All y’all will recall Donna M. Sutherland, who dodged retroactivity of the Section 6015(e)(7) record-rule amendment. What, no? Well, then, see my blogpost “Comfortable Words,” 9/8/20.

Unhappily, the rope Judge Albert G (“Scholar Al”) Lauber threw Donna last year, in the form of a trial de novo, only hangs Donna in 2021 T. C. Memo. 110, filed 9/18/21.

Donna did enough of the bookkeeping for husband Scott’s beertapping business for her to know that the FICA/FUTA/ITW taken from the employees thereof for the years at issue weren’t going to be paid.

Donna’s health claims were insufficiently substantiated.

Judge Scholar Al conducts the obligatory trudge through the Seven Pillars of Equity (as Donna is still married to Scott, streamliner and apportionment are off the table). Only one of the seven is not neutral, but Judge Scholar Al finds two additional factors.

“The revenue procedure notes that the seven factors discussed above are ‘not intended to comprise an exclusive list’ and that ‘[o]ther factors relevant to a specific claim for relief may also be taken into account.’ Rev. Proc. 2013-34, sec. 4.03(2); see sec. 6015(f)(1)(A) (requiring ‘all the facts and circumstances’ to be considered).” 2021 T. C. Memo. 110, at p. 20.

“When signing the returns petitioner knew that she would receive a sizable inheritance from her mother’s estate. When she submitted her Form 8857…, she had more than $400,000 in bank accounts. She could have easily used a portion of this money to pay off the…joint liability, which totaled about $40,000. We can understand why petitioner might have preferred to use this money for some other purpose. But that does not mean it would be inequitable for the IRS to collect the tax from her.” 2021 T. C. Memo. 110, at p. 21. (Citation omitted).

Donna’s performance on the stand wasn’t of the best, and the RA who nailed Scott won the credibility stakes.

But Taishoff says that the cash stash is what decided this case.

I was going to blog Kenneth Jay Flynn, Docket No. 11381-19L, filed 9/16/21, largely because Judge Buch devoted fourteen (count ’em, fourteen) pages to sustaining the NITLs, which IRS bestowed upon KJ. But the tale mirrors so many others, where the petitioner loses the case at Appeals before it ever gets to The Glasshouse. KJ told Appeals he’d pay in full. He had the assets, and was expecting a large personal injury settlement. He saved his tale of multiple injuries to oppose summary J, but Appeals can’t consider what petitioner never told them.

It’s really frustrating to this blogger to write what those who will read it don’t need it, and those who need it will not read it.

More than once have I had occasion to proclaim that I will not mourn TEFRA. The separation of partnership-level items from partner-level items from computational items, the scrambling of inside basis and outside basis, the bankruptcy collapse, all provided blogfodder. But they increased my consumption of headache remedies.

Whether the PATH Act protected anyone from tax hikes remains to be seen. But one thing its buddy the Bipartisan Budget Act of 2015 did accomplish was to end such frittatas as we find in Todd D. Graham & Traci R. Graham, Docket No. 22933-19, filed 9/15/21.

T&T petition a SNOD that combines (or perhaps better put, conflates) “adjustments from or related to Superox Holding, LLC, Graham Family Partnership LP, and Firsthird Capital Partners (the ‘Partnerships’).” Order, at p. 1. The said adjustments amount to $162K in one year at issue, and $115K in the other.

Problem is, none of the Partnerships is small by TEFRA standards, as each has a partnership as a partner, thus the fewer-than-ten-partners out is out.

IRS moves to drop the whole partnership story. Looks to me like there never were FPAAs, and maybe so it might could be that SOL has run on those years. Even if no SOL, IRS has a Section 6212(c)(1) one-SNOD-per-tax-year problem.

IRS folds. “The Court does not have jurisdiction in this partner-level proceeding to determine or redetermine the partnership items of the Partnerships for the tax years…. The erroneous inclusion of those partnership items in the notice of deficiency issued to Petitioners does not give the Court jurisdiction to redetermine them.” Order, at p. 2.

But T&T had better keep the Pol Roger Cuvée Winston Churchill in the Eurocave.

“Although the notice of deficiency is invalid to the extent it determines adjustments to taxable income attributable to TEFRA partnership items, the notice of deficiency is valid to the extent it determines adjustments to nonpartnership items. The adjustments to royalty income of $4,019.00 and $2,673.00 for the tax years [at issue], respectively, the related computational adjustments to the self-employment tax and the self-employment tax deduction, and the related penalties and additions to the tax with respect to the nonpartnership items in the notice of deficiency are not related to TEFRA partnership items.” Order, at p. 2.

