Archive for the ‘Uncategorized’ Category


In Uncategorized on 05/25/2020 at 06:45

As United States Tax Court in exile is closed for the holiday, there will be no post other than this. I ask that readers place a candle in a window, if possible, in remembrance (electric preferred).


In Uncategorized on 05/22/2020 at 16:35

Locked-down and sequestered as I am, I approach nostalgia as I think about the days when I had clients. They were so varied, and yet so alike. The experiences I had were often surreal, an endless loop of L’année Dernière à Marienbad, interspersed with silent-film comedy reels. And all the while shooting down the sharp, clear, technical slalom of New York City real estate, negotiating gates at high speed, in an adrenaline-fueled euphoria. You truly couldn’t make that stuff up.

So when I read Judge David Gustafson’s admonition to Robert Bruce Blackmer, Docket No. 8091-19S, filed 5/22/20, the warm wave of recognition that broke over me as I rolled through the surf of memory brought a wrinkled smile to my ancient visage.

This is really too good to paraphrase.

“…the Commissioner filed a status report that states: ‘On April 28, 2020, respondent’s counsel and petitioner discussed the case and status reports telephonically, and petitioner stated that he will hire an attorney two months before the trial and that the case is not susceptible to settlement at this time.’” Order, at p. 1.

Oh, and by the way, Robert and IRS had a Branerton conference in February.

On this schedule, by the time Robert has retained counsel (if anyone other than a pro bono will take a small-claimer), discovery will be complete and Robert will have a bunch of Rule 37s, 90s and 91s wrapped around him tighter than snakes on Laocoön. With summary J to follow.

Judge Gustafson, obliging as ever, cautions Robert. “The Court advises Mr. Blackmer that he should not delay by planning to ‘hire an attorney two months before the trial’. Experience teaches that by that time, it would be too late for the new attorney to prepare the case for trial. The new attorney would want to propose that the trial date be continued so that he can properly prepare the case, but Rule 133, sent. 5, provides: ‘[E]mployment of new counsel ordinarily will not be regarded as ground for continuance.’ Mr. Blackmer should either handle this case himself without counsel or should now hire counsel promptly.” Order, at p. 1. (Emphasis by the Court).

In the meantime, let IRS serve their Branertons by the end of June.

You know what’s going to happen. If Robert shows up for trial at all, he’ll ask for more time because he can’t find a lawyer.

Edited to add, 5/23/20: For a masterclass in this sort of thing, see my blogpost “Quo Usque Tandem Abutare, Alexander, Patientia Nostra?” 5/13/13.



In Uncategorized on 05/22/2020 at 10:47

No, not the long-departed and much-lamented television series, from the days when commercial television had pretensions to a brain. Today I want to talk about the omnibus motion, a fixture in State court (and the Federal courts as well), but a pariah at the locked-down Glasshouse on Second Street.

For the civilians in the audience, an omnibus motion combines various grounds for various requests for relief, and lets the Court resolve all these matters at once. Initially, it’s more work for counsel on both sides, and the Court, but it’s a great tool to clear cut and brush hog a lot of extraneous matter, or even dispose of the case itself.

I understand that Tax Court expresses its solicitude for the self-represented in Rule 54(b) single-shot  motion practice. Jack-lighting deer with one headlight is cruel enough; a muilti-highbeam array is many times worse. And of course, unlike many courts, State and Federal, there is no office for the self-represented at the Glasshouse.

But IRS attorneys are under pressure to clear dockets. So I don’t fault the IRS attorney, doubtless frustrated by petitioner’s nonresponsiveness, for flashing the highbeams at John Joon-Il Kim , Docket No. 6160-18, filed 5/22/20.

I’ll defer to That Obliging Jurist, Judge David Gustafson, to tell the tale.

“…the Commissioner filed a ‘Motion to Dismiss for Failure to Properly Prosecute’…which alleges (at paras. 59-61) a history of non-response and non-communication by petitioner. The bulk of the motion, however, consists of assertions about the amount of petitioners’ correct tax liability in support of a ‘claim for increased deficiency’ (para. 55). It is not unusual to see, in a motion to dismiss for failure to prosecute, a request for a decision redetermining a deficiency in a decreased amount, reflecting partial concession by the Commissioner.” Order, at p. 1. (Emphasis by the Court).

