No, not Betty MacDonald’s 1945 humorous account of chicken-ranching in Chimacum, Washington (wherever that is).

Today we have the story of Suffering Nichelle G. Perez, 144 T. C. 4, filed 1/22/15. And it’s quite a story.

Who better to tell it than The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Imperturbable, Irrefragable, Illustrious, Indomitable, Indefatigable (but never Impetuous or Inconsiderate) Foe of the Partitive Genitive, His Honor Judge Mark V. Holmes?

Suffering Nichelle’s suffering has induced an outpouring of legal talent rarely seen in a five-figure unreported income case. From left to right, we have “Professor Bridget Crawford of Pace University School of Law; Professor Lisa Milot of University of Georgia School of Law; and Professor Timothy M. Todd of Liberty University School of Law.” 144 T. C. 4, at p. 2. Judge Holmes thanks these renowned scholars for their “outstanding pro bono work on the unprecedented question this case raised.” Idem, as my high-priced colleagues would say; that means “in the same place as the last-cited item”, for those of you who are human beings and not lawyers.

Suffering Nichelle claims her egg dealings caused her suffering. And they literally are her eggs.

Suffering Nichelle donated human ova, of her very own manufacture, to a for-profit called Donor Source International, LLC. Suffering Nichelle was able to pass the strict scrutiny of DSI, LLC.

“…only nonsmokers between the ages of 21 and 30 who have no family history of cancer or personal history of infertility or mental disorders will pass the initial screening. For those who pass, the donation process begins with an online application; and, if selected, potential donors are invited for a consultation to go over the time commitment, needed medications, and risks of egg donation. They are also subjected to a series of psychological and physical evaluations, including blood tests, pap smears, breast exams, and pregnancy tests. Once approved, the potential donor creates an online profile that includes a picture, a description of her family history, and other personal details for prospective parents to view.” 144 T. C. 4, at p. 3.

Suffering Nichelle does this to relieve the suffering of persons unable to conceive a child, and provide the happy outcome described in Psalm 113:9.

Well done.

Except Nichelle got $20K during the year at issue, and a 1099 therefor. Now the contract she signed with DSI, LLC and the intended recipients clearly state she is being paid for her “…time, effort, inconvenience, pain, and suffering in donating her eggs. This fee is for Donor’s good faith and full compliance with the donor egg procedure, not in exchange for or purchase of eggs and the quantity or quality of eggs retrieved will not affect the Donor Fee.” 144 T. C. 4, at p. 5.

The contract also states that Nichelle is not being paid for the eggs, she isn’t selling body parts and she assumes all medical and physical risks. She signed a similar contract with prospective donees. DSI, LLC swears they can sue Nichelle for breach of contract if she didn’t follow the procedures, which included blood draws, hormone injections and invasive ultrasound examinations.

Finally, Nichelle had to have a massive hormone injection, be anaesthetized, and suffer various physical symptoms, the details of which I’ll spare you.

As this is a non-political blog, I refrain from making a personal comment about women’s rights over their own bodies, which usually takes the form of telling men (myself included) to shut up. I now return to the tax aspects.

Nichelle went online, talked to fellow donors, and decided that, as she was paid for pain and suffering (and she did suffer), the payment wasn’t taxable.

Of course both DSI, LLC and the prospective donees disclaimed all tax advice of whatever kind.

Judge Holmes agrees that this isn’t a case of a sale or exchange. “We acknowledge that this case has received some publicity in tax and nontax publications, which is why it is important to state clearly what it does not concern. It does not require us to decide whether human eggs are capital assets. It does not require us to figure out how to allocate basis in the human body, or the holding period for human-body parts, or the character of the gain from the sale of those parts.” 144, T. C. 4, at p. 5 (Footnote omitted, but read it; one of the amici, Prof. Milot, has authored a disquisition entitled “What Are We–Laborers, Factories or Spare Parts? The Tax Treatment of Transfers of Human Body Materials,” for the Washington & Lee Law Review. I cannot imagine what General Lee, asleep on the campus of that illustrious university, would say).