Judge Emin (“Eminent”) Toro agrees. Since the parties want to put off the trial, he puts them on status report track, so they can fight about the six grand remaining at issue.

I wonder who will mourn TEFRA.

The government travel slogan applies to practitioners entering Tax Court practice. A tour of the Tax Court website can provide helpful tips before you send out that engagement or retainer letter, or fire off that last-minute Form 2 as the sun nears the landline on Day 30 (or 90).

Even better, you might spare Ch J Maurice B (“Mighty Mo”) Foley the labor he expended on Samuel Sanders, Docket No. 21831-21, filed 9/14/21. It’s not Sam’s doing, but rather that of his trusty attorney, Jonathan McCormick, Esq.

“The petition filed to commence this case…lists the name of an individual who purportedly is petitioner’s counsel. The Petition bears the original signature of petitioner’s counsel, however, counsel is a practitioner who has not been admitted to practice before the Court, as required by the Tax Court Rules of Practice and Procedure. If petitioner’s counsel wishes to be recognized as counsel of record in this case, it will be necessary at this juncture to electronically file an entry of appearance upon meeting all admission requirements pursuant to the Tax Court Rules of Practice and Procedure. An entry of appearance may only be filed by a practitioner who has been admitted to practice before the Court. The Court has prepared Q&A’s on the subject ‘Representing a Taxpayer Before the U.S. Tax Court[‘]. A copy of these Q&A’s are attached to this order. The Court also encourages practitioners and non-attorneys’ seeking admission to practice before the Court to consult ‘Guidance for Practitioners’ on the Court’s website at http://www.ustaxcourt.gov/practitioners.html.” Order, at p. 1.

Attorney Advertising: Indeed, the practitioner might even pick up a useful tip or two, or perhaps learn what to avoid, by a casual perusal of this my blog.

The pilots say landings are the most hazardous part of any flight: long flight or short, the pilot is tired, stressed, and wants to get on the ground. So it is with counsel settling a litigation. When your client has finally gotten to “yes,” and the adversary has finally found some bucks in the file, the boilerplate stip of discontinuance (or whatever its equivalent in your jurisdiction) and the equally routine stip of settlement is the sight of the runway looming up just before your wheels touch.

But that’s when the tax troubles start. Here’s Judge Travis A. (“Tag”) Greaves to tell you all about it, in Rebecca A. Tressler, 2021 T. C. Sum. Op. 33, filed 9/13/21*. Rebecca was an Amtrak engineer and road foreman, who sued Amtrak for various delictions, involving assault, hostile work environment, injuring her ankle when exiting a train, and retaliatory employment practices. Amtrak won summary J in USDCDC, but Rebecca appealed, and Amtrak settled.

Rebecca never filed for year at issue, so the SNOD here is from a SFR. Rebecca doesn’t contest the portion of the settlement Amtrak treated as lost wages. But she contests the rest, saying she needed psychotherapy to recover from the PTSD caused by the evil deeds visited upon her.

Unfortunately, the sitp of settlement boilerplate knocks out all but $6900 of the $55K Rebecca claims.

“The plain text of section 2.2 [of the stip] establishes that the $55,000 payment represents ‘settlement of Ms. Tressler’s claim for emotional distress damages related to her allegations’ in the lawsuit. Petitioner points to section 2.5, which provides that the $82,500 payment ‘is inclusive of all claims by Ms. Tressler for any alleged damages against Amtrak, including, but not limited to, any alleged claims for physical injuries, emotional distress, attorneys’ fees, and costs’. We recognize that petitioner’s complaint in District Court included allegations of physical injuries, but section 2.5 does not state that any part of the $55,000 payment is attributable to the settlement of a physical injury claim. Section 2.5 is a general exculpatory provision whereby petitioner relinquishes the right to further sue Amtrak. This Court has held that a general liability release does not supersede explicit contractual text providing a settlement payment for emotional distress. We simply cannot accept petitioner’s request to allocate the $55,000 payment among her claims for ‘physical injuries, emotional distress, attorneys’ fees, and costs’ when section 2.2 attributes the whole $55,000 to her claim for emotional distress damages related to her claims in the lawsuit.” 2021 T. C. Memo. 33, at p. 8 (Citation omitted).

And extrinsic evidence that Amtrak knew about the assault doesn’t vary the stip of settlement provisions that lump all the nonwage money together.

