I’m driven to use the lingo of the opposable-thumbed virtuosi, they who transmit whole volumes of stuff by thumbs alone, while hanging from subway straps and holding their smartphones at impossible angles. For the traditionally-handed, that means “shaking my head.”

First up, Bryan Edward Menge, Docket No. 22622-16, filed 12/15/21.* Menge has a seriatim bœuf concerning “many years and thousands of hours of the petitioner’s life spent trying to resolve tax related issues with the IRS that started in 2011 and were directly caused in part or in whole by the unlawful violations * * * by US government contractors, officials and employees of HUD, of the Federal District Court for the District of Rhode Island, the Kent County Superior Court, the DOL, and the IRS.” Order, at pp. 3-4. Apparently there was a HUD $60K holdback from a construction contract payment to Menge’s eponymous construction outfit, from which Menge his own self was credited with $2660 ITW.

Menge wants to fight about the holdback in Tax Court. A definite nonstarter, but Menge wants to fight so badly that he gets a $500 Section 6673 frivolity chop from Judge Tamara Ashford, even though he wins. He’d been warned about frivolizing before.

Ya see, IRS handed Menge a deficiency, which they concede in full. But it’s not only Menge’s obduracy that has me shaking my head; clearly, he hasn’t a clue about courts, or is so frustrated he doesn’t care.

Here’s the deficiency: “…respondent determined a deficiency in petitioner’s Federal income tax of $0.78, an addition to tax pursuant to section 6651(a)(1) of $802.95, and an accuracy-related penalty pursuant to section 6662(d) of $1,070.60 for the 2013 taxable year.” Order, at p. 1.

Seventy-eight (count ’em, seventy-eight) cents of tax and $1873 in add-ons and chops? And for this we’ve had a bunch orders and motions (hi, Judge Holmes)? SMH, indeed.

Speaking of Judge Holmes, he has an off-the-bencher today, Chung Yung Chong & Anita Chong, Docket No. 8551-20, filed 12/15/21.** Reading about Chung Yung’s securities investments (for which he claims long-term capital losses above the standard $3000 per year), I am reminded of Greg and Sue Raifman, and their unerring nose for fraud; see my blogpost thus entitled.

I’m moved, though, by Judge Holmes’ lament for the vanishing Form 1040. “…I need to discuss…whether the Chongs are entitled to long-term capital losses of more than $3000 for the years at issue. This was a particularly difficult topic to understand in the context of this case. We didn’t have a Form 1040. We had an electronically-filed form, and it was not at all clear what the source of these alleged long-term capital losses were.” Transcript, at p. 5.

Takeaway- Might be a good idea to have a printable Form 1040 handy as a back-up to the e-Filed version to use as an exhibit, when trying your case with a Senior Judge.

*Bryan Edward Menge Docket No 22622-16 Filed 12 15 21

**Chung Young Chong Docket No. 8551-20 12 15 21

Generally, we lawyers have inquiring minds. It’s not enough to know what, or who, or when; before all, it is to know why. That is true, even if “why” is totally irrational. Once we know why, we can deal with the consequences.

I’ve mused before on this my blog why Form 6 Ownership Disclosure Statement is such an obstacle to entity petitioners. It is a single-page form. It asks only three (count ’em, three) questions. I dare say in 95% of the petitions filed in US Tax Court, the answer to all three questions is “NONE.”

Yet today, 12/14/21, a very special day in our family, I see no fewer than six (count ’em, six) orders giving petitioners more time to file Form 6. The petitioners are all conducting, or, I assume, assert they are conducting, or have in the year(s) at issue conducted, business operations to the extent that principals thereof had to know how to read and write at least well enough to graduate from lower school.

I have in the past suggested modifying Form 6, by adding the words, in bold-faced capital letters “YOU CANNOT LEAVE THIS FORM BLANK; IF “NONE” WRITE “NONE”. See my blogpost “Even Good Accountants,” 3/25/19.

But no; the form, last modified almost ten years ago, retains its 1 Corinthians 1:23 characteristics.

And it doesn’t provide for signature by post-TEFRA representatives.

Ch J Maurice B (“Mighty Mo”) Foley joins in the words of Nobel Laureate R. A. Zimmerman’s 1967 chanson, as he announces “…today that order search is now available in the DAWSON case management system. In addition to being able to search for orders by case name or docket number, the public may search for orders by keyword or phrase, by judge, or by date range. ‘Today’s Orders’ will continue to be available on the Tax Court website.”

Here’s the gladsome news.

So the Genius Baristas and the 18Fs (if they’re still on-scene) have joined the Isaiah 9:2 brigade.