So here we don’t have a sale. But was Suffering Nichelle paid for services or for suffering?

She had to go through the entire process. “… Perez’s compensation depended on neither the quantity nor the quality of the eggs retrieved, but solely on how far into the egg-retrieval process she went. On this key point, the testimony of both parties to the contracts agrees with the contract language. We have to find that Perez was compensated for services rendered and not for the sale of property.” 144 T. C. 4,

Of course, payment for personal services is taxable. But payment of damages for physical sickness or injury isn’t.

The magic word in Section 104 is “damages.”

Going back in time, the exclusion from tax required a tort-type claim and recovery, but that got changed. The current Reg (1.104-1(c)(1)) says “Section 104(a)(2) excludes from gross income the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness.” 144 T. C. 4, at p. 12.

But as they say in The City of Light, “plus ca change, plus que c’est le meme chose.” The word “damages” is still around.

Nichelle claims that the Reg exceeds the statutory limits of Section 104(a)(2).

So Judge Holmes has to “pull into the Chevron Station”, 144 T. C. 4, at p. 13. In doing so, Judge Holmes sideswipes Mayo Clinic. See my blogpost “Carpenter, Colony, Chevron and Mayo”, 4/26/11.

Nichelle claims Congress hasn’t spoken, because Congress hasn’t defined “damages”, so we next go to the “arbitrary or capricious or manifestly contrary to the statute” Chevron text that Mayo applied to taxation.

OK, says Judge Holmes, but the cases Nichelle and amici cite go to settlements of claims, whether commonlaw or statutory. Here, however, there was no claim to settle: Nichelle agreed she waived all claims for medical or physical injury. In advance. Now if she had waived after the fact, maybe she might have had a better shot. But I can’t think DSI, LLC would play “trust me, trust me”, much less the donees.

“Perez very clearly has a legally recognized interest against bodily invasion. But we must hold that when she forgoes that interest–and consents to such intimate invasion for payment–any amount she receives must be included in her taxable income. Had the Donor Source or the clinic exceeded the scope of Perez’s consent, Perez may have had a claim for damages. But the injury here, as painful as it was to Perez, was exactly within the scope of the medical procedures to which she contractually consented. Twice. Her physical pain was a byproduct of performing a service contract, and we find that the payments were made not to compensate her for some unwanted invasion against her bodily integrity but to compensate her for services rendered.” 144 T. C. 4, at pp. 16-17.

But what about the 1996 Small Business Job Protection Act, which supposedly got rid of tort-type recovery as a predicate for Section 104 relief? That was for no-fault recoveries, like Workers’ Comp or automobile no-fault recoveries, where the injured party gets paid regardless of an affirmative finding against the party inflicting the injury.

It’s in advance of litigation, or in lieu of litigation. Further, the amendment “…helped tax regulation keep up with a bit of a shift in American law toward administrative or statutory remedies and away from common-law tort for some kinds of personal injuries. It is not at all arbitrary, capricious, or manifestly contrary to the Code. But it also doesn’t help Perez. We completely believe Perez’s utterly sincere and credible testimony that the series of medical procedures that culminated in the retrieval of her eggs was painful and dangerous to her present and future health. But what matters is that she voluntarily signed a contract to be paid to endure them. This means that the money she received was not ‘damages’.” 144 T. C. 4, at pp. 19-20.

And, looking forward to Super Sunday, Judge Holmes turns to the sports pages.

“We conclude by noting that the result we reach today by taking a close look at the language and history of section 104 is also a reasonable one. We see no limit on the mischief that ruling in Perez’s favor might cause: A professional boxer could argue that some part of the payments he received for his latest fight is excludable because they are payments for his bruises, cuts, and nosebleeds. A hockey player could argue that a portion of his million-dollar salary is allocable to the chipped teeth he invariably suffers during his career. And the same would go for the brain injuries suffered by football players and the less-noticed bodily damage daily endured by working men and women on farms and ranches, in mines, or on fishing boats. We don’t doubt that some portion of the compensation paid all these people reflects the risk that they will feel pain and suffering, but it’s a risk of pain and suffering that they agree to before they begin their work. And that makes it taxable compensation and not excludable damages.” 144 T. C. 4, at p.20.

