Attorney-at-Law

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NO EZ TELEPHONE “DETERMINATIONS”

In Uncategorized on 04/12/2019 at 15:43

Tohubohu Isn’t Even Close

The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, has a doozy to end the week in EZ Lube, LLC, EZL-1 Investments, Inc., A Partner Other Than The Tax Matters Partner, Docket No. 18021-13, filed 4/12/19.

EZ crashed years ago, but Goldman Sachs bailed them out. How they got bailed is the fight: was it termination of one partnership with deemed sale of its assets, per Section 708(b)(1)(B), and deemed capital gain; or did the partnership go on, with COD and concomitant ordinary income as to the outgoing partners? The outgoers want the first, the incomers the second.

IRS went with the incomers, and issued a FPAA, which the outgoers petitioned.

But then came Tax Court’s latest bargain baby, the remand.

“The Appeals officer who handled the case spoke on the phone with petitioner’s counsel and said she thought that the FPAA should be conceded — namely, that the original [outgoers’] returns were correct. She said that her manager concurred with her view, but that it was also necessary for her to consult with the Appeals National Office before any such concession could be embodied in a TEFRA settlement. The National Office disagreed with the Appeals officer, however, which meant the case did not settle in the usual way.” Order, at p. 2.

And the famous Susan L. Latham, then of the Department of the Treasury, Memorandum for Appeals Employees (Control No. AP-08-0713-03) (July 18, 2013), was going to set up a quasi-judicial approach at Appeals, the so-called AJAC, the Appeals Judicial Approach and Culture.

“Haha and hoho,” yell outgoers, “no settlement, the phonecall was a determination. Back to Tax Court for a ‘dission’.”

The outgoers claim Tax Court, that creature of statute, has jurisdiction.

Judge Holmes: “But where? Sections 6320(c)2 and 6330(d) give us jurisdiction to review Appeals Office’s determinations to proceed with enforced collection. Section 7429(b)(2)(B) gives us jurisdiction to review the Commissioner’s jeopardy levy or assessment in cases where he makes such an assessment after a taxpayer has petitioned for redetermination of a deficiency. Section 6404(h) gives us jurisdiction to review determinations not to abate interest. Section 7476(a) gives us jurisdiction to review determinations about the qualifications of ESOPs. Section 7428(a) gives us jurisdiction to review determinations to deny tax-exempt status. And section 7436(a) gives us jurisdiction to review determinations about an individual’s employment status.” Order, at p. 4.

Note to prospective candidates for Tax Court admission via the test: memorize this list. And practitioners, both attorneys and USTCPs, would do well to do likewise.

OK, say the outgoers, so use the Administrative Procedures Act default rules, and decide that way.

“What petitioner seeks is review under the default rules of the APA. Those default rules would mean that our scope of review would be limited to the administrative record compiled by the IRS, and our standard of review would be to look for an abuse of discretion. Both this scope and standard of review are different from what we use in TEFRA and deficiency cases. And that’s not all — the proper default venue for review of administrative-agency determinations that lack a special statutory review procedure are the federal district courts, under their general federal question jurisdiction.” Order, at p. 5 (Citations omitted).

Maybe the outgoers are arguing that there is a new subset of TEFRA, a sort of ancillary or TEFRA-lite. Just what we need, another permutation of the dying dinosaur TEFRA (sarcasm alert).

But Judge Holmes doesn’t see that.

“The contents of a phone call might be a fact relevant to our decision, but it is irrelevant to our jurisdiction to decide. Here petitioner argues that the phone call itself is of jurisdictional importance. If it is correct — that some court somewhere has to have jurisdiction to review this phone-call ‘determination’ — that court is not Tax Court. If petitioner is wrong, then the phone-call determination isn’t reviewable and is just part of settlement negotiations that didn’t work out. Under either analysis, and in a case where our Court has jurisdiction under TEFRA, it must be ORDERED that petitioner’s motion for summary judgment is denied.” Order, at p. 6.

And by the end of next month, guys, tell poor Judge Holmes what you want to do with this mess.

Thanks, Judge Holmes, for a designated hitter that really hits the spot on a Friday. And a Taishoff “Good Try, First Class” to Steven Ray Mather, Esq., another L. A. lawyer.

 

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L.A. LAW

In Uncategorized on 04/11/2019 at 17:39

No, this is not a plot suggestion for a defunct television series. This is real-life L. A. Law, featuring a real-life L. A. lawyer (whom I don’t know) with a client who has to be in the top-fuel wag, wit and wiseacre category.

And who better to decant for us this ya-can’t-make-this-stuff-up tale than STJ Lewis (“A Name to Inspire Legends”) Carluzzo?

Here’s an off-the-bencher designated hitter, Mohamed A. Hadid, Docket No. 14213-18L, filed 4/11/19.