Now of course Judge Gustafson isn’t going to let the deficiency hike go by.

“However, the undersigned judge believes that a claim to increase the amount of the deficiency is best stated in respondent’s original answer or in an amended answer that respondent moves for leave to file, in compliance with Rule 41(b). In this instance the ‘claim’ is inserted in a motion to dismiss for failure to prosecute, and is contrary to the spirit, if not the letter, of Rule 54(b) (forbidding ‘joinder of motions’). We would entertain a proper motion to amend the answer to assert an increased deficiency or a motion to dismiss for failure to prosecute, but not both simultaneously.” Order, at p. 1.

So the motion gets tossed without prejudice.

But the gambit seems to have worked, at least with Judge Gustafson.

Judge Gustafson orders that JJ, by June 26, “…shall confirm or correct his mailing address and telephone number, and he shall respond to paragraphs 59-61 of respondent’s motion (alleging that Mr. Kim failed to return telephone calls and failed to respond to letters). He should begin immediately to communicate with his opponent, the IRS’s attorney, Amy Chang.” Order, at p. 2.

I mention IRS’ attorney by name here, and give her a Taishoff “Good Try, First Class.” I add, however, a warning not to make this standard operating procedure when confronted with a stonewall. While this gambit may work once or twice, systematically ignoring a Court Rule can get you jacked up.


In Uncategorized on 05/21/2020 at 16:46

Ya gotta love this stuff; I certainly do. The practice of law (and I suppose medicine, both on humans and animals) gives the practitioner a ringside seat on The Human Comedy, and often the human tragedy.

STJ Daniel A (”Yuda”) Guy draws a whistleblower that shows that the “small court” is often the stage where the Human Comedy is played out.

Rena Elizabeth Houston, a.k.a Tneka Rena Galloway, Docket No. 9869-19W, filed 5/21/20, got tossed by the Ogden Sunseteers without even an “and/or.” Brevity sure is the soul of wit in Lee Martin’s bailiwick.

“The Whistleblower Office has considered your Form 211, Application for Award for Original Information….Internal Revenue Code section 7623 provides that an award may be paid only if the information provided results in the collection of tax, penalties, interest, additions to tax, or additional amounts. The Whistleblower Office has made a final decision to reject your claim for an award.

“The claim has been rejected because the IRS decided not to pursue the information you provided.” Order, at pp. 1-2.

Rena/Tneka also petitioned an alleged NOD and an abatement of interest denial, but Ch J Maurice B (“Mighty Mo”) Foley tossed that one last year because no NOD was ever issued.

Rena/Tneka’s blower bœuf was also wide of the mark.

She claims a “…small municipality has been corrupted and ‘has not paid the judgment issued by [a State court] * * * nor has [the municipality] made any attempts to pay nor provide a judgment bond to pay for the physical damages they have cause [sic] to me’.” Order, at p. 2.

IRS moves to toss for failure to state a claim. Rena/Tneka fires back with an “’Amended Petition/Objection’ repeating the allegations that she made in the petition. Petitioner also filed two exhibits: A ‘Questionnaire for Public Servant’ and a ‘Violation Warning, Denial of Rights Under Color of Law’.” Order, at p. 2.

I’m sure we’ve all seen them in small claims part, or village court, or justice court, or in whatever it’s called in the jurisdiction in which you toil. They think it’s like television. Judge Judy, maybe.

STJ Guy has, I’m sure, seen it too.

“The petition in this case does not include allegations or statements necessary to satisfy petitioner’s burden of presenting a valid claim for judicial review under section 7623. Petitioner does not allege that she provided information to the IRS regarding an underpayment of Federal tax or violations of the internal revenue laws. Nor does petitioner allege that the WBO abused its discretion in rejecting her whistleblower claim or that the IRS erred in declining to pursue the information that she provided. Although we give petitioner the benefit of the doubt at this stage of the proceedings, and read her pleadings liberally, the allegations in the petition and amended petition/objection relate only to a complaint concerning enforcement of a State court judgment. The relief that petitioner seeks simply is not cognizable under section 7623. Because petitioner fails to state a claim for which relief can be granted, we shall grant respondent’s motion to dismiss.” Order, at p. 3.

La commedia è finita.