Now, my merry readers, join with me in the words of the Project Farmer of youtube.com: “We’re gonna test that!”

In the best (??) traditions of DAWSON, if one document in a docket extending ten (count ’em, ten) years is sealed (even without a Rule 27 or Rule 103 order), the entire docket is sealed, so forget searching by name or number or anything else.

Ah, DAWSON, what sins are committed in thy name!

Judge Joseph Nega regretfully shuts down Vardan Antonyan’s Paradise Acres, as Vardan’s plan never gets nearly operational. Here’s the story: Vardan Antonyan and Margarita Safaryan, 2021 T. C. Memo. 138, filed 12/13/21*.

Vardan wanted to make the desert bloom, so he started with 10 acres “in the middle of the Mojave Desert, approximately 1 mile away from any road and 120 miles away from petitioners’ residence.” 2021 T. C. Memo. 138, at p. 2. Vardan says he wants to subdivide the land into plots, get USDA organic certification, and rent to farmers.

Unlike so many hobby losers and busted starters-up, Vardan had a business plan. This “…first required him to construct a nonlivable outdoor structure, similar to a barn, on the property. The business plan then required him to obtain a certification from the U.S. Department of Agriculture (USDA) certifying that the land complied with the standards set forth for organic farming. Finally, the business plan provided for the installation of an irrigation system on the property and the construction of an access road to the property.” 2021 T. C. Memo. 138, at p. 3.

Vardan did build a water storage tank to catch whatever rainfall one might find in the middle of the Mojave Desert, bought some materials and rented some vehicles, did some building work (but the barn never got done), never got the USDA certification, and never put in the irrigation system.

And Vardan was less than stellar on the stand. “Assuming, arguendo, that none of the steps in petitioner husband’s business plan was necessary to rent the property, petitioners nevertheless failed to produce any evidence to establish that petitioner husband held the property out for rent during [year at issue]. Other than petitioner husband’s incredible testimony, petitioners failed to produce any evidence to establish that petitioner husband was actively managing and engaging with potential customers to rent the property during [year at issue] or that he received any offers from potential customers.” 2021 T. C. Memo.138, at p. 12.

Vardan’s deductions are dried up.

Takeaway- So many start-ups and Section 183s founder for want of a written business plan. But having the plan isn’t enough. My colleague Peter Reilly, CPA, has often said that, while a plan certainly helps,  if it’s not executed it’s nothing.

*Vartan Antonyan 2021 T C Memo 138 12 13 21

(Sorry, Guys)

Our Ancient Foe made me do it.

Happily, it seems that Mark Betz & Christine Betz, et al., Docket No. 21587-18, filed 12/13/21*, and IRS have both of them given over the discovery razzmatazz that so upset Judge Nega back in February.

The bases for Judge Nega’s lament are more particularly bounded and described in my blogpost “CLE Has Much to Answer For – Part Deux,” 2/3/21. But the intervening ten (count ’em, ten) months have apparently stilled the waters and chilled the beeves to the extent that a bushebasketful of discovery-related motions can all be dismissed as moot today.

A great holiday present for a hardworking Judge.

*Mark Betz Docket No. 21587 18 12 13 21

If, dear reader, you are old enough to remember the radio program thus entitled, you are definitely in the zone for Medicare. Judge Courtney D (“CD”) Jones is not in that category, but today she puts a stop to an incipient waltz in Nautical Hill Holdings, LLC, Inland Capital Management, LLC, Tax Matters Partner, Docket No. 11971-20, filed 12/10/21.*

The Nautical Hillbillies were on for trial in Atlanta next Valentine’s Day, but moved jointly with IRS for a continuance (what we State courtiers call an “adjournment”) and a “new trial.”

Exactly how you get a “new trial” when you haven’t yet had the old trial eludes me. Judge CD Jones is more than equal to the task, and will give the Nautical Hillbillies a “special trial”, with a scheduling order adopted from the moving papers, setting discovery deadlines. So she renames the motion as one for a special trial, and grants the motion as thus restyled.

Except.

“We agree that setting the proposed pretrial schedule shall provide the parties with adequate time to prepare this case for trial. However, in the best interest of judicial economy, we will set trial for a time and date certain following a show of compliance with the pretrial schedule and substantive trial preparation.” Order, at p. 1.

Judge CD Jones will stop the music if the parties keep waltzing.

Here in NY, our major trial courts’ Rule 202.21 requires the filing of a Note of Issue and Certificate of Readiness, showing that all discovery is complete, before a case may be calendared for trial. Perhaps where large sums and complex issues are involved, Tax Court might wish to consider a similar rule.

