Herewith a couple miscellaneous items (hi, Judge Holmes) noted in passing, neither of themselves worthy of whole blogpost, but perhaps indicative of things to come.

Stephen C. Gilbert & Ronda D. Gilbert, Docket No. 18210-23, filed 11/13/24., are 177 (count ’em, 177) days late with the petition from the SND, according to Judge Elizabeth A. (“Tex”) Copeland. Steve & Ronda claim they never got the SND. USPS tracking information shows  both copies of the Notice of Deficiency were ‘Unclaimed/Being Returned to Sender.” “They further contend that the Appeals Officer assigned to their case, SL, left the Independent Office of Appeals at some time during the course of the appeals process, contributing to their lack of knowledge about the Notice of Deficiency.” Order, at p. 1.

IRS wants summary J, claiming mailing is sufficient, receipt not necessary, and IRS has plenty of somber reasoning and copious citation of precedent to back that up.

Except.

Steve & Ronda lived in NJ when they petitioned. Hence Culp country (3 Cir), where alone among the Circuits equitable tolling rules. See my blogpost “No Time for Modesty,” 2/15/22.* So now they get to tell Judge Tex Copeland why extraordinary circumstances thwarted their diligent attempts to assert their rights. Should be an interesting story.

Judge Albert G. (“Schoilar Al”) Lauber crafts a Rule 103 protective order for Mitsubishi Bank, a/k/a MUFG Bank Ltd., in Computer Sciences Corporation, Docket No. 4823-21, filed 11/13/24. Apparently some of MUFG’s proprietary info was hoovered up in the 1300 documents encompassing more than 10,500 pages by an IRS subpoena. Judge Scholar Al puts the veil thereon.

* https://taishofflaw.com/2022/02/15/no-time-for-modesty/

I will here engage in some editorializing and speculation, as opposed to my customary reportage, so you may skip this post, if you will.

No, this will not be political. I said I’m not going there, and I’m sticking to it.

Haven’t the multiple calamities that Loper-Bright was supposed to engender been exaggerated?

The abrogation of Chevron does not mean we can discard our copies of the CFR. Skidmore remains, and nothing in Loper-Bright requires any Federal judge to ignore or invalidate any Federal regulation we cite.

I just finished watching an hour-long webinar from my alma mater on the effect of Loper-Bright on laws affecting military veterans. The power of inertia is great; whoever may be Secretary of Veterans Affairs, their several Vicars of Bray remain at their posts. USDC judges, confronting the multiplicity of law and regulations affecting everything from cold-smoked whitefish to syndicated conservation easements, and being human (although some of us may doubt it), will take the course of least resistance. That means pay due obeisance to Loper-Bright and hold for the agency.

We seldom see cataclysmic change for what it is, and often exaggerate what isn’t. Me, too.

Baseball fans know that hitting for the cycle means a player, in a single game, hits a one-base hit (single), two-base hit (double), three-base hit (triple), and a four-base hit (home run). It is possibly the rarest feat in American professional baseball.

While Brian Dean Swanson, T. C. Memo. 2024-105, filed 11/12/24, has not received a Section 6673 frivolity chop in each increment from zero to $25,000, his record is sufficiently impressive to warrant a Taishoff “Frivolite of the Cycle” award.

“We take judicial notice that the Eleventh Circuit has sanctioned petitioner in the amount of $8,000 at least three separate times for taking such positions and that the Southern District of Georgia has also sanctioned him by permanently enjoining him from filing refund suits in federal court for any tax year in which he has failed to report his wages as income. See Swanson 9, 2023 WL 5605738, at *3; Swanson 6, 2021 WL 4551628, at *2; Swanson 3, 799 F. App’x at 671–72; Swanson 13, 2024 WL 3342503. We take further notice that this Court has sanctioned petitioner in the amount of $15,000 for making frivolous arguments. Transcript of Bench Opinion at 26, Swanson 11, No. 2526-23. As these sanctions appear to have left petitioner undeterred, we will grant respondent’s Motion and impose a penalty of the full $25,000 permitted in the hopes that petitioner will in fact think and conform his conduct to settled principles going forward.” T. C. Memo. 2024-105, at p. 7. (Footnotes omitted, but it’s more about Brian Dean’s appealing ways).

I can only wish Judge Alina I. (“AIM”) Marshall better success than I can myself envision.

But Brian Dean does manage to avoid the Section 6662(a) accuracy/negligence chops. The 1040 he filed isn’t a return, in that it doesn’t provide information reasonably necessary to calculate tax, nor is it a an honest and reasonable attempt to comply with law.