In Uncategorized on 05/20/2020 at 12:43

I wouldn’t be at all surprised if CSTJ Lewis (“I Just Love That Name”) Carluzzo didn’t think reflexively of Milton’s great sonnet as he crafted his order in Sungmi Bang, Docket No. 16550-19S, filed 5/20/20.

Sungmi wanted innocent spousery, and petitioned a non-NOD (maybe) IRS denial. IRS did deny one year, but there are two more hanging fire. IRS’ answer says no NOD as to the two, so toss because no jurisdiction.

“Petitioner does not seem to dispute respondent’s claim that a notice of final determination for [Year One] and/or [Year Two] has not been issued to her. We point out that respondent’s failure to issue a final notice of determination in response to a taxpayer’s section 6015 election or request for relief for any given year does not, as respondent’s motion proceeds, necessarily preclude the Court’s jurisdiction over that year for purposes of section 6015 relief. See sec. 6015(e)(1)(A)(i)(II). The Commissioner’s failure to act in response to a taxpayer’s request for section 6015 relief within a certain period allows the taxpayer to seek relief here.” Order, at p. 1.

Moreover, IRS’ non-NOD rejection of the two is dubious, at best.

“According to respondent, the [Year One] and [Year Two] request was ‘declined because a requesting spouse is barred from relief from joint and several liability under section 6015 by res judicata for any tax year for which a court of competent jurisdiction has rendered a final decision on the requesting spouse’s tax liability***.’” Order, at pp. 1-2.

OK, pop quiz. Whether or not this is indeed a NOD, what’s wrong?

If you answered, “res judicata (or claim preclusion) is an affirmative defense, not a jurisdictional bar,” you get an “A”.

“As indicated above, respondent’s motion also suggests that petitioner is barred from relief for [Year One] and [Year Two] by res judicata. See sec. 6015(g)(2). The application of res judicata, however, even if appropriate, does not operate to deny the Court’s jurisdiction over [Year One] and [Year Two] in this case. Res judicata is an affirmative defense.” Order, at p. 2. (Citations omitted).

Anyway, the no-NOD defense fails, if Sungmi can show she only stood and waited the six (count  ’em, six) months law that Section 6015(e)(1)(A)(i)(II) allows IRS to forgo the NOD and let an innocent spouser simmer before they can go to Tax Court.

But since no one has put in anything about the timing, IRS’ motion to toss for want of jurisdiction is itself tossed.

And I’ll even forgive CSTJ Lew for that “and/or” above.



In Uncategorized on 05/20/2020 at 11:43

The answer for Mr F. (name omitted) is “No,” and Judge Courtney (“CD”) Jones will tell you why not in Sunil S. Patel & Laurie McAnally Patel, et al., Docket No. 24344-17, filed 5/20/20.

It’s not that Mr. F shouldn’t be subpoenaed as a non-party witness. “Respondent represented, and petitioners did not dispute, that Mr. F served as a wealth management advisor to petitioners and, in that capacity, played a significant role in setting up the micro-captive arrangement.” Order, at p. 1. Clearly relevant and material, and Mr F as a non-party is not subject to a Branerton play-nice.

On background, micro-captives are purported insurers of a single enterprise, or controlled group of enterprises. Micros have often been used to take big deductions. Policies are massively overwritten (premiums greater than any actuarial risk). The micro then cookie-jars the “premium” cash against liabilities that (a) never happen, or (b) are laid off on macro insurers, so the micro runs no economic risk, thus not really insurance. Not saying that happened here; let’s see what happens as the case proceeds.

IRS first claims they served Mr. F, with the subpoena duces tecum, to show up and bring papers. Then they say, “sorry, my bad, didn’t serve.”

Judge CD: “the Court ordered respondent to file a copy of the subpoena duces tecum, including verification of the date of service. Respondent filed a response… admitting that he had not served the subpoena duces tecum on Mr. F, apologizing to the Court for the incorrect representation, and explaining how it occurred.” Order, at p. 1.

But IRS’ attorneys never lacked resourcefulness (some, less charitable, might say chutzpah, if you’ll pardon an arcane technical term). “He nevertheless asked the Court to compel a virtual deposition of Mr. F (in the light of concerns related to COVID-19), albeit without the documents.” Order, at pp. 1-2.