Again I’m brought up short by a reader of this blog, when I assume that something is obvious. See my blogpost “Maybe Not So Obvious”, 8/28/11.

This time it’s Mr. T. J. Walker, who finds some of my abbreviations and slang  incomprehensible.

Mr. Walker is right. 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.”

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

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

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.

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

NIFL – Notice of Intent to File 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.

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).

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.

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.

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.

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

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

Summary J – Summary judgment. Judgment on the law without need for a trial, as no material facts are disputed. See FRCP§56.

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

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, 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 Eastern District of New York as USDCEDNY.

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

USPS – United States Postal Service

USSC – United States Supreme Court, sometimes also known as “The Supremes.”

I guess I’m getting old. I began a couple of recent blogposts with recollections of events sixty years ago. So I’d better bring the recollections closer to modern times.

OK,  around forty-five years ago, I was discussing a judicial decision (not involving tax) with a very senior member of our profession (he was admitted to practice the year before I was born). The decision interpreted a statutory provision that employed the word “all.”

I pointed this out, to which the gentleman remarked, “What a novel concept. All means all.”

Well, today we have a full-dress T. C. from Judge Wells, John Chase Lee, 144 T. C. 3, filed 1/21/15. And “any” means “any.”

At his CDP, JC didn’t raise nonreceipt of the Letter 1153 that triggered his right to object to the TFRPs, which IRS seeks to take out of his hide.

IRS says “game over, can’t contest liability, summary J for IRS.”

Not so fast, says Judge Wells.

“In reaching our decision, we must decide whether the requirements of any applicable law and administrative procedure have been met.” 144 T. C. 3, at p. 3.

IRS claims JC was personally served by the RO at a meeting with JC on March 30 (they never claimed mailing to last known address). But “(T)he Integrated Collection System History Transcript (ICS Transcript) that respondent submitted with the declaration shows a March 30… entry which does not refer to the Letter 1153. Instead, an entry on March 31… the day after the meeting, states: ‘In addition to GM entry above * * * both Bains and [JC] were personally served 1153’. 144 T. C. 3, at p. 5.

JC never petitioned the Letter 1153. He did petition the NOD from Appeals.

There is no SNOD for TFRPs; the Letter 1153 serves that function. If you want to fight liability (whether in whole or in part), you must petition from the Letter 1153.

If you didn’t, your only out is Section 6330(c)(2)(B), namely, viz., and to wit, that you were never served with the Letter 1153. That IRS issued the Letter 1153 is all very well, but though necessary, is not sufficient. You must have gotten it, or refused it, or failed to tell IRS when they mailed it where you were if you moved from your last known address.

See my blogpost “You Didn’t Get It – Part Deux”, 5/31/13, for the difference between assessing TFRPs and having the opportunity to contest liability.

At the CDP, the SO must verify that any and all requirements of law and administrative regulations have been met. And that is so whether or not the appellant raises any at the CDP.

The prohibition on raising issues related to the imposition itself applies only to the tax (or TFRP), not the notice (the Letter 1153). No notice, no opportunity to contest.

Judge Wells explains the difference between tax issues (Section 6630(c)(2)) and verification issues (Section 6330(c)(1)).

“Section 6330(c)(2) issues such as spousal defenses or collection alternatives cannot be a part of the Appeals officer’s determination unless raised by the taxpayer…. The concern… is that litigating new issues in Court without any prior consideration by the Service would frustrate the administrative review process created by section 6330…. In contrast, the section 6330(c)(1) verification requirements will always form part of the determination because the statute requires their consideration at the hearing regardless of whether the taxpayer raises the issue…. Because section 6330 requires Appeals officers to independently consider section 6330(c)(1) issues at the hearing, they are not ‘new’ when asserted in Court and there is no danger of frustrating the administrative review process.” 144 T. C. 3, at pp. 16-17. (Citations omitted).

