Once again I repeat the old tale.

Here’s Wendell C. Robinson & May T. Jung-Robinson, Docket No. 6446-19L, filed 9/27/19, from the wordprocessor of that Obliging Jurist, Judge David Gustafson, again helping out a tired old blogger with a designated hitter.

Wendell & May want partial summary J in this CDP. They don’t get it.

“The Robinsons’ motion shows that they reported on their [year at issue] tax return an income tax liability of $88,721.91 and paid that liability by withholding and by a check that accompanied the return. They argue that their… liability has therefore been paid in full, that the statute of limitations (section 6501(a)) bars further assessments, and that the proposed levy to make further collections … cannot be sustained.” Order, at p. 1.

IRS’ riposte seems to have a minor arithmetic glitch.

“However, the Commissioner’s response shows that the Robinsons’ return reflected six mathematical errors, that their correction increased the Robinsons’ tax liability by $13,267.20 to a total of $88,721.91, and that this larger total was timely assessed…. The Commissioner explains that these mathematical errors were corrected as such pursuant to section 6213(b)(1), which provides for a ‘notif[ication] … [that] shall not be considered as a notice of deficiency’.” Order, at p. 2.

Guys, $88,721.91 plus $13,267.20 does not equal $88,721.91. Even if you take off your gloves, your shoes and your socks, and lie on your backs with limbs in the air, $88,721.91 plus $13,267.20 does not “increase the Robinsons’ tax liability to a total of $88,721.91.”

Judge Gustafson finds issues of material facts here.

“The recitation of verification in Appeals’ notice of determination makes no mention of mathematical corrections under section 6213(b)(1), nor of whether the IRS ‘notified’ the Robinsons of such corrections in compliance with that provision so as to give them the opportunity to request abatement pursuant to section 6213(b)(2)(A) and thereby obtain the opportunity to resist the corrections under deficiency procedures. The Commissioner’s brief describes the alleged mathematical errors and cites section 6213(b)(1), but it makes no allegation about notification to the Robinsons or an opportunity to request abatement. We would expect to receive evidence on this issue in due course.” Order, at p. 2.

I would expect to see a motion to amend the answer, too.

I’ll tell ya, Fridays are days this blogger dreads. Tax Court never, but never, issues an opinion, not even a small-claimer, on Fridays. Most of the time, there’s a bushelbasketful of housekeeping orders, through each of which I must plod, trying to find something non-banal wherewith to amuse, if not instruct, my readers. Judges are loath to burden the hard-laboring clerks and flailing datestampers with designated orders, wherefore I must root through them all. So even if I find a “gem of purest ray serene” in the “dark unfathom’d caves” of Tax Court’s Friday’s undesignated hitters, the said readers are heading out for the weekend, and have zero time for this stuff.

And it’s worse, because this is the penultimate business day of this month of September, and my website hits aren’t coming.

But Judge Mark V Holmes comes to my rescue, and the legendary cavalry of my young days at the movies have nothing on Judge Mark V.  He’s designated fifteen (count ‘em, fifteen) orders, with docket numbers going back fourteen (count ‘em, fourteen) years. Cases tried, opinions issued, and the Rule 155 beancount is supposedly going on.

Here’s David B. Greenberg, et al., Docket No. 1143-05, filed 9/27/19. David and the als were part of AD Global. For the backstory, see my blogpost “Slog,” 5/31/18.

It seems Will is back from Portugal or wherever, and wants a stay to relitigate whether the FPAA for AD Global tolled the SOL for the individual partners.

Except.

Will and Dave lost that one in USCFC and Fed Cir affirmed. Besides, the criminal indictments severed the partnership items and dropped them to the partners as nonpartnership items. So mox nix whatever happens to AD Global the nonpartnership. Dear old TEFRA. Besides, Tax Court affirmed the legality of the conversions back in 2011.

Finally, “…[Will] argues a stay is necessary in these cases because he seeks to litigate (or, more precisely, relitigate) this statute-of-limitations issue in AD Global in the Court of Federal Claims. The Court of Federal Claims has stayed AD Global until final decisions are entered in these cases. On September 13, 2019, the Court of Federal Claims refused to lift that stay. Order dated Sept. 13, 2019, AD Global, 67 Fed. Cl. 657 (2005), aff’d, 481 F.3d 1351 (Fed. Cir. 2007) (No. 4-336T). Were we to grant this motion, cases in both courts would be suspended and no progress in bringing this whole litigation to a close would ever occur.

