Attorney-at-Law

Archive for the ‘Uncategorized’ Category

SUBSTANCE VS SMELL

In Uncategorized on 04/19/2018 at 17:33

My colleague Peter Reilly CPA took his cue today from a very exalted source to “smite me with friendly rebuke” for having missed Summa Holdings, Inc., 2015 T. C. Memo. 119 filed 6/29/15. Mr Reilly has noted in his blog on forbes.com that both 1 Cr and 2 Cir are dealing with appeals, and 6 Cir has tossed IRS. The prevailing view on appeal is that economic substance is not a smell test.

I responded that when Summa came down, a variation on the DISC-stuffs-Roth gambit, I viewed it as “much of a muchness with the other blown-up DISC-to-Roth cases, like Mazzei and Ohsman.”

And the facts in Summa pre-date the codification of economic substance in the still-unrepealed Affordable Care Act.

So if the statement that “if there’s a problem Congress should fix it” is what tosses IRS, we have yet to see whether Congress did fix it in 2010.

Thanks as always to Mr Reilly.

Advertisements

FIIK

In Uncategorized on 04/19/2018 at 10:37

I don’t tweet, but the abbreviation that entitles this blogpost well summarizes Judge Mark V. Holmes’ Order in Gail Vento, et al., Docket No. 23537-08, filed 4/18/18. Judge Holmes is stuck with the outwash from the beaches of Our Insolvent Islands in the Sun.

For those unacquainted with 140-ese, the last three letters signify “If I Know.” The first I cannot explicate in a blogpost meant for family reading.

Again we have la famille Vento front-and-center, but only the daughters are on parade, their parents having successfully escaped the toils of the IRS. See my blogpost “It Pays To Be a Virgin,” 3/20/18.

But the issue of the daughters’ true Virginity was not disposed of, notwithstanding Judge James S (“Big Jim”) Halpern’s attempt, as to which see my blogpost “Farewell To The Virgin – Part Deux,” 9/7/16.

For between Judge Big Jim’s denial and IRS’ long-sought entry of decision in its favor, there came the Coffey break. See my blogpost thus entitled, 2/8/18.

So now the Vento daughters, having elected to dump the competent authority, maybe want to go for summary J (as Judge Holmes suggested in the last-named of my blogposts hereinabove, as my high-priced colleagues say).

Now all y’all know I just love summary J. Even if you lose the motion, you get valuable discovery, not only of your adversary but of the Judge as well.

Better yet, Coffey, with its kick-out of SOL, would end the whole Vento epic. Maybe.

Judge Holmes: “Respondent may well wish to appeal Coffey, though the appeal would likely head to a different circuit than any of these cases. Petitioners report that they may seek summary judgment. The Court would invite such a motion, but would urge both parties to become fully aware of the extreme complexities of figuring out what a fractured majority opinion means for later cases, and the possible difficulties of translating whatever the rule is in appellate courts to our Court’s rulings when we sit in conference. See http://procedurallytaxing.com/fractured-tax-court-opinions-which-opinioncontrols-and-does-the-supreme-courts-marks-decision-apply/ (And note as well that there is a case pending before the Supreme Court this term that may touch on this issue.) Order, at p. 1.

In short, chaps, exactly what did we decide in Coffey? It sounds like the weirdest doubleplay in baseball history, 5-7-4, but in Coffey five (count ‘em, five) Judges agreed in Judge Holmes’ “majority” decision, seven (count ‘em, seven) Judges concurred as to result but thought Judge Holmes and the “majority” went too far, and four (count ‘em, four) dissented altogether.

Hence the above-cited blogpost from a guest on a colleague’s site: how do you deal with a case where the ratio decidendi (that means what they were talking about, for those of you who didn’t go to a high-class law school) is all over the lot?