This is summary J, so JC needn’t put in evidence admissible on a trial; he need only state facts that, if he can prove them with proper evidence, creates a material issue.

And he does. He says he always replies to IRS billets doux and there’s evidence of this, and he claims he had nothing to do with payroll or any of that.

IRS doesn’t produce a copy of the signed Letter 1153. IRS doesn’t produce an affidavit from the RO who allegedly served JC with the Letter 1153 on March 30. The TCS transcript says nothing about serving the Letter 1153 on March 30, only adding it as an afterthought the next day.

Not good enough.

When it comes to proper issuance and service of a Letter 1153, “any” means “any”. Whether or not the appellant raises it.

Takeaway for IRS- Admission of service or affidavit of service would help, and better still is hand-and-mail.

Well, Not Quite

No, not quite the Robert Allen Zimmerman ballade, in the best tradition of Francois Villon, which he launched on the world just fifty years ago. This is the story of two homesteaders, one of whom had a home that knocked out his deductions, and the other had no home, but that knocked out his. This is a tale of two petitioners, Joel B. Evans, 2015 T. C. Memo. 15, filed 1/20/15, and Shalom Jacobs, 2015 T. C. Sum. Op. 3, filed 1/20/15. Joel has a tax home, but it isn’t the one he claims. Shalom doesn’t have a fixed tax home, and the one he has isn’t the one he claims either.

Joel is an oilman, but not the kind that wears a suit to the office. No, Joel was out on Sakhalin Island during the years at issue. That Garden Spot East of Siberia was where Joel supervised drilling crews. Joel couldn’t bring his family there (though he tried for a visa for his daughter, he got a “nyet”). Joel lived in employer-provided housing with employer-provided meals and an employer-provided car and driver (Joel’s visa didn’t permit him to drive his own self). And Joel owned a house back in the USA, which he never rented but where his second wife and daughter lived. And where he stayed when he came home on leave. And where he was registered to vote and registered his car during the years at issue. You can see where this is going.

Joel’s Section 911(a) gambit hits the dry hole of Section 911(d)(3). Joel’s “abode” is back home in West Monroe, LA. Judge Lauber: “A taxpayer posted abroad will invariably have some connections with the foreign country in which he works, but if his ties to the United States are stronger, we have held that his ‘abode’ remains in the United States.” 2015 T. C. Memo. 15, at p. 8 (Citation omitted). It’s the old cocktail of economic, family and personal ties, not the legal definition of “domicile”. And “abode” does not equal mere physical presence. Joel is clearly taxable onshore, abroad at home.

But since he relied on Brad, an expert whose credentials, though unstated in this opinion, impress Judge Lauber, Joel escapes the Section 6662(a) chops.

Shalom is a long-haul truckdriver. He claims to share a house with fellow ex-pat Shimon, a sort of Minnesota kibbutz, to which he claims he contributes much money for upkeep (but can’t prove it). Worse, he testifies he sleeps in the “guest room”, where other sojourners sleep between times. Shalom’s life is apparently of the “six days on the road but I’m a-gonna make it home tonight” variety. But is it his “home”, or rather, his tax home?

No, says Judge Holmes. Unlike Gary A. Lyseng, Shalom doesn’t need to be in Minnesota to be “stickin’ to the union” for employment. See my blogpost “I’m Stickin’ to the Union”, 9/21/11 for Gary’s story. Shalom has no reason to be in Minnesota, or anywhere else, except for personal reasons. Judge Holmes sums up Shalom’s condition: “Cases decided over many decades give us the answer–a taxpayer who’s constantly in motion is a ‘tax turtle’–that is, someone with no fixed residence who carries his ‘home’ with him.” 2014 T. C. Sum. Op.3, at p. 5. (Citations omitted).

Shalom has no principal place of business except the cab of whatever rig he’s in at the time. He’s an itinerant, and his living expenses of whatever kind aren’t deductible. Shalom does get a substantial understatement chop. He claims there are three different kinds of truck drivers, each with separate tax issues. Judge Holmes is skeptical of that one but, as Shalom never bothered to tell whichever specialist he consulted about some 1099s he accumulated but never reported, good-faith reliance goes under the truck.