Oh, for the off-the-bencher hereinabove recited by Judge AIM Marshall, see my blogpost “Rounders’ Day, Again,” 4/22/24.*

• https://taishofflaw.com/2024/04/22/rounders-day-again/ recites aboive

Tax Court being closed, there will be no blogpost from me.

Whether Maimonides or Schumacher is your guide, neither addresses the problem that has been occupying far too much of the US Tax Court’s Chief Judges’ time. And mine.

I refer, of course, to the non-admitteds attempting to represent petitioners in Tax Court, because they are welcome at Exam. Having a Form 2848 or a CAF number is not enough. I will not weary my readers’ patience with yet another citation to an Order embodying the mantra “The United States Tax Court, which is separate and independent from the Internal Revenue Service, has certain requirements that must be met before an individual can be recognized as representing petitioner before the Court. The Tax Court, unlike the Internal Revenue Service, does not recognize power of attorneys.”

Almost every working day, at least a couple Orders (hi, Judge Holmes) with this language are needed to toss the non-admitted.  Leaving aside the ungrammatical “power of attorneys,” why this language does not appear in the Guide for Petitioners, Form 2 instructions, or anywhere else on the Tax Court website, eludes me.

Does the Chief Judge require busywork?

Judge Elizabeth A. (“Tex”) Copeland has to deal with unsalable, untransportable, irreparable, and unrecyclable WD-40 cans in IQ Holdings, Inc., T. C. Memo. 2024-104, filed 11/7/24. IQ set up a 501(c)(3) to research medical aerosols, and gave it land and building, a bunch equipment (hi, Judge Holmes), some inventory (aerosol cans and raw packaging materials), and cash. While waiting for TE/GE to bless said 501(c)(3), the cans went bad. USDOT told IQ they couldn’t ship them, WD-40 became immoveable and rejected the stuff, and IQ concluded it would cost more to recycle them than they were worth. So IQ wrote the stuff off. IRS wants to fight about the calculation of the amount of loss.

Reg. Section 1.471-2(c) provides guidance, based upon bona fide sales price. IQ never offered the stuff for sale, claiming no one would buy the junk. IRS wants summary J, but won’t get it from Judge Tex Copeland.

“We agree with IQH that Treasury Regulation § 1.471-2(c) cannot be read to require a taxpayer to offer for sale items that, in their current condition, would be tortious or illegal to sell. Moreover, solely for purposes of ruling on the Commissioner’s Motion for Summary Judgment, we construe the record in the light most favorable to IQH. Consequently, we must assume that both the IQ-branded aerosol products and the WD–40 cans were tortious or illegal to sell in [year at issue], precluding us from resolving the issue summarily on the basis that the goods were not actually held out for sale.” T. C. Memo. 2024-104, at p. 9. (Citation omitted).

And there’s also the issue in what year the junk became junk. IRS says IQ knew two (count ’em, two) years earlier the cans were junk. But IQ’s good faith is a fact question.

Summary J is fact-finding, not fact-determining, but there are two (count ’em, two) facts not in dispute. The Contemporaneous Written Acknowledgement from the 5012(c)(3) doesn’t have the magic “no goods or service were provided” wording, so that sinks the charitable side. Substantial compliance can’t o’ercrow explicit statutory requirement.

Likewise, IQ’s claimed NOL founders for year at issue because of failure to check the box on line 11 of the 1120 IQ filed (IQ is a C Corp), thereby failing irrevocably to renounce timely carrying back its NOL. That’s necessary to prevent free-riding by taxpayers, who could claim a “whoops” later on, depending on what income they subsequently had or didn’t have.

There’s argy-bargy about Section 1314 mitigation, but the year for which IQ should get a refund because its NOL needed to be carried back two years is not before the Court.

Finally, the Section 6662(a) chops might be avoided if IQ can put in its accountants and “various corporate representatives” (T. C. Memo. 2024-104, at p. 20) on the stand to testify to IQ’s good faith, so no summary J on that.

Once again, summary J affords discovery of everybody’s case, and what the judge thinks of them.

The Tax Court homepage announces today the death of the designer of its homeplace, Vic Lundy, at the age of 101. For more, see here.*

Surprisingly, The Architect’s Newspaper fails to mention The Glasshouse among Vic’s many notable creations. To remedy that oversight, see my blogpost “Vic Lundy,” 11/27/20.**

* https://www.archpaper.com/2024/11/victor-lundy-architect-artist-dies-101/

** https://taishofflaw.com/2020/11/27/vic-lundy/

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

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

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

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

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

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

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

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

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

Peter Reilly, CPA, please copy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Get with the program, guys.

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