So, plaintively echoing Paddy Chayefsky’s words from long ago (“Whaddya wanna do, Marty?”), Judge Holmes orders the parties to “…describe any progress they have made in framing the cases for decision on summary judgment, by agreement to be bound by Coffey on appeal, or any other suggestions.” Order, at p. 2.

And respond by July 17. 2018. I’m sure Judge Holmes would love them to wait until July 17, 2118.

WILL IT NEVER END?

In Uncategorized on 04/17/2018 at 17:13

Many years ago, the British humor magazine Punch ran one-sentence reviews of plays then current in London’s West End. One particularly long-lived farce entitled “No Sex Please, We’re British” drew from Punch’s sententious critic the headline of this blogpost.

Now there are few sagas running at 400 Second Street, NW, that would draw so piteous a cry from such as me. But this five-barreled special is indeed a rara avis.

Here’s John E. Rogers and Frances L. Rogers, et al., 2018 T. C. Memo. 83, filed 4/17/18.

I have blogged the Rogers’s story extensively, but today Judge Goeke’s 134-page magnum opus has outdone me.

Suffice it to say that unreported income, sham transactions, undocumented loans, Section 274 documentation, home office, charitable gifts of land in exchange for municipal beneficence, and the innocent spouse who knew too much (with MBA, JD and CPA credentials), all play a part, but at the end of the day, it’s all been said before.

And yet, Mr. and Mrs. Rogers escape both the late-filing addition and the 75% fraud chop.

But wait, there’s more: the 20% accuracy or negligence chops are reserved for another day. So it seems there are Graev matters yet to come.

TRANSFERENCE

In Uncategorized on 04/16/2018 at 15:59

I see Ch J L Paige (“Iron Fist”) Marvel transferring cases away from Ch J-elect Maurice B. (watch this space) Foley, apparently preparatory to Judge Foley’s ascendance to the Chieftainship.

That means I need to get en charette with a cognomen. I have one chosen, but am awaiting final approval.

As soon as that happens, I’ll announce the unveiling.

ASKED BUT UNANSWERED

In Uncategorized on 04/16/2018 at 15:52

Cecil K. Kyei, Docket No. 9118-12, filed 4/16/18, is back, but Judge David Gustafson’s question remains unanswered because CKK never responds to a couple requests (hi, Judge Holmes) to deal with same.

The question? See my blogpost “Come And Take My Hand, Walk With Me Today,” 2/20/18.

How can one enter decision based upon a stipulation entered into when the 11USC§362(a)(8) automatic stay was in effect?

Obliging to IRS as he is to petitioners, Judge Gustafson let IRS cop out as to the stip, and treated their papers as a motion for entry of decision based upon lack of prosecution.

But IRS has no Section 6751(b) Boss Hoss sign-off, so chops are off the menu.

“Mr. Kyei has failed to participate in this case, and his noncompliance with the Court’s orders and rules prompts us to grant the Commissioner’s motion to dismiss as supplemented, and to enter decision against him pursuant to Rule 123(b).” Order, at p. 4.

But the decision is for less than the SNOD, because IRS has conceded some items.

IRS was lucky CKK didn’t put up a fight.

DO’S AND DON’TS FOR LAWYER

In Uncategorized on 04/16/2018 at 15:15

Tax Court Style

Let’s take these in reverse order. Both Richard Edward McCormick & Cielo Marie Mendoza, Docket No. 6186-17, filed 4/16/18, are, according to that Obliging Jurist Judge David Gustafson, “…attorneys, though apparently they are not tax attorneys and are not admitted to practice in the U.S. Tax Court.” Order, at p. 1.

I seriously doubt that box-top admission to USTC would much avail Rich & Ciel, or either of them, as they seem unable to deal with pre-trial prep. They prefer to seek continuance six (count ‘em, six) days before trial, without an affidavit or declaration under penalty of perjury or hospital admission slip in sight.