“This we will not do.” Order, at p. 3.

C’mon, Judge, no yellow card? If this move doesn’t merit a Section 6673 chop, what does? More to the point, Will’s motion is made in all fifteen (count ‘em, fifteen) cases. Even without taking off my shoes and socks, I figure fifteen times $25K is $375K, a World-record delay-of-the-game penalty.

And this is delay-of-the-game on steroids.

Carolyn J. Cole, Docket No. 14526-19, filed 9/26/19, is a self-represented petitioner who is also a lawyer. This reminds me of the old paradox of the barber who shaves everyone in town, except those who shave themselves; the question goes “then who shaves the barber?”

Carolyn J. Cole, Esq., does seem to have resolved the issue of the SNOD, which IRS bestowed upon her.  So IRS moves to dismiss her petition as untimely.

Except the SNOD wasn’t the issue. Ch J Maurice B (“Mighty Mo”) Foley explains. Carolyn J. Cole, Esq., wanted interest abated.

“Pursuant to I.R.C. section 6404(h) the Tax Court shall have jurisdiction over an interest abatement action brought by a taxpayer who meets the net worth requirement of section 7430(c)(4)(A)(ii) to determine whether the Secretary’s failure to abate interest under section 6404 was an abuse of discretion, and may order an abatement if such action is brought at any time (1) after the earlier of(a) the date of mailing of the Secretary’s final determination not to abate interest, or (b) the date which is 180 days after the date of filing with the Secretary of a claim for abatement of interest under section 6404, but (2) not later than the date which is 180 days after the date of the Secretary’s mailing of the final determination not to abate interest. I.R.C. sec. 6404(h)(1) (A) and (B).” Order, at p. 1.

So let IRS’ counsel check the record to see if either IRS rejected, or 180 days went by since Carolyn J. Cole, Esq., requested, abatement.

Apparently Ch J Mighty Mo’s directions to IRS to make jurisdictional motions on day 91 after anything hits their desks has taken effect.

Too great an effect.

Judge Halpern and Ch J Foley each have a take on the title of this blogpost. But in each case, the upshot is the same: once you take a certain position, you can’t go back.

Judge Halpern opens with Claude Tate George, 2019 T. C. Memo. 128, filed 9/25/19, while I was high above the clouds homeward bound. Hence the late post.

Claude T, ex- NJ Net and Milwaukee Buck guard, is caught in a full-court press. While sitting in stir, he gets a $200K pension distribution from the NBA. Claude T files neither an automatic extension nor a return, so IRS gives him one for free. Plus a deficiency for whatever the NBA didn’t withhold, and additions for late filing and nonpaying.

“Petitioner’s principal defense to respondent’s additions to tax is that he has been incarcerated, so that documents evidencing deductible expenditures are unavailable to him, and it would be inadvisable for him to file a … return until he obtains documents that might evidence those deductible expenditures.” 2019 T. C. Memo. 128, at p. 9.

Well, being in the slammer is not necessarily an excuse for not filing. And Claude T’s papers are bereft of any specific deductions he might have had. Claude T’s claim that his family might suffer hardship is for another day.

“And while petitioner avers in the petition that paying the amounts owed under the notice would pose a hardship on him and his family, he has not responded to the motion with any specific facts showing that he exercised ordinary business care and prudence in providing for his … tax liability. Nor has he responded with specific facts concerning his financial situation while the failure to pay penalty accrued. While his incarceration may have hampered his ability to obtain documents establishing the relevant facts, petitioner admits to family but fails to explain why family members did not assist him in gathering documents not in his immediate possession.” 2019 T. C. Memo. 128, at pp. 11-12.

Most importantly, if you want to itemize deductions, you have to file a return and elect itemized deductions. See Section 63(e)(1). If you don’t file and elect, you can’t go back.

Briana Dawn Ho, Docket No. 12250-19, filed 9/25/19, seems to be unaware of my blogpost “Good Call,” 7/14/17. Briana Dawn sent in a letter, which Ch J Maurice B (“Mighty Mo”) Foley treated as a petition, but stiffed the Court for the sixty Georges. Ch J Mighty Mo, ever alert for freeloaders, ordered Briana Dawn to stump up or fold.