Whether you have a home or not, you might end up owing tax.

And Guiana, and Inner Mongolia and Outer Mongolia, and Chad, and Kyrgyzstan–nobody in these countries reads my blog. At least take a look-see.

Even though the doings at 400 Second Street, NW and 1111 Constitution Ave, NW, chronicled in my blogposts, may have minimal impact within your borders, to say nothing of your daily lives, they may evoke a sly giggle to brighten your day.

So join with the rest of the world–read taishofflaw.com.

Just in case–the foregoing may constitute attorney advertising.

No, not the long-running Britcom from Grace Brothers department store, nor the current lament from Nina E. (“The Big O”) Olson, National Taxpayer Advocate, that taxpayers and us professionals telephoning IRS cannot get through the understaffed eye-of-the-needle to get even wrong answers that cannot be relied upon. Congress has cut the IRS budget and is mad about the politicizing of the audit process as regards PACs. So if you’re counting on reaching IRS by phone this filing season, best of British luck to you.

Check out The Big O’s annual weep at http://www.taxpayeradvocate.irs.gov/2014-Annual-Report/

Today’s story is about an old chum who finally does get served, namely and to wit, Billy F. Hawk, Jr., GST Non-Exempt Marital Trust, Trustee, Transferee, Nancy Sue Hawk and Regions Bank, Co-Trustees, Et Al., Docket No. 30024-09, filed 1/16/15.

Remember Billyhawk, Mrs Hawk and the Hawklings? No? Then take a gander at my blogpost “Game Ends In No Score”, 5/30/12. This is another MidCoast Financial ring-a-ring-rosie with a C Corp with a huge gain and a basis of bortscht (please pardon an obscure technical term).

The key to the case is what I said back then: “Although the hawklings swear MidCoast got funds to close the purchase of Billyhawk Inc from Mid-Coast’s own monies and a private loan from an offshore, and didn’t strip Billyhawk Inc’s proceeds from the sale to Corley, they don’t have checks, bank statements or anything else to prove it. Every payment to the hawklings came out of MidCoast’s attorneys’ escrow account. If MidCoast did get outside funds, then Billyhawk Inc wasn’t rendered insolvent when the hawklings got the boodle, as the Corley cash was still aboard, so no fraudulent conveyance.”

OK, so now it’s time to prove. And guess what? IRS (or their pals at DoJ) has the dope.

Judge Wells takes up the tale. “One of respondent’s [IRS’] theories in support of transferee liability is that MidCoast purchased the stock using Holiday Bowl’s [Billyhawk Inc.’s] own funds rather than funds from an unrelated third party. After the Holiday Bowl transaction, respondent opened a tax shelter promoter investigation of stock acquisitions by MidCoast and its related entities. The investigation resulted in the convictions of several individuals, including John Ivsan, who is a former partner of Morris Manning & Martin LLP involved in the stock sale of Holiday Bowl.” Order, at p. 1.

Apparently Johnny Esq. was a lead batter in doing the nasty at MidCoast. And Johnny Esq. had the pictures, descriptions and accounts.

“Petitioners have requested from respondent certain unredacted Morris Manning & Martin, LLP ledgers (ledgers) allegedly created by John Ivsan. Petitioners also requested forty-four (44) boxes of evidence respondent provided to the Department of Justice in connection with the criminal investigation of MidCoast Financial, Inc. (DOJ evidence).” Order, at pp. 1-2.

IRS says oh no, this stuff is all ultra-top-secret, sealed with the seal of Section 6103(b)(2), which renders sacrosanct “return information”. The magic boxes and the ledgers name taxpayers and show payments to and from them.

Judge Wells awards IRS an “Oh Please, Second Class”.