“…the Court received from petitioners an amended motion for continuance…. It includes no affidavit or unsworn declaration substantiating petitioners’ allegations. It does not state whether petitioners challenge the four numbered allegations about which the Court asked [the unreported income]. It does not give detailed allegations about the merits of the disputes in this case and does not give any supporting documentation. Rather, it alleges that ‘petitioners are reviewing their records and are still compiling primary documents from 2014’.” Order, at p. 4

This does not go over big with Judge David Gustafson.

“When a party mails a motion for a continuance to the Court 6 days before a trial date and then leaves the country, he does not thereby tie the Court’s hands and effectively grant himself a continuance.” Order, at p. 5.

IRS played nice before an earlier trial date, because IRS needed info from the State of VT as to the accuracy of its third-party reporting. Turns out VT confirms all the shortfalls.

Rich & Ciel get hit with the fully monty plus chops.

Don’t do it.

Judge Pugh is in on the hunt in Eric S. Harrop, Docket No. 6174-17, filed 4/16/18, but it isn’t about Eric at all. His attorney, to whom I’ll hereinafter refer as RJR, is a trifle casual with his motion practice.

“…counsel for petitioner, filed a motion to withdraw as counsel that did not comply with the Court’s Rules. After RJR failed to respond to our… Order for a supplement to his motion, we denied his motion to withdraw….

“This case was called from the calendar for the Trial Session of the Court at Salt Lake City, Utah…. There was no appearance by or on behalf of petitioner. Counsel for respondent appeared and filed with the Court a motion to dismiss for lack of prosecution.” Order, at p. 1.

So Eric is ordered to show cause why his petition should not be tossed, with a win on all counts for IRS thrown in at no extra charge. And so that RJR doesn’t feel left out, RJR “shall show cause in writing… why he should not be sanctioned for failure to respond to this Court’s…Order and for failure to appear…, or otherwise comply with the Court’s Rules.” Order, at p. 1.

Definitely don’t do it.

Here’s the “do” part of my blogpost, as Ch J L Paige (“Iron Fist”) Marvel shows the correct way to let an attorney who is allowed a peek (quick or otherwise) at the sacrosanct Section 6103(b) taxpayer info through the Section 6014(h)(4) peephole prepare for trial.

It’s a whistleblower case, of course, Richard G. Saffire, Jr., Docket No. 101-18W, filed 4/16/18.

And I do want to give a Taishoff “Good Job” to that well-respected Buffalo NY law firm representing Mr. S.

Of course, the material protected must be appropriately marked (see Order), and communicated only “…for the sole bona fide purpose of trial or hearing preparation….” Order, at p. 2.

As for anyone getting a glimpse from the Buffalonians, here’s the drill.

“…whenever petitioner or petitioner’s counsel intends to provide to any person(s) any document(s) containing section 6103 information of third party taxpayer(s) that respondent has designated and marked as ordered in the second ordered paragraph and provided to petitioner or petitioner’s counsel, petitioner or petitioner’s counsel must first provide a copy of this Order to any such person(s), inform such person(s) that he or she must comply with the terms of this Order, and obtain on a copy of this Order the name, the business or home address of such person(s) at which service of process can generally be made during business hours, and the signature(s) of such person(s). Petitioner or petitioner’s counsel shall retain the signed copy of this Order until one year after the decision in this case becomes final within the meaning of section 7481(a). After petitioner or petitioner’s counsel has complied with the first sentence of this ordered paragraph, petitioner or petitioner’s counsel may provide to any person(s) described in the first sentence any document(s) containing section 6103 information of third party taxpayer(s) that respondent has designated and marked as ordered in the second ordered paragraph and provided to petitioner or petitioner’s counsel.” Order, at p. 2.

Finally, anyone with any of the aforesaid material must, within fourteen (count ‘em, fourteen) days after decision become final per Section 7481(a), either destroy same and so certify to IRS, or give it all back to IRS.

I suggest getting a receipt in the latter case.