Briana Dawn replies that she’d rather work with IRS. So one would expect Ch J Mighty Mo would toss Briana Dawn on the spot.

Not quite.

“Yet the closing statement of her recent letter gives pause, as petitioner concluded: ‘However, I do not wish to close the door with the United States Tax Court in the event I might need to knock in the future.”” Order, at p. 1.

Ch J Mighty Mo tells Briana Dawn that’s exactly what she is doing.

“Once such a dismissal has become final, the Court would be unable to revisit the determinations regarding [year at issue] made by the IRS in the… notice of deficiency, either in this case or in a new case. Except in very limited situations, this Court lacks jurisdiction over a proceeding once a decision or dismissal for lack of jurisdiction becomes final within the meaning of section 7481, I.R.C. A reviewable decision of the Tax Court becomes final ‘Upon the expiration of the time allowed for filing a notice of appeal, if no such notice has been duly filed within such time”. Sec. 7481(a)(1), I.R.C. Section 7483, I.R.C., provides that a notice of appeal may be filed within 90 days after a decision is entered. A nonreviewable decision, such as a disposition in a small tax case ‘S’ proceeding, becomes final “upon the expiration of 90 days after the decision is entered’. Sec. 7481(b), I.R.C.” Order, at pp. 1-2. (Citations omitted).

In simpler terms, Briana Dawn, if you don’t pay (or plead and prove poverty and get a waiver), after 90 days, the door is shut. All IRS has to do is run out the clock, do nothing, and your only remedy is to pay, file for a refund, wait the six (count ‘em, six) months, and sue in USDC or USCFC. Assuming SOL hasn’t run by the time you file for the refund. And that will cost you a lot more than sixty bucks, trust me.

Michael Balice, Docket No. 17799-18L, filed 9/24/19 justifies a prediction I made back in 2015; see my blogpost “The Jolly Rounder,” 3/16/15. Mike is back, albeit not on a Rule 161, but fighting off IRS’ summary J motion to affirm Appeals’ bouncing of Mike’s CDP without a hearing on the grounds of frivolity.

That Obliging Jurist, Judge David Gustafson, aware of Mike’s shady track record in Tax Court, nevertheless finds that not every word of Mike’s form letter petition is frivolous or shows an intent to delay and hinder the collection of revenue.

“In this case our review of Appeals’ determination would be assisted by more information about which positions reflected in Mr. Balice’s CDP hearing request are ‘position[s] which the Secretary has identified as frivolous under subsection (c)’ of section 6702.

“It is not clear whether there could be anything frivolous or dilatory about calling on Appeals to conduct the ‘verification’ required by sections 6320(c) and 6330(c)(1). Mr. Balice may be mistaken in his purported demand that the verification ‘be provided to me before the hearing’, since the statute requires that it be obtained ‘at the hearing’, sec. 6330(c)(1); but we do not yet see how this renders his position not just erroneous but ‘frivolous’.” Order, at p. 6.

Moreover, there is a chop in Mike’s latest case, and neither IRS nor Appeals seems to have dealt with the Section 6751(b) Boss Hoss sign-off.

“If, for purposes of section 6330(g), only some “portion” or “portions” of Mr. Balice’s CDP hearing request were frivolous or dilatory, but not the entire request, then it would seem that Appeals may have abused its discretion in denying Mr. Balice a CDP hearing. When this case is called from the calendar, the parties should be prepared to discuss whether that is so and, if it is, what further proceedings are appropriate in this case.” Order, at pp. 6-7.

Glad to see Mike is out of the Ft Dix FCI. It’s just about three weeks shy of fifty (count ‘em, fifty) years since I departed Ft Dix (albeit it not the FCI), DD214 in hand.

Once again we hear the story of Neil L. Whitesell and Tracy L. Whitesell, 2019 T. C. Memo. 126, filed 9/24/19. The story started (as far as this blog is concerned) with my blogpost “The Law of Return,” 5/18/17.

You’ll remember (or you will after you read my above-cited blogpost) that Neil and Tracy’s SOL started with the deficiency they got, not that which went to their wholly-owned Sub S.