“We find respondent’s argument unpersuasive. ‘Taxpayer identity’ is ‘the name of a person with respect to whom a return is filed, his mailing address, his taxpayer identifying number * * * or a combination thereof.’ IRC sec. 6103(b)(6) Respondent does not contend that the ledgers include either mailing addresses or taxpayer identification numbers. At most, the ledgers may contain the names of certain individuals or businesses to whom Morris Manning & Martin, LLP made disbursements or assigned credits and/or debits. Such listing of a name is insufficient for us to conclude that such persons are persons ‘with respect to whom a return is filed’, and neither do such entries identify the nature, source, or amount of income or any other data with respect to a return.

“Even if petitioners are seeking ‘return information’, the ledgers are directly related to the issue of the consideration paid for petitioners’ stock. See IRC sec. 6103(h)(4)(C). If the ledgers show that third party funds were designated for the purchase the Holiday Bowl stock, then it is some evidence, or would likely lead to evidence, that the transaction occurred as contended by petitioners. See T.C. Rule 70(b).” Order, at p. 2.

As for the DoJ stuff, IRS says it doesn’t have that, but has got electronic copies, and makes the same “return information” argument that just failed.

Judge Wells tells IRS to hand over the ledgers and whatever electronic files they have that relate to Billyhawk.

You’ll remember back in May, 2012, IRS was worried about the Billyhawk litigation compromising the criminal investigation of MidCoast. Well, it didn’t, and if the evidence IRS was hoping for did fall from the sky, as the Hawk Squad suggested, it might could be that evidence wins it for the Hawks.

Stay tuned.

Before we take off for the three-day weekend, two rounders show to the front, and that Obliging Jurist, Judge David Gustafson, shows that when someone asks him to go the mile, he will go the twain–and then some.

Following on Judge Gustafson, STJ Lewis (“Love That Name”) Carluzzo shows rounder David Loven Nelson, Docket No. 26547-12, filed 1/16/15, that two’ll get ya ten.

First is Judge Gustafson obliging Curtis E. Leyshon to check out 123 pages (and they all appear as attachments to this order) from his wife Lisa’s Tax Court non-trial back in August, 2012. And Curt should tell Judge Gustafson why he shouldn’t take judicial notice thereof. You can read it all in Curtis E. Leyshon, Docket No. 20983-13, filed 1/16/15.

Curt was at the table with Lisa in Judge Goeke’s courtroom back in August, 2012. Read the transcript of the hearing at the end of the 123 pages. It tells the story.

A primer on judicial notice. “Rule 201(b) of the Federal Rules of Evidence, provides in relevant part that a court may take judicial notice of a fact that is not subject to reasonable dispute because it ‘can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.’ Rule 201(e) provides a party the opportunity to be heard on the propriety of taking judicial notice and the nature of the fact to be noticed. A formal hearing is not required in all circumstances.” Order, at p. 1. (Citation omitted).

Hint: Curt, don’t play the protester game.

Dave’s case is simple. Judgment on the pleadings, which is neither a motion to dismiss or strike the petition, nor a motion for summary J. It’s what in my youth we called a demurrer, as explicated by Prof. Gray Thoron, On The Hill Far Above long ago, thus: “Everything you say is true–so what?”

“The pleadings establish that in 2009 petitioner received $161,365 in wages as a pilot for Northwest Airlines. Petitioner failed to report this income on a Federal income tax return, and the deficiency here in dispute is attributable to his failure to do so. Petitioner does not deny receiving the wages in the amount shown in the notice; rather, he contends that his compensation is not taxable. His position on the point is frivolous, and, despite the warnings, he has continued to maintain it throughout the proceeding. Because petitioner has not raised any issues on which he can prevail in his petition, respondent’s motion for judgment on the pleadings will be granted.” Order, at pp. 1-2 (Citations omitted).

But wait, there’s more, as the late-night TV pitchpeople say. Dave has been there before, back in August, 2012 like Curt’s spouse Lisa. Apparently 2012 produced a bumper crop of rounders, and Tax Court harvested them in August that year. And Judge Marvel hit Dave with a $2K Section 6673 chop when he was in Tax Court that time.

So STJ Lew, seeing Dave unrepentant, hits him with a $10K chop.

