(b). The transcript of the Judge’s oral remarks is the opinion (or order and decision).

Ogden Sunseteers or OS – Personnel of the IRS Whistleblower office, located in Ogden, UT, who deny applications and  watch the sunset.

Partitive Genitive – A syntactical form carried over from Latin, where one shows an object as a part of a greater whole, as in “a cup of coffee”, “a couple of rounds of briefing”, etc. Much derided by His Honor Judge Mark V. Holmes

Reg – Regulation. Usually Treasury Regulation. See CFR above.

Reg. Section – Specific provision of CFR.

Rounder – A frequent Tax Court litigant. May or may not be found by the Court to make protester or frivolous arguments. IRS periodically publishes notices setting forth what it defines as frivolous arguments. See wits, wags and wiseacres, infra.

RTRP – Registered Tax Return Preparer. One who qualified under the now-extinct Shulman-Williams registration regime, abolished by Loving v IRS, No. 13-5601, USCADC.

Section – The Internal Revenue Code, Article 26 United States Code.

“Small Court” – United States Tax Court, but may be used for inferior courts created by Congress under US Constitution, Art. 1, s. 8.

SNOD – The Statutory Notice of Deficiency, also known as the “ninety-day letter” or “ticket to Tax Court”.

SOL – Statute of Limitations. There is none for nonfiling or fraud. For others, there are three-year and six-year SOLs, which I abbreviate 3SOL and 6SOL.

State Abbreviations – I use the United States Postal Service version, e.g., CA for California, AZ for Arizona.

STJ – Special Trial Judge. Section 7443A.

Summary J – Summary judgment. Judgment on the law without need for a trial, as no material facts are disputed. See FRCP§56 and Tax Court Rule 121. There is a précis on the Tax Court website: “What is a motion for summary judgment? How should I respond to one?” https://ustaxcourt.gov/petitioners_start.html?s=summary&r=3051#START39

TAS – Taxpayer Advocate Service. See https://www.irs.gov/advocate/the-taxpayer-advocate-service-is-your-voice-at-the-irs

The Hill Far Above – Location of Cornell University Law School.

The Supremes – United States Supreme Court. Sometimes also USSC.

USCA – United States Circuit Court of Appeals.

USCFC – United States Court of Federal Claims.

USDC – United States District Court. Usually followed by State (or District or Commonwealth or Territory) designation, and geographical designation, if any, i.e., E (Eastern), W (Western), N (Northern), S (Southern), or M (Middle). Thus, I’d write United States District Court for the Middle District of Tennessee as USDCMDTN, and United States District Court for the District of Rhode Island as USDCDRI.

USCAFC – United States Court of Appeals for the Federal Circuit.

UPS – United Parcel Service.

USPS – United States Postal Service

Wits, wags and wiseacres – Aspirants to, or candidates for, Rounder status, but not yet elevated thereto.

I award various titles to litigants for their maneuvers on a purely arbitrary basis. Examples are Taishoff “Good try” of various classes, Taishoff “Good job” for winners,  and Taishoff “Oh Please,” the last for extremely feeble arguments and maneuvers.

I introduce editorial comments with “Taishoff says.”

The Tax Cuts and Jobs Act of 2017 made alimony nondeductible to the payor and non-taxable income to the payee. But pre-2018 divorce agreements continue unchanged while unmodified (in which event further hoops must be jumped through), so Michelle L. Romanowski, Docket No. 15816-19S, filed 9/2/20, may yet be relevant.

Both Michelle and IRS want summary J. Neither gets all of it, but Michelle gets tossed, while IRS only gets some. Thereby hangs the tale.

IRS first stung Michelle’s loved-once with a deficiency, but he showed expenses paid per the temporary maintenance order. So IRS gave Michelle a SNOD, as she reported nothing.

Michelle’s loved-once made mortgage payments on family home that he vacated. But since Michelle claims she never saw loved-once’s numbers, she’s raised a question of fact. Loved-once claimed the interest deduction on his return, as well as claiming it as part of  the alimony he paid. Nice try. So calculating which was what is a question of fact. As for paydown of the mortgage, that secured Michelle’s dwelling, so she got a benefit. And since she and loved-once held title as husband and wife, by State law (NY) her interest in the family home ceases at her death, so further payments not for her benefit, satisfying Section 71(d).

Utilities for the family home, even though billed to loved-once, benefit Michelle, so they’re in. So are the lease payments on the Land Rover for the months she had it.

Unallocated cash payments are taxable to Michelle.” We have previously rejected the argument that unallocated support allocations are not alimony because they could be part of the payor’s child support obligations under State law. See Berry v. Commissioner, T.C. Memo. 2005-91, 2005 WL 950117, at *14; see also Okerson v. Commissioner, 123 T.C. at 264 (holding that whether the document characterizes a payment as alimony ‘has no effect on the consequences of that payment for Federal income tax purposes.’) (quoting Hoover v. Commissioner, 102 F.3d 842, 844 (6th Cir. 1996), affg T. C. Memo. 1995-183). And petitioner does not allege that Mr. Romanowski did not make these payments. Based on the undisputed facts before us, we conclude that the semi-monthly payments were taxable alimony payments.” Order, at p. 4.

Health insurance payments were made for both Michelle and kids, but the evidence shows only lump-sum, so question of fact which payments benefited only Michelle.

The Court-ordered professional evaluation fees (probably for determining child custody) are neither alimony, nor income to Michelle, nor deductible.

So the unallocated payments, the Land Rover lease rent, and utilities are in as alimony, and presumably deductions for love-once. Mortgage payments and health insurance are questions of fact. Professional evaluation fees are out both ways.

Does payee benefit is the question.

A commentator from The Land of the Conservation Easement lamented the long delay in a case I blogged only yesterday under the caption “Let the Spinnin’ Wheel Spin,” 8/31/20. The commentator remarked that the case involved one MFJ 1040 return for a single year, and once the Sub S and LLC were disposed of, the issue was simple.

What price the syndicated (or maybe not syndicated) conservation easement, the commentator asked, with multiplex taxpayers with multiple entities, documents by the terabyte, appraisals, dueling experts, et hoc genus omne? Will these cases be the new Jarndyce v Jarndyce?

Far be it from me to condone dilatory tactics on any side. Justice delayed is justice denied, and the old cry “There’s no difference between ‘some day’ and ‘never'” is as true today as sixty years ago.

But a brief review of the facts in the case I blogged via a docket search shows that the petition was filed six (count ’em, six) years after the year at issue, and the SNOD issued only after two attempts by IRS to settle per Announcement 2005-80, both of which taxpayers rejected. The SNOD followed only as the SOL was about to run, with no Form 872 or any other extender in sight.

There were voluminous exhibits on the trial. See Sean L. Daichman and Linda E. Daichman, Docket No. 14368-15, filed 8/31/15.

Finally, there were five (count ’em, five) volumes of pretrial and trial transcripts, compiled over two days.

So given that the petition hit five years after the audit, a nine-month pretrial continuance agreed to by both sides, and a two day trial to sort this out, the time lag wasn’t as bad as the commentator suggests.

As my late law partner Sid (may he rest in peace) would grunt between his cigar-laden teeth when confronted with delaying tactics, “Select or settle or get out.” He meant either select a jury, settle the case, or go home.