Neil and Tracy took a big deduction when they lost a trade secrets case. But they appealed, and three years after they took the big deduction, the appellate court reversed and remanded. Neil and Tracy claim this means that trial court could reinstate the verdict appealed from, but Judge Morrison says that until the trial court does, the verdict is reversed.

So Neil and Tracy want to amend their already amended petition to claim the SOL ran on the periods for which IRS sought a deficiency. They claim they were pro sese and overwhelmed by Tax Court technicalities.

Except they had a CPA advising them, with a law firm writing memos of law in the wings.

“Because the Whitesells received assistance from W [CPA] and the TC law firm, we are not persuaded that the Whitesells’ pro se (i.e., unrepresented) status excuses their delay in raising the argument they now seek to make in their proposed amendment to amended petition.” 2019 T. C. Memo. 126, at p. 25. (Names omitted).

Also IRS is ambushed big-time, if Judge Morrison lets Neil and Tracy amend now. Neil and Tracy want to claim that giving them back the deduction for the reversed verdict should be in a year that everyone agrees is barred by SOL. But they argued for another year all along.

“In determining the potential for unfair prejudice, the question is whether allowing a party to add a new issue by a later amendment, rather than inclusion in the initial pleading, works an unfair disadvantage to the other party. The issue the Whitesells wish to raise is the argument that [new year] was the only year for which there should be an income inclusion. Had they made this argument in their amended petition, which was filed in December 2015, the IRS could have made an assessment for the [new year] tax year. But if the Whitesells are allowed to file their amendment to raise the issue now, the IRS would be prejudiced because the three-year period for assessing the tax for [new year] has ended.” 2019 T. C. Memo. 126, at pp. 27-28. (Footnote omitted, but it says that requiring IRS to prove 6SOL at this point is an ambush, and Neil and Tracy didn’t raise Section 1311 mitigation, so that’s off the table).

So be careful in pleading years, lest you pass the point of no return.

Maybe Wm Shakespeare (or Francis Bacon, or the Earl of Southampton, or Mr. W. H., or whoever else is on the shortlist for writer’s credits for Hamlet, The Scottish Play, King Lear, etc.), has furnished the title for this telling of the sad tale of Massoud Fanaieyan and Ziba Fanaieyan, 2019 T. C. Memo. 124, filed 9/19/19.

It’s Masso’s story. Though retired, he runs a rental real estate operation while Ziba toils as a hairstylist. The family gets the ACA premium credit, the undoing of many, and fail to do the Form 8962 reconciler. Had they done so, they would have discovered that they blew the 400%-of-poverty-line, and had to pay back the $15K of PTC they got.

IRS hit them with a SNOD. Masso petitions. And he gets creative.

“After this case was continued from a previous trial calendar, petitioners provided to respondent a Form 1040X, Amended U.S. Individual Income Tax Return, for [year at issue]. An attached Schedule C, Profit or Loss From Business, reported that Mr. Fanaieyan operated a publishing business that used the cash receipts and disbursements method of accounting, realized income of $731, and incurred expenses of $6,157 for a net loss of $5,426. That loss reduced petitioners’ adjusted gross income reported on the Form 1040X to $95,341.” 2019 T. C. Memo. 124, at p. 3.

The cutoff for the PTC in Masso’s case was $97K, while his AGI pre-1040X was $100K.

Masso claimed he was in the publishing business.

“The publishing business consisted of Mr. Fanaieyan’s efforts beginning no later than 2012 to publish and promote a book written by his sister. She wrote the book–a fictional account of challenges faced by a Baha’i student in Iran–to publicize the plight of a persecuted religious minority in Iran but was not able to publish it there. Mr. Fanaieyan wanted to support his sister’s efforts to bring attention to the issue and hoped that the book would generate enough revenue to cover publishing expenses and provide some income for his sister in Iran. His efforts to promote his sister’s book were spread over several years but did not take up most of his time and had ceased by [year at issue]. 2019 T. C. Memo. 124, at pp. 3-4.

Problem One for Masso is that the expenses he claims were made years before the year at issue. Even if, as Masso claims, they were capital expenditures, and even if he could substantiate them (and Judge Pugh avoids that issue), he claims he was running a business, reporting the publishing activity on Sched C.