Now IRS did properly serve the Rule 74 deposition notice before COVID-19 shut everything down. So IRS’ counsel is not out on a limb when he asks for a Zoomathon sans documents.

But Judge CD says Rule 147 is not off the table.

“The record establishes that Mr. F’s deposition is warranted and that respondent served Mr. F with a notice of deposition…pursuant to Rule 74(c)(2). But respondent has not met the requirements of Rule 147 because he has not served Mr. F with a subpoena to require his testimony and/or production of documents listed in the attachment at the deposition described in the notice. As a result, respondent has not done what is necessary to compel Mr. F to testify and/or to produce documents at the deposition.” Order, at p. 2. (Name omitted, emphasis added).

Judge, two things bother me. First, IRS’ counsel doesn’t want no documents. Second, what’s with the “and/or” bit? See my blogpost “Ran the Checklist,” 4/6/20.

I praised you then, in these words. “Again Judge CD joins in rebuking the bureaucratic responsibility-ducking language of the form shootdown letter. “The WBO’s form letter contained the same ‘and/or’ conjunction that led to a lack of clarity in Lacey v. Commissioner, 153 T.C. __, __ (slip op. at 33) (Nov. 25, 2019). In this case, the record establishes that all of the reasons stated in the letter are justified. So the general lack of clarity attendant to the “and/or” conjunction is inconsequential here. But the Court continues to be concerned that, in a closer case, this form text may create confusion when we review a summary rejection of a whistleblower claim. See Alber v. Commissioner, T.C. Memo. 2020-20, at *8-9 n.5.” Order, at p. 2, footnote 5.” Loc. cit., as my high-priced Zoomer colleagues would say.

I most respectfully submit that this is a case where “and/or” definitely lacks clarity and creates confusion.

Of course, Judge CD is right about COVID-19. “Respondent’s failure to serve Mr. F. with a subpoena is made more problematic by the current crisis surroundingCOVID-19. The Court is concerned that it is not currently safe to serve him.” Order, at p. 2. Both the process server and Mr F are at risk with personal service.

But why deny IRS’ motion to take the deposition sans documents? Even without prejudice, as here, insisting on personal service of a subpoena that IRS is willing to do without only delays the case indefinitely. If IRS is playing games and seeking a double shot at Mr F, first without documents and then afterward with documents, then at that time a protective order requiring a showing of special circumstances for a rematch (and COVID-19 is expressly not one such), or a flat denial shuts the game down.








In Uncategorized on 05/19/2020 at 19:25

I miss baseball. I’ll admit it has been a while since I did a full score of a game, forward K for struck out swinging and backwards K for caught looking, BB for walk (base on balls), and all that. And I’ll also admit I probably forgot a lot of notations.

But here are some of my notations from this blog, for those scoring, if any.

A Taishoff “Oh Please” comes in two classes; it’s given for particularly lame arguments or odiferous maneuvers. A Taishoff “Good Try,” again two classes, is given for an inventive ploy that fails, but really deserves praise. And a Taishoff “Good Job,” generally is given for a well-prepared and executed case, showing professionalism and class.

Today I have a Taishoff “Oh, Please” for IRS. The case is Robert J. Peacock and Bonita B. Peacock, 2020 T. C. Memo. 63, filed, 5/19/20. IRS wants to toss the Peacocks because Bob ponied up the claimed deficiency. Although IRS marked the check on their records as a deposit, and although Bob tendered the check with a four-page cover letter demanding a review by Appeals, IRS said “SNOD issued after payment was a mistake, no deficiency, no jurisdiction.”

Judge Vasquez is not impressed.

“Rev. Proc. 2005-18, sec. 4.01(1), states that a ‘taxpayer may make a deposit under section 6603 by remitting to the * * * appropriate office at which the taxpayer’s return is under examination, a check or a money order accompanied by a written statement designating the remittance as a deposit.’ Other than requiring a ‘written statement’ accompanying a check or money order, the revenue procedure does not specify how a taxpayer may designate a remittance as a deposit.” 2020 T. C. Memo. 63, at pp. 9-10. (Footnote omitted).

IRS says since Bob wrote “payment” on the memo line of his check, that means he paid. Judge Vasquez says, if no four-page letter that came with the check, it would be a payment. Except the letter makes it clear Bob wants to pursue the matter.