*Nautical Hills Holdings LLC Docket No 11971-20 12 10 21

Depositions might be an “extraordinary means of discovery” in US Tax Court, but they’re the flavor du jour everywhere else. So the interjection “asked and answered” when examining counsel tries a second round of the same question is commonplace.

Well, today I have a new take on the old rejoinder. Here’s my e-mail to Public Affairs anent the current petition inundation, and the reply I got (name omitted).

Dec. 4, 3:04 p.m.: “Ms. S, There has been much discussion lately, not only by me but also by commenters on my blog, about the flood of petitions in calendar 2021. Two recent press releases have stated that the Court itself has sought to address one consequence, the need to prevent IRS enforcement proceedings when a petition has been filed but, because of the processing backlog, has not yet been served on IRS.

“But so far no particulars have issued from the Court, discussing how the staff are dealing with the backlog generally. Is there a preliminary screening of petitions? For example, are petitions divided between those accompanied by the filing fee and those that are not? Are the petitions themselves subjected to a quick-peek, to see if they meet any applicable standard of adequate pleading (whatever that is; Conley, Twombley, Iqbal or some sui generis Tax Court standard)? If classified, how is each class dealt with? Has any stay-of-enforcement protocol directed to the backlog been adopted?

“I suggest an interview with staff might yield valuable guidance for the public. I would like to interview a member of the staff by telephone and publish the results. Can this be arranged?”

Reply, Dec. 9, 4:00 p.m.: “Thank you for your email. The Court does not comment on internal operations, but you may refer to the press release issued December 9, 2021.”

So I did. And here is something worth repeating. “Of the total petitions filed, approximately 20% were filed electronically. The Court continues to process petitions expeditiously, and the number of paper-filed petitions that have yet to be processed continues to drop as the number of electronic petitions increases. Electronic petitions were up to 30% in October and increased to 36% in November. There is no backlog with respect to electronically filed petitions.” Press Release, 12/9/21.

Btw, Tax Court reports that, as at 11/30/21, 33,300 petitions have been filed so far this year.

Anyone want to start a no-cash, air-bet pool on the final number?

Oh yes, there was an opinion today, a small-claimer. Libia Higuita Wheeler, 2021 T. C. Sum. Op. 42, filed 12/9/21*, had a beef with her ex about their Sub S and their divorce decree. But inasmuch as the case involves Section 66(c) community property issues, of which I know nothing and do not practice in community property jurisdictions, and inasmuch as I was having barbecue beef and a delightful chat with my colleague Peter Reilly, any communist proprietors will have to read Judge Pugh’s opinion without my gloss.

*Libia Higuita Wheeler 2021 T C Sum Op 42 12 9 21

We all know that Section 6015(e)(3) ousts Tax Court of innocent spousery when the alleged innocent sues for a refund. But does it matter whether the innocent sues first and petitions afterwards? Nope, says Judge Christian N. (“Speedy”) Weiler, in Alice J Coggin, 157 T. C. 12, filed 12/8/21.*

Judge Speedy Weiler has a great syntactical chaw. “Sec. 6015(e)(3) provides: ‘If a suit for refund is begun’; it does not say ‘[i]f a suit for refund is [later] begun’ or ‘is begun [after the Tax Court case]’. It provides that ‘the Tax Court shall lose jurisdiction’, not that ‘the Tax Court shall lose [earlier acquired] jurisdiction’. It provides that ‘the [district] court acquiring jurisdiction shall have jurisdiction over the [Tax Court] petition’, not ‘the  [district] court [subsequently] acquiring jurisdiction’ nor ‘shall have jurisdiction over the [previously filed Tax Court] petition’.” 157 T. C. 12, at p. 20, footnote 19.

Alice was 50-50 in a Sub S with late spouse Phil. Late spouse Phil was also late filer Phil. Alice claims late spouse forged her signature on late-filed MFJs for years 2001-2009. Just before late filer Phil became late spouse Phil, he paid all of 2001-2007 (tax, but not add-ons, chops or interest), part of 2008 (ditto), and nothing of 2009. After late spouse Phil became so, IRS socks Alice with joint-and-several for whatever late spouse-filer didn’t pay. Alice files amended MFSs, claiming refunds. IRS says no, so Alice sues in USDCMDNC for refunds, never mentioning innocent spousery. DOJ counterclaims for the unpaid stuff. USDCMDNC tosses the refund claims, but doesn’t rule on the DOJ counterclaims (reserving same for trial).