And I’d really like to read the moving papers that allowed the Buffalonians to get the peek, appropriately redacted, of course. But that isn’t possible.

“PUT THESE GRAEV MATTERS TO THE PROOF”

In Uncategorized on 04/13/2018 at 23:38

Sir Winston Churchill was talking about Ireland and spelled differently in 1912, but Judge Cohen is letting Darrell Archer, et al., Docket No. 10444-16, filed 4/13/18, “go forward together” when it comes to proving the Graev Boss Hoss sign-off.

Darrell and the als fell foul of Section 274 strict substantiation, and had maybe a substantiation issue with their Section 170 charitables. Moreover, Judge Cohen found Darrell and the als had other problems, when IRS tried to wild-card in the Section 6751 Boss Hoss post-trial.

“Petitioner’s responses make various other meritless arguments about the validity of the notices of deficiency. We will disregard them for present purposes but note that he is apparently misguided in his citation of legal authorities in the context of his acknowledged ignorance of sections 274(a) and 170(f)(8). With respect to relevant considerations, he suggests that motions made after the record is closed are untimely and that receipt of the evidence probably would not change the outcome of these cases. He is mistaken in the latter regard because our view of the evidence supports the application of section 6662(a) penalties.” Order, at p. 2.

Darrell claims the Boss Hoss won’t change the outcome. Maybe not as to the deficiency at issue (which doesn’t look rosy for Darrell), but it sure would as to the 20% chops.

So IRS gets their wild card. But Darrell also gets his innings.

“Petitioner requests the right to examine the examiner who executed the declarations accompanying respondent’s motions, which we interpret as a hearsay objection to certain representations therein. We will allow limited discovery to propound the questions that petitioner wishes to pursue. In view of his propensity for misguided and meritless arguments, we will limit that discovery to proper areas of inquiry.” Order, at p. 3.

Darrell can hit the IRS declarant with “single, definite” interrogatories, dealing with what declarant declared.

 

TAX COURT AS KINDERGARTEN

In Uncategorized on 04/12/2018 at 16:39

There has been some buzz on the Internet about teachers’ strikes in various localities. I don’t comment upon news developments outside the realm of tax, except in the rarest of instances.

But while much has been made of the hard work and advanced educational qualifications of teachers, Tax Court judges need a wee boost as well.

The educational and real-world experience that the judge brings to his or her seat on the bench in the “small court” is beyond cavil or controversy. I’ve said in the past if I could find even two or three of equal stature, I could build a world-class tax department in any major law firm. But so could any lawyer.

Now see to what these extraordinarily-talented people are reduced.

Judge Elizabeth Crewson Paris: Aspro, Inc., Docket No. 17494-17, filed 4/12/18. “…petitioner filed a Stipulation to Take Deposition of A and B. However, the document internally states that it is supplementing respondent’s …Motion to Take Deposition Pursuant to Rule 74(c)(3). …petitioner cannot supplement a document that respondent has filed….” Order, at p. 1. (Names omitted).

Johnny, you can’t draw on Mary’s paper.

Ch J L Paige (“Iron Fist”) Marvel: Teresa Conaty Tierman, Docket No. 1135-18, filed 4/12/18. TC got bounced for lack of jurisdiction. The following week she sends in a letter that her name was misspelled. So Ch J Iron Fist (1) orders the caption amended, (2) orders the bounce order amended, and (3) “the Court’s Order of Dismissal for Lack of Jurisdiction…remains in full force and effect.” Order, at p. 1.

I’ve corrected your library card, but your library book is still overdue.

PAY AND IT ALL GOES AWAY

In Uncategorized on 04/11/2018 at 16:21

Right? Isn’t it the function of the “small court” to afford taxpayers the only prepayment tribunal whereat to contest liability? So once there’s no longer a liability or threat of collection, there’s no longer a case, no?

Maybe not. What happens when a Section 6015 innocent spousery is interjected into a deficiency proceeding, whether or not by intervention, and the claim is paid?