As for Rebecca’s payments for psychotherapy after the year at issue, that’s for another day.

Takeaway- Practitioner, watch the boilerplate. As long as the other side can deduct the settlement payment, they shouldn’t make it hard for you to get whatever you reasonably can for your client.

And I’ll give Rebecca’s trusty trial attorney a Taishoff “Good Job,” for getting a good settlement out of losing summary J.

*Rebecca A Tressler 2021 T C Sum Op 33 9 13 21

If your gigworker on-the-road client wants to claim that her/his tax home is where s/he lives, not works, heed Judge Vasquez.

Today he takes a leaf from The Silhouettes’ 1957 smash hit to admonish Avito M. Vasquez, 2021 T. C. Sum. Op. 32, filed 9/13/21, that if he wants to claim his residence as his tax home between on-the-road gigs as an electrician with a high-voltage TX outfit, he should look for work when he’s laid off by the high-voltagers and goes back home until the next gig. Remember, home may be where the heart is, but a business connection is necessary for it to be your client’s tax home.

“The record does not establish that petitioner had any business connections in the vicinity of [hometown]. While unemployed in the summer of [year at issue], he did not attempt to find work near his residence. As petitioner acknowledged at trial, job opportunities in his field were scarce in and around [hometown]. On the record before us, petitioner’s only tie to [hometown] was familial, which is a personal and not a business connection. We therefore find that petitioner’s choice to maintain a home in [hometown] was for personal rather than business reasons. Accordingly, petitioner was not ‘away from home’ while working [on the road].” 2021 T. C. Sum. Op. 32, at p. 10.

So keep good records, gig roadster, but remember Rick Lewis’ immortal words. When you get on the stand, say as follows: “And when I get the paper, I read it through and through, And my girl never fails to say If there is any work for me, And when I go back to the house I hear the woman’s mouth Preaching and a crying, Tell me that I’m lying ’bout a job, That I never could find.” Just leave out the sha na na na.

That’s Ch J Maurice B (“Mighty Mo”) Foley giving the bad news to Rami A. Fares & Eman S. Fares, Docket No. 8685-20, filed 9/10/21.* The last day for them to file their petition from three (count ’em, three) years’ worth of SNODs was 3/5/20. Tax Court got the same on 7/10/20, when once again the postal workers might enter The Glasshouse in the Stateless City.

Alas, the envelope wherein said petition (signed 3/17/20) resided was postmarked 3/18/21 [sic]; I suspect typos at p. 1 of said Order. If I am correct, the postmark would have been 3/18/20, and the reference to 7/10/21 in the order should be 7/10/20.

Howbeit, “(I)n their petition, petitioners conceded that the petition was being filed after the filing deadline set forth in the notice of deficiency. In their objection to respondent’s motion to dismiss, petitioners further agree that the petition was not timely filed. Petitioners, however, contend that extenuating circumstances, namely the COVID-19 pandemic, were the reason for the late filing and request that the Court deny respondent’s motion to dismiss.” Order, at p. 1.

But the postmark was the same day Tax Court closed its doors, so Rami and Eman were late anyway, even if Tax Court stayed open. Hence Section 7502 mailed-is-filed avails them naught.

And the goalline save by Steve Mnuchin and the Treasury Munchkins (see my blogpost “The Quinzieme Juillet,” 4/10/20) is no help for Rami and Eman.

“The extension granted by Notice 2020-23, however, only applied to petitions due between the dates of April 1, 2020 through July 14, 2020 and, thus, that extension does not benefit petitioners in this case.” Order, at p. 2.

If you were late when the doors closed at the Glasshouse, nothing else counts.

*Rami Fares 8685-20 9 10 21

I didn’t blog the three (count ’em, three) previous visits of Karson C. Kaebel, 2021 T. C. Memo. 109, filed 9/9/21.* KCK was just another nonfiler who claimed he never got SNODs off the SFRs, so didn’t owe anything. But IRS proved he did, notwithstanding KCK’s motion to strike the USPS Forms 3877 showing proofs of mailing to his Lewisville TX last-known-address (at least someone in TX knows how to spell Lewisville, unlike that KY place). So you can read 2017 T. C. Memo. 37, and Order 7/26/18 in Docket No. 916-18, aff’d per cur 770 F. App’x 726 (5 Cir., 2019) for yourself.