Alice finally petitions as a stand-alone (no SNOD), asking USDCMDNC for a stay pending Tax Court proceedings, which USDCMDNC grants, saying it’s not ruling on innocent spousery, but might like to hear what pore l’il ol’ Tax Court has to say, if Tax Court has jurisdiction, 157 T. C. 12, at p. 22, footnote 23.

If. How many cases revolve, rise, or set on that word.

Well, Judge Speedy Weiler, like an even greater juridical mind of old, renders a split decision. Tax Court decides tax years; claims may involve several years (identical issues, identical parties), but only the years placed in issue count. USDCMDNC put paid to years 2001-2007. Alice could’a would’a should’a raised innocent spousery there; after all, she amended her pleadings three (count ’em, three) times, and anyhow, she conceded 2001. Thus res judicata (claim preclusion) bars Tax Court from considering innocent spousery for those tax years.

But 2008 was never paid in full, and 2009 not at all. Alice did petition more than six (count ’em, six) months after DOJ tossed her, so stand-alone is definitely in play, barring res judicata.

IRS wants Judge Speedy Weiler to toss the whole shebang, arguing that when Alice invoked the jurisdiction of USDCMDNC, Tax Court was out. OK, she’s out as to 2001-2007 tax years, but there remain 2008 and 2009 tax years. Those years may serve as a defense to the DOJ counterclaims, so as USDCMDNC has jurisdiction over the trial, it has jurisdiction over that issue. But Tax Court has innocent spousery stand-alone jurisdiction for those years as well.

“Section 6015(e)(3) does not address this overlap in jurisdiction and therefore leaves us to consult principles of comity to decide whether both courts should go forward on these common issues or, if not, which one should proceed.” 157 T. C. 12, at p. 22.

Remember, USDCMDNC wanted to hear what Tax Court would say. And judges are no different from the rest of us: if someone else wants to take the heavy lifting, go to it, mate.

Alice can go for innocent spousery for years 2008 and 2009 in USTC.

*Alice J Coggin 157 T C 12 12 8 21

My preparer colleagues are even now standing to their kit and bracing for the inundation of client requests for tender loving care and understanding as said clients drop off shoeboxes, totebags, and multi-part accordion envelopes (of the kind generically referred to by their older compères as RedWelds, a well-known brand).

These contain receipts, credit card statements, bank statements, brokerage statements, real estate closing statements, and pieces of paper “wretched, crinkled, scrawled over, blotched, frowsy.”

And from these, my colleagues and their trusty software craft the tax returns that furnish grist to today’s creaking mill in the Second Street, NW, Glasshouse.

DAWSON Opinions search function, restored, shows us that even the shoebox or RedWeld recordkeeping system, if the same as mother made, will stave off the Section 6662(a) chops. And though in the case of Maryann Patacsil, Docket No. 21903-19, filed 12/7/21*, much of IRS’ asserted unreported income and sketchy deductions o’ercrow Maryann’s little envelopes showing the expenses of her CA care home operations, Maryann escapes the chops.

CA care homes are residences for the serious disabled, or what are called group homes back East. Maryann got her learning from her Mom. Judge Holmes is at pains to point out Maryann’s engaging personality, care for her “consumers,” and her lack of accountancy or tax background. Mom was a “little envelopes” type of bookkeeper, the kind who dumps them on your desk and tells you “go to it.”

Most important, the years at issue were the early years of Maryann’s operations on her own.

“She had grown up in a business in which accounting system was bookkeeping via envelopes and receipts turned over to one’s CPA at the end of the year. Under these very special circumstances for these years early in her business career, I find she was reasonably relying on her mother and the accountant so I won’t sustain the penalty for her in any of these three years.” Transcript, at p. 19.

OK, preparers, “look how it comes again.”

*Maryann Patacsil Docket No. 21903-19 12 7 21

Y’all will recollect that IRS’ virtuous trial counsel, discovering controlling contrary precedent downGolzenized to James E. Hansen & Helen R. Hansen, Docket No. 16157-18, filed 12/7/21*, brought same to the attention of Judge Morrison, earning him a Class A diss from his fellow IRS counsel. If not, see my blogpost “A Current Example,” 11/4/21.

Well, IRS’ virtuous attorney may have earned the scorn of his mates for following ABA Model Rule 3.3(a)(2), but Jim & Helen R want Section 7430 legals and admins.

So Judge Morrison orders a volley of responses. Will Jim & Helen be rewarded for IRS counsel’s virtue? Stay tuned.

*James Hansen & Helen Hansen Docket 16157-18 12 7 21