Judge Morrison has the question, but maybe hasn’t read my blogpost “Entropy,” 2/5/18, where Judge Pugh had the answer.

Joanne Folger, Docket No. 3633-17S, filed 4/11/18, apparently coughed up the deficiency, additions, chops and interest at issue, so IRS moves to dismiss as moot.

OK, no-brainer, right?

But what about Joanne’s innocent spousery?

Judge Morrison takes Joanne off the trial calendar, but keeps jurisdiction and tells IRS to: “…file a supplement to its motion to dismiss, addressing the question of whether a court has ever dismissed a § 6015 case on grounds of mootness because the joint tax liability has been paid.” Order, at p. 1.

Hint- Read my blogpost abovecited, and Connie L. Minton, a.k.a. Connie L. Keeney, 2018 T. C. Memo. 15, filed 2/5/18.

A DAY IN THE LIFE

In Uncategorized on 04/11/2018 at 15:51

No, not the Lennon-McCartney classic; rather, one gets the feeling that Judge James S (“Big Jim”) Halpern has had enough of certain tactical manœuvres in this designated hitter, George E. Joseph, Docket No. 27759-15, filed 4/11/18.

Judge Big Jim gives George and counsel one (count it, one) day to respond to an IRS oral motion to bar testimony from the AO who, according to George and counsel, “re-performed the audit of taxpayer based on serious deficiencies apparent from the original audit.” Order, at p. 1.

So George wants to get the AO’s testimony.

Except trial is set for Tuesday, 4/17/18, date and time certain. And IRS’ counsel says the testimony is inadmissible and irrelevant.

Now my sophisticated readers will say “hey, deficiency cases are tried de novo, so who cares what IRS or Appeals did or didn’t do? The past is prologue. Let George and counsel prove the return or returns at issue are substantially correct.”

Judge Big Jim is a little more explicit.

“The gravamen of respondent’s objection is that any testimony by AO would be excludible under Fed. R. Evid. 408 as evidence of a compromise of the deficiency in tax determined by respondent. Also, respondent argues that petitioner bears the burden of proof, see Rule 142(a), Tax Court Rules of Practice and Procedure, and that AO’s testimony is not necessary or relevant for petitioner to meet his burden. Finally, the Court brought to the parties [sic] attention what the Court announced long ago in Greenberg’s Express, Inc. v. Commissioner, 62 T.C. 324, 327 (1974): ‘As a general rule, this Court will not look behind a deficiency notice to examine the evidence used or the propriety of respondent’s motives or of the administrative policy or procedure involved in making his determinations.’

“Also, the Court has looked at the petition and is somewhat at a loss as to what, other than matters precluded by Fed. R. Evid. 408, AO would testify to. Petitioner assigns error to respondent’s deficiency determination claiming: ‘The amounts filed in the filed returns are the correct numbers.’ In support of that assignment of error, petitioner avers in relevant part: ‘Although a significant tax liability remains, the numbers are correct and are not nearly as large as the numbers seemingly pulled out of the air by the auditor.’” Order, at pp. 1-2. (Name omitted).

Of course, George’s petition flunks the Rule 34 separately state and number clear and concise statements of facts relied upon test. And settlement negotiations can’t be introduced at trial.

So George and counsel have to unload the following on Judge Big Jim: “…an objection to respondent’s oral motion under Fed. R. Evid. 408 and also to respond to respondent'[sic] concerns as to the relevance of AO’s testimony and to our concern under Greenberg’s Express. He shall identify in particular the adjustments on the Form 4549-A attached to respondent’s notice of deficiency as to which he believes AO has knowledge. He shall specify the facts that petitioner relies on to show error in each of those adjustments. He shall identify what knowledge AO possesses of each of those facts. He shall identify how she obtained knowledge of each such fact.” Order, at p. 2. (Name omitted).

And they have to do this by close of business tomorrow, 4/12/18.