Issue preclusion sinks KCK. He litigated the issuance and mailing of the SNODs, and lost. He tried again, lost, and appealed and lost. Even though he got tossed on the second try for want of jurisdiction rather than on the merits, he’d already had his shot at the merits. ” A dismissal for lack of jurisdiction precludes relitigation of issues essential in ruling on the jurisdictional question.” 2021 T. C. Memo. 109, at p. 13 (Citations omitted).

OK, so why is KCK back? Because State grabbed his passport per Section 7345, as IRS certified that KCK owed $250K+. KCK doesn’t dispute the certification. He reiterates the non-mailing of SNODs, but that train left years ago. He also claims the statute violates his Constitutional right to travel freely.

Judge James S (“Big Jim”) Halpern is the last Judge on whom to try that that gambit.

“In Rowen v. Commissioner, 156 T.C. __, __ (slip op. at 16-17) (Mar. 30, 2021), we said: ‘In short, the actions of the Commissioner, the Secretary of the Treasury, and the Secretary of State are governed by separate and distinct rules, which impose different responsibilities on each and grant them varying degrees of discretion in carrying out those responsibilities.” 2021 T. C. Memo. 109, at pp. 15-16.

For the Rowen story, see my blogpost “We Report, State Decides,” 3/30/21. IRS tells State that taxpayer owes money; State takes it from there. Pore l’il ol’ Tax Court cannot review whatever the Sec’y of State decides.

I said don’t try this with Judge Big Jim. Here’s why.

“This is the third proceeding before this Court and the fourth altogether, see Kaebel v. Commissioner, 770 F. App’x 726, in which petitioner has claimed that deficiency notices for one or all the delinquency years were not properly mailed. It should have become clear to petitioner, at least after the Court of Appeals in Kaebel II affirmed our rejection of his claims, that those claims lack merit. He has in this proceeding occupied the time of respondent’s counsel and this Court needlessly with his claims that deficiency notices for the delinquency years were not properly mailed. In pertinent part, section 6673(a)(1) allows us to impose a penalty of up to $25,000 if (1) the taxpayer has instituted or maintained proceedings before the Tax Court primarily for delay or (2) the taxpayer’s position in the proceeding is frivolous or groundless.” 2021 T. C. Memo. 109, at p. 17.

So let KCK show cause why Judge Big Jim shouldn’t mulct him.

*Karson C Kaebel 2021 T C Memo 109 9 9 21

The Jersey Boys, and their Great Chieftain Frantic Frank Agostino, are an unending source of blogfodder. When it comes to novel theories and unparalleled envelope-pushing, count on Hackensack as the launching pad to the stars.

Today, Judge Mark V. Holmes confronts the stretch of the year in Malka Yerushalmi, Petitioner, and Joseph Yerushalmi, Janet Baldwin, Next Friend, Intervenor, Docket No. 5520-08, filed 9/8/21*. That 08 is no typo; I’ve drunk good Scotch that’s younger than this case.

Frantic Frank signed aboard only last October, but he’s quick off the mark.

I’ll turn it over to Judge Holmes.

“Intervenor is the debtor in a long-running bankruptcy case, but in 2019 the Bankruptcy Court lifted the automatic stay to allow him to file his own case and to give us the authority to adjudicate together both he and his ex-wife’s tax liabilities for the years 1999 and 2000. We have since consolidated his and her cases.

“Intervenor’s bankruptcy case is ongoing, and the trustee of his bankruptcy estate has filed an adversary proceeding in Bankruptcy Court to authorize the sale of a condominium unit in which both intervenor and petitioner have an interest. Intervenor then moved for a protective order in this Court to stay the sale pending the outcome of this case. The Commissioner quickly made a jeopardy assessment against both petitioner and intervenor, the effect of which would seemingly be to ensure payment of the proceeds of any sale.” Order, at p. 1.

Howbeit, Frantic Frank’s move for a Rule 103 protective order to stay the sale by the Bankruptcy Trustee is truly breathtaking. Exactly how pore l’il ol’ Tax Court has such jurisdiction is above my paygrade.

“Intervenor cites Rule 103 as our authority to grant the order he seeks. That Rule is part of the section of our rules that governs discovery in our Court. It allows us to issue orders to protect persons who are the object of a ‘method or procedure’ of discovery ‘from annoyance, embarrassment, oppression, or undue burden or expense.’ Rule 103(a).