Enjoy the weekend.

It must be nearly sixty years since my boyhood friend Richard inveigled me to the old Marshall Chess Club on Tenth Street to watch the game at which he excelled and I could never assimilate. From that rather embarrassing experience I came away with the title for today’s blogpost, which features two such gaffes.

Finger-fehler (German: means “finger errors”) are errors made by touching the wrong piece or pawn at chess, which require the errant party to move the piece or pawn, notwithstanding that the party intended not so to move or that any such move would spell disaster. There’s even the celebrated Finger-Fehler Mate, but I’ll spare you.

Today we have two examples thereof.

Leading off, Mercedes Ochoa-Bunsow, Docket No. 21759-13, filed 1/15/15.

Merc claims her lawyer signed a stip of settled issues and a stipulated decision, to which she did not agree. She claims she never knew, never consented, never signed, fired lawyer and brought in new counsel (who enters appearance).

Merc claims her former lawyer was going to withdraw and also she quotes from a letter supposedly sent by former counsel admitting his deeds, but doesn’t produce same. Merc claims her new counsel will show how the stips are wrong.

Not good enough, says Judge Nega, and holds Merc to the deal.

The stips are clear enough, contract law governs, Rule 23(a)(3) requires either party’s or counsel’s signature (not both, although see my takeaway infra, as my small-batch-craft-Bourbon-drinking colleagues would say), and unless you can show real injustice, stips stand.

“This Court has repeatedly declined to vacate a stipulation for settlement. The Court regularly enforces settlement stipulations, written or oral, unless for reasons of justice a party should be relieved from the stipulation. A stipulation is treated like a contract and general principles of contract law are used to determine whether a settlement has been reached and whether it is binding and enforceable. ‘Under such principles, we enforce a stipulation of settlement that has led to the cancellation of the trial, absent a showing of lack of formal consent, fraud, mutual mistake, or some similar ground; a mistake by just one party to a stipulation of settlement is not a sufficient ground to disregard the stipulation.’ Order, at p. 3 (Citations omitted, but check them out carefully.)

So Merc is hit with a bushelbasketful of deficiencies. What she will do to her former lawyer is nowhere stated, but I most respectfully urge my readers not to find out what possible remedies she may invoke, should a like event befall them in their own cases.

Next is “Samuel Israel, an attorney”, but he’s only a bit player in the ongoing, long-running drama Pacific Management Group, BSC Leasing, Inc., Tax Matters Partner, et al., Docket No. 6411-07, filed 1/15/15. There are forty (count ‘em, forty) cases under this rubric, but one will suffice to lead you into this morass.

Sam an attorney is claiming attorney/client privilege or attorney work product privilege (Order, at p. 1) for some documents in the trial subpoena duces tecum he got back on October 30 last year. Sam an attorney didn’t show on the trial date (this past Monday) and hadn’t told IRS or Judge Lauber that he wouldn’t.

The documents in question, both paper and electronic, related to “the arrangement”, which is apparently what is at issue in these cases.

On Tuesday, Sam an attorney proffers a privilege log listing a dozen documents. But Sam an attorney never mentions e-mails.

Judge Lauber is kinder than I would have been, were I a Tax Court Judge (which I thank whatever gods may be will never happen).

Of course Sam an attorney must produce all the e-mails, unless he can claim privilege for any.

Worse, Sam an attorney’s privilege log lists a certain letter from Sam an attorney to petitioners’ trial counsel (who also was one of the creators of “the arrangement”). Though this case gives me grounds for plenty of them, I will spare you my usual conflict-of-interest remarks.

But yet worse: as one of the dozen was handed over at discovery and stipulated into the trial record, Judge Lauber finds privilege waived as to all Sam the attorney’s dozen documents, unless he can establish which specific ones do not relate to “the arrangement”.

So Sam has until 5:00 p.m., tomorrow, to produce at the Courthouse all the foregoing for in camera inspection, to claim whatever privilege he can for the e-mails, and to claim (in writing) whatever of the dozen do not in any way relate to “the arrangement”. And if Sam an attorney fails to do any of the foregoing, Sam an attorney is due in Court next Tuesday in person at 0930.