Judge Vasquez quotes the IRM even though it it’s neither law nor reg, to show how IRS expects its staff to deal with matters.

“Respondent asserts that the cover letter merely expresses disagreement with RA M’s determination. Respondent argues that an expression of disagreement ‘is not determinative of whether a remittance * * * [that satisfies] the underpayment in full should be treated as a payment or a deposit.’ However, petitioner husband’s letter did more than express disagreement. It also requested another meeting with the RA and stated that a request for Appeals review was forthcoming. These statements are as indicative of a desire to dispute a liability in prepayment forums as the term “Stop Interest”, which the IRM deems sufficient to denote a remittance as a deposit under section 6603. See IRM pt. Accordingly, we hold that petitioner husband properly designated the remittance as a deposit under section 6603 and Rev. Proc. 2005-18….” 2020 T. C. Memo. 63, at pp. 12-13. (Footnotes  and name omitted).

Judge Vasquez makes it clear he isn’t deciding that just voicing disagreement in a transmittal letter makes a check into a payment and not a deposit. See 2020 T. C. Memo. 63, at p. 13, footnote 14.

And the IRS coded the check as a 640 (6603 deposit), and issued a SNOD.

The Peacocks win.

A Taishoff “Good Job” to The Jersey Boys, and a “Good Job” from Judge Vasquez.

“When this case was called from the calendar, Mr. Agostino and Mr. Colasanto were present in the courtroom as volunteer lawyers. They entered appearances on behalf of petitioner husband for purposes of arguing the motion before us, and we are thankful for their pro bono service.” 2020 T. C. Memo. 63, at p. 1, footnote 1.







In Uncategorized on 05/19/2020 at 18:28

Judge James S (“Big Jim”) Halpern is a stickler. The law is his guiding light, and steadfastly does he steer his course thereby. But today is a rarity. While he doesn’t vacate a stipulation, he pulls up a corner and tweaks it, in George E. Joseph, 2020 T. C. Memo. 65, filed 5/19/20.

George was an eye doctor with his eye on the prize, running Sub Ss and LLCs all over Northern Texas. He was a wee bit casual about filing returns, so IRS did a few for him, at no extra charge. And threw in some heavy duty chops for lagniappe.

George claims that the number to which he and IRS stiped double-counted about $18K in capital gains. He also claims that there is a mistake in the basis he had, because some deductible depreciation he was entitled to didn’t show up in that number either.

IRS agrees about the double counting, not the depreciation. The caselaw is very strict, and I’ve been over this a lot. Absent fraud or mutual mistake of fact, stips don’t get set aside. Even mistakes of law don’t do it, maybe. See my blogpost “The Busted Stipulation,” 1/20/12.

“…the record in the case before us makes clear that the stipulated amounts count the same capital gain twice. The double counting is not an unproven allegation but an established fact. To remedy that obvious error, we will disregard the parties’ stipulation that petitioner recognized $17,998 of capital gain for 2013….” 2020 T. C. Memo. 65, at p. 30.

Both parties agreed the number in the stip was wrong. They also agreed what number was right. No need to do discovery or to retry the case.

Deductible depreciation is another story.

George gave no numbers to support his depreciation claim, although he claims it is a “simple calculation.” And he knew from IRS’ request for admissions that depreciation and the amount of capital gains were on the table before he stiped. So this means “we would have to reopen the record ‘to determine how the gain was computed,’ which would involve ‘the production of additional documents and testimony’ from petitioner’s accountant and perhaps from petitioner himself. 2020 T. C. Memo. 65, at p. 32.

Not after trial.

But Judge Big Jim isn’t through. George has some deductions, defectively documented, that Judge Big Jim might be able to Cohanize, and thereby shave a couple bucks (hi, Judge Holmes) off George’s hefty deficiency.

Except. There’s a splash across the bows that isn’t a porpoise catching its breath.