“We see nothing in that rule that would allow us to second guess any decision of the Bankruptcy Court’s to authorize the condominium sale. Intervenor’s stated reason for filing the motion is, moreover, to avoid prejudice to the Commissioner’s ability to apply any equity in the condominium to the Yerushalmis’ tax debt and to prevent petitioner from possibly putting the condominium out of the Commissioner’s reach. The Commissioner has shown he’s capable of protecting his own interest through the jeopardy assessment.” Order, at p. 1.

Judge, a quick check of our New York City Automated City Register Information System shows IRS filed a NFTL on Joe last month for about $2.5 million and two (count ’em, two) on Malka for about twice that. And if I got it right, there are three (count ’em, three) condos in play here. One is on 58th Street and Third Avenue, another on West 80th Street, and a third on Warren Street in the courthouse district, all on this Minor Outlying US Island. With deeds out showing no consideration. My kind of case.

The Commissioner is ultra-capable of protecting the fisc.

But I must give Frantic Frank a Taishoff “Gutsy Move, Hors Classe” for this one.

*Malka Yerushalmi 5520-08 9 8 21

Today we have another example showing why Campbell, LCJ’s famous statement is as true today as when he first said it. For the text, see my blogpost “Lord Chief Justice Campbell’s Dictum,” 6/1/21.

Here’s seventeen (count ’em, seventeen) pages of Judge Morrison deconstructing the discovery objections of Jeffrey A. Miller and Patricia J. Miller, Docket No. 8820-20.*

If you need a checklist of boilerplate discovery objections, Jeff & Pat have ’em for ya. See Order at pp. 2-3. Of course, Jeff & Pat are long on objections and short on facts.

Bottom line: If you are going to object, state the facts that underpin each of your objections. Otherwise, the judge will do as Judge Morrison does, and knock them down seriatim. If you don’t have something in your possession or under your control, say so. If you promise to produce something within a time certain, produce it. Blowing a time limit and promising again, without a good explanation why you blew the time limit, doesn’t help.

Finally, if you’re going to play lawyer, learn to play it right.

*Jeffrey Miller 8820-20 9 8 21

Though The Girl of My Dreams watches the double-wide in the living-room, I do not, so never is heard those discouraging words in our house.  But Judge Christian N. (“Speedy”) Weiler does just that, in Green Valley Investors, LLC, Bobby A. Branch, Tax Matters Partner, et al., Docket No. 17379-19, filed 9/7/21.*

Y’all will recollect that Judge Speedy upended the Green Valleys back in May. No? See my blogpost “How Green Was My Valley – Part Deux,” 5/27/21. Well, the Green Valleys tried reconsideration, and today fare no better.

I’m not going into the improvements-out or the deference-to-regulation arguments here. Read them for yourselves, but they’re much of a muchness with all the prior Tax Court learning. I’m waiting for appellate learning before chewin’ this cabbage twicet.

I’m going back to my old favorite, “so remote as to be negligible.”

Unhappily, the Green Valleys didn’t raise this argument in the partial summary Js for which they now seek reconsideration. Judge Speedy could blow them off on that alone. “On the basis of our review of the prior motion papers petitioners are raising this argument now for the first time and therefore could be denied on that basis alone.” Order, at p. 6.

OK, but the citation of precedents IRS (presumably) argues, and Judge Speedy buys, don’t really cover. First is the original “How Green Was My Valley,” 4/27/16, Carroll. But there Judge Ruwe distinguished Kaufman on the grounds that there was no intervening mortgage; and Carroll never appealed.

Next is Palmolive, as to which see my blogpost “No Joy Forever – Because Golsen,” 10/11/17.

But there, Judge Gustafson tossed Kaufman because Kaufman was 1 Cir and Palmolive was 7 Cir, and anyway, 1 Cir was wrong. But Palmolive folded (see my blogpost “Palmolive Washes Out,” 12/4/20), so no appeal there either.

OK, the Kaufman argument is a weak reed. Casualty loss is by “no means so remote as to be negligible,” especially to a New Yorker who’s seen two (count ’em, two) record-braking flash floods in the last ten days. And the mortgagee can scoop the insurance proceeds in every  mortgage I’ve seen. But brushing off condemnation by saying there are other ways that an easement may be terminated, as Judge Ruwe did in Carroll, is just as weak a reed. Those “other ways” as just as remote.

Yes, failure to raise the argument on the motion is enough to toss reconsideration, absent fraud, which is not the case here. Still, “very contestable readings of what it means to be perpetual” will not go away until the Circuits weigh in.

So don’t pass the remote quite yet.

*Green Valley Investors 17379-19 9 7 21