Problem Two is Peter Reilly’s Delight, Section 183, home of the “goofy regulation.”

Pursuant thereto, where the activity incorporates both personal pleasure and the pursuit of pecuniary profit, the trier of fact must find the principal motive, based upon objective criteria.

And, like many a pro se before him, Masso on the stand at trial was less than a stellar witness for anyone but IRS.

“He had no history or particular expertise in publishing, and his testimony at trial convinced us that he did not devote most of his time to it. When we characterized the activity as a ‘labor of love’ at trial, he agreed and added that he wanted the book to generate income for his sister. His motives are commendable, but they are not enough to entitle petitioners to deduct any of their reported business expenses.” 2019 T. C. Memo. 124, at p. 10.

The Bard of Avon (or whoever) got it right. Love’s Labour’s Lost.

.

Seulement

Not even the “Frensh of Paris,” , whether “unknowe” or not, will do for Judge Colvin (Geoff Chaucer to the contrary notwithstanding), so Pascal Nsame and Lamiaa Msalka, 2019 T. C. Sum. Op. 26, filed 9/23/19, can’t put in their untranslated substantiation for their basis in their Canadian property.

“Documents written in a language other than English are generally not admissible unless the offering party provides an English translation. Petitioner husband testified that the French language documents, Exhibit 16-P, established the cost basis but later said that they provided information about the refinancing of the Canadian property…. The French language documents include no translation and thus are not admissible.” 2019 T. C. Sum. Op. 26, at pp. 6-7. (Citations and footnote omitted).

Here’s the omitted footnote. “Petitioners submitted one translated document with their answering brief. We generally do not consider documents submitted by one party after trial because the other party has not had an opportunity to seek additional testimony relating to the document. In addition, according to the translation, the document is a credit application and does not show the amount of petitioners’ cost basis in the Canadian property. Thus, we do not consider that document in deciding this case.” 2019 T. C. Sum. Op. 26, at p. 7, footnote 5.

Pas and Lam have other problems.

They claim a foreign currency loss for the debt service payments they made on the Canadian property while they rented it out.

“A foreign currency transaction loss can occur when there are changes in the exchange rate between the taxpayer’s primary currency and the currency in which the debt was denominated. Sec. 988(b)(2), (c)(2) and (3). Petitioners did not provide testimony or admissible documents to substantiate the amounts of payments they made on the mortgage during the rental period. Thus, petitioners have not shown they may deduct a foreign currency transaction loss.” 2019 T. C. Sum. Op. 26, at p. 11. (Footnote omitted, but it says the only documents Pas and Lam had were in French, untranslated.)

Pas and Lam aren’t through.

“Petitioners seek monetary damages from respondent on the grounds that respondent knowingly misrepresented the facts, made intentional false statements, and concealed the truth. There is no credible evidence in the record supporting petitioners’ claims on these points.” 2019 T. C. Sum. Op. 23, at p. 14.

That Obliging Jurist, Judge David Gustafson, has much advice for Alan David Cooper, Docket No. 4123-19, filed 9/23/19. And I do not presume to substitute my prose for His Honor’s.

That said, AD might have been spared Judge Gustafson’s exegesis, had he, before he petitioned the SNOD that gave rise thereto, perused my blogposts “Cracking Up,” 2/27/14, and “Another Rounder’s Day,” 6/3/15.

AD was another follower of Peter Hendrickson, whose literary efforts Judge Buch eviscerated, as more particularly bounded and described in the first of my above-cited blogposts.

But Judge Gustafson holds out hope.

“We take no pleasure in imposing penalties; the principal purpose of the penalties is to deter future abuse; and if Mr. Cooper plausibly undertakes to refrain from future abuse, then the need to impose a penalty might be reduced.

“On the other hand, if Mr. Cooper were instead to renew his frivolous arguments in response to this order, then it would appear that mere admonition cannot affect his behavior but rather that penalties might be necessary. We hope that will not be the case.” Order, at p. 3.

Coming off some heavy-duty Tax Court wins on phony captive insurance companies, which I’ve blogged, IRS offers terms of surrender to maybe some 200 captors.

Here’s the skinny: https://www.irs.gov/newsroom/irs-offers-settlement-for-micro-captive-insurance-schemes-letters-being-mailed-to-groups-under-audit