“But petitioner did not invoke Cohan in his initial brief. And petitioner’s specific circumstances give us grounds to decline to rely on Cohan to estimate the amount of … deductible expenses that he failed to substantiate. As the Court of Appeals for the Second Circuit observed in Cohan v. Commissioner, 39 F.2d at 543, not only did the taxpayer in that case fail to keep account of his travel expenses; he ‘probably could not have done so.’ That observation suggests a limit on Cohan’s scope, under which estimating unsubstantiated expenses would be inappropriate when proper recordkeeping is feasible and can reasonably be expected. In fact, the Court of Appeals for the Seventh Circuit has recognized just such a limitation, identifying a trend under which Cohan, ‘while not * * * repudiate[d] * * * entirely, is * * * not invoke[d] * * * where the claimed but unsubstantiated deductions are of a sort for which the taxpayer could have and should have maintained the necessary records.’ Lerch v. Commissioner, 877 F.2d 624, 628 (7th Cir. 1989), aff’g T.C. Memo. 1987-295. Thus, we might justifiably decline to apply Cohan because petitioner could have kept adequate records. We do not take his failure to do so as the result of inevitable exigencies in the practice of ophthalmology.

“Respondent, however, accepts that we ‘may utilize Cohan to estimate some of petitioner’s expenses’.” 2020 T. C. Memo. 65, at pp. 40-41.

In this Technologic Age, when your FitBit measures how much you breathe each minute, and your smartphone takes your temperature hourly, and these synched-in doodads upload your whole life to the cloud and above, don’t count on the prehistoric technology of Cohan to bail you out. Or the IRS to continue to play nice.






In Uncategorized on 05/19/2020 at 14:23

I venture no opinion whether it was Æschylus or his son Euphorion who put the original of those words in Prometheus’ mouth. The classical scholars on Tax Court bench are much more qualified than I.

But they certainly fit those who are locked out of Tax Court, and yet must file wet ink paper. STJ Diana L (“The Taxpayer’s Friend”) Leyden sums it up in Tavares Dunn, Docket No. 712-19SL, filed 5/19/20.

Tav is about to be tossed for failure to prosecute. But his reply to IRS’ motion was due after lockdown struck, so he gets another chance. He can also use eFiling.

“If petitioner has mailed a response the Court will not be able to read it because the Court is closed and cannot access mail sent to it.” Order, at p. 1.

I’m not claiming Tav is, or is not, an injured innocent, nor is STJ Di. But that’s not the point.

The point is that petitioners, worthy or unworthy, get a stay of collection when they petition a SNOD (Section 6213(a)), or a NITL NOD (Section 6330(e)). But there is no petition unless and until Tax Court gets it. So if the petition has to be wet ink snail mailed, Tax Court right now isn’t getting it. And a petition or amended petition can’t be e-filed, because the procedures in Rule 34(a) for e-filing haven’t been put in place.

I know I’m tiresome. But until someone can show me that my point is incorrect, I’ll keep at it.


In Uncategorized on 05/19/2020 at 13:39

Judge Morrison has a redacted order and decision (hereinafter “order”) in Whistleblower 8001-14W, filed 5/19/20, that brings back the mellifluous sound of the late great Harry Belafonte, singing the song he and Jack Rollins wrote back in 1954.

It seems 8001-14W claimed the entire [blacked-out] was included in the claim. 2600 of whatever they were.

“…a Senior Tax Analyst with the Whistleblower Office, referred petitioner’s whistleblower claim to the IRS [blacked-out] Division. The referral letter enclosed the documents that had been given by petitioner to the Whistleblower Office to that date. In the referral letter C stated: the Whistleblower Office had determined that petitioner’s claim met the procedural requirements for submitting a claim, the determination did not mean that an administrative or judicial action must be taken to address the tax noncompliance alleged by petitioner, and ‘[t]he decision to proceed with an examination or investigation is solely under the jurisdiction of the Compliance functions.’” Order, at pp. 2-3. (Name omitted).

A sample taxpayer was selected, and someone sent an audit letter with an IDR. Whoever got whatever, and something happened.

“In [blacked-out], Revenue Agent [blacked-out] met with (1) [blacked-out] and (2) [blacked-out] in the IRS Office of Chief Counsel. The conferees concluded that due to legal issues, evidentiary problems, and agency resources, it would be futile to pursue the issues that petitioner had raised about the sample taxpayer.

“On [blacked-out] Revenue Agent [blacked-out] met with his manager, [blacked-out], agreed that the examination of the sample taxpayer should be closed without changes.

“In [blacked-out] made the following statement at [blacked-out].” Order, at p. 5.

And I think we can stop here, with Harry singing. “And the confusion made the brain go ’round.”