Takeaway Number One– If you’re doing a stip settling a case, have the client sign it. And make sure the stip says in bold-faced type “I the client have to pay $Y now”, with the client’s initials next to it. Keep a fully-signed duplicate original in a safe place.

Takeaway Number Two– Don’t wait until trial has begun to object to a subpoena duces tecum you got two months before. And if you have trial counsel, make sure they haven’t already handed over what you claim is privileged.

Takeaway Number Three– Judges get peeved at last-minute shenanigans. Don’t pull them unless well-prepared for the consequences, including without limitation judicial and client retaliation when they fail.

Takeaway Number Four– If not heeding the three (3) previous comments, keep one bottle of that small-batch-craft Bourbon handy; you may need it. Me, I’m an Old Grand-Dad guy.

No, it’s not a Tax Court Snowden spilling the clichés; it’s none other than The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Irrefragable, Illustrious, Indefatigable, Ineluctable, Indestructible Foe of the Partitive Genitive, Judge Mark V. Holmes, putting Randy Jenkins and friends wise to getting a low-cost or no-cost transcript of their trial, all nine (count ‘em, nine) volumes’ worth. And not one that fell off the Capital Reporting Co. truck.

Nope, it’s a designated hitter, Randy Jenkins, et al., Docket No. 27139-11, filed 1/14/15. Randy and the et als must get en charette with their post-trial brief. And Randy has a problem, which carries over to the et als.

For the nonce and yet a while after, Randy is an involuntary guest in a governmentally-owned and operated residence for the penally-challenged. In short, the Stony Lonesome.

Randy and the et als need help. They ask Judge Holmes to toss them the nine-volume saga. For free.

Judge Holmes: “Petitioners do not address the relevant factors:

“Do petitioners need the transcript to write their briefs?;

“Do petitioners have the financial means to pay for the transcript?; and

“Does the case present a substantial question?

“See Taxpayer Information: After Trial, http://www.ustaxcourt.gov/taxpayer info after.htm#AFTER9 (last visited Jan. 12, 2015).

“The Court therefore denies the motion, but without prejudice to renewal on a proper showing.

“Petitioners are advised that the Court customarily uses the form for seeking a waiver of the filing fee in considering the second question. See http://www.ustaxcourt.gov/forms/Application_for_Waiver_of_Filing_Fee.pdf.” Order, at p.2.

Judge Holmes extends the briefing deadlines by 60 days, but neither he nor Tax Court will spring for a free copy of the nine-volume saga.

But Randy and the et als can reapply. And they shouldn’t go to a guy in a black raincoat standing outside the Glass Box at Second Street, NW.

Taking up the words of the 1943 hit sung by the King Cole Trio, as written by the late great Nat King Cole and Irving Mills, but using his “softer, gentler” style, Judge Gale joins the ranks of the obliging Tax Court jurists with Melanie L. Thomas-Kozak, Docket No. 802-12S, filed 1/14/15, another Tax Court teletubby day.

You remember Judge Gale gave Melanie the boot. No? Then see my blogpost “He Gave Her the Boot”, 11/11/14.

Melanie and IRS were scuffling over Melanie’s deductions, most of which tanked, but Judge Gale did allow Melanie the deduction for her metatarsal safety boots. IRS conceded some, and Judge Gale allowed a couple others (as Judge Holmes would say).

So off went Melanie and IRS to a Rule 155 beancount.

IRS came up with numbers, but Melanie didn’t, so that should be “game over, decision per IRS’ numbers”, no?

No.

IRS’ numbers left out some of their own concessions and ignored some of Judge Gale’s findings, which Judge Gale itemizes in the order above described, complete with a concordance to his opinion, more particularly bounded and described in my blogpost above referred to.

So Judge Gale again gives the boot, this time to IRS’ motion for entry of decision, and tells IRS to show him where IRS’ numbers include their concessions and Judge Gale’s findings.

IRS, straighten up and fly right.