Mo was in the hole four-for-three. That means $4 million in tax liabilities for three (count ‘em, three) tax years. Mo doesn’t dispute this. IRS wants to levy, and Appeals says “go right ahead.” Mo and his trusty L. A. attorney, whom I’ll call MG, petition.

There’s a brief joust over the administrative record, as they’re in record-rule LaLa Land. STJ Lew says “mox nix, let it all in.”

Mo wants an IA.

“As a collection alternative to the proposed levy, Petitioner requested an installment agreement and offered to pay $30,000 per month towards the underlying liabilities. In support of his request for the installment agreement, petitioner provided a financial statement showing that he had $5,000 of monthly income and more than $200,000 of monthly expenses. Petitioner’s offer was conditioned upon respondent’s agreement that a Notice of Federal Tax Lien (NFTL) would not be filed with respect to the underlying liabilities.” Transcript, at p. 5.

Awesome.

“At trial petitioner’s attorney acknowledged the obvious mathematical implications,  but suggested that the money would come from somewhere.” Transcript, at pp. 5-6.

I was about to suggest Shangri-La, when I recalled the death yesterday at age 103 of Col. Dick Cole, the last living Doolittle raider. President Roosevelt said the raiders came from Shangri-La.

I award MG a Taishoff “Good Try, Third Class.”

And we can stop here.

 

 

 

ANYONE CAN WHISTLE – AND GET REMANDED

In Uncategorized on 04/11/2019 at 16:24

All y’all will doubtless remember Judge Vasquez’s concern about remanding a whistleblower case. If not, see my blogpost “Remand? You Can Whistle For It,” 1/31/18, when Judge Vasquez feared that remanding Suzanne Jean McCrory might result in the Court ordering IRS to commence some kind of proceeding. Obviously no jurisdiction for that.

And anyway, Judge Vasquez couldn’t find any precedent for a remand in a whistleblower case.

Well, now ex-Ch J Michael B (“Iron Mike”) Thornton decides that there can be a remand, and Chief Judge Foley, Judges Gale, Marvel, Gustafson, Morrison, Kerrigan, Buch, Lauber, Nega, Pugh, Ashford, and Urda, all agree. No dissent, so maybe Judge Vasquez is convinced, even if he doesn’t say so.

There’s the analogy of the stand-alone 6015, where Section 6015(e) gives Tax Court de novo review, and where innocent spousery can be raised when there’s none of deficiency, NITL or NFTL in sight. But that’s the only case where there’s no remand because there was no agency determination to review.

Whistleblower 769-16W, 152 T. C. 10, filed 4/11/19, wants his [personal pronoun based on characterization at p. 7”… the IRS failed to comply with the statutory mandate to permit the taxpayer to make an audio recording of his CDP hearing….”) case tried and his money paid now. Remand, he claims, will only delay the process.

IRS admits they didn’t consider the Congressional committee report wherein 769-16W dished on the dodgers, and want to reconsider. Besides, the Ogden Sunseteers claim there are other claimants for the boodle who precede 769-16W. OK, says 769-16W, try the whole shootin’ match here and now.

But the other claimants aren’t before the Court, Tax Court has no jurisdiction to whack up awards, and DC Cir, to which 769-16W is Golsenized, says it’s better for the agency to cure its own mistakes rather than have the courts do it.

Now if 769-16W were seriously prejudiced, or if the demand for remand is made frivolously or in bad faith, it would be another story. But all 769-16W is beefing about is the delay in his payday.

“Petitioner contends that remand will result in prejudice because it will prevent ‘immediate payment of the money to which * * * [petitioner] is entitled.’ As a practical matter, however, even if we were to deny respondent’s motion for remand, there would be no ‘immediate payment’ of a whistleblower award; any award would have to await resolution of proceedings in this forum, which might well involve a trial, posttrial briefing, and possibly an appeal.  And as previously noted, even if, after conducting further proceedings in this forum, we ultimately concluded that respondent had abused his discretion in denying petitioner’s claim for an award, the ultimate remedy might well require a remand to the Whistleblower Office in any event.  Granting respondent’s motion for remand will simply return this case to the Whistleblower Office sooner than would occur in that scenario.  Should this matter be resolved as a consequence of a remand, the parties’ and the Court’s resources will be greatly conserved.” 152 T. C. 10, at pp. 15-16.

“But even if this case is not resolved upon remand and additional time passes before petitioner receives judicial review of respondent’s ultimate determination, we believe that any such delay is warranted inasmuch as completing the administrative process should facilitate more focused judicial review.” 150 T. C. 10, at p. 16. (Citation omitted).

And again obeisance is paid to Kenneth William Kasper, whose journey through Tax Court I’ve extensively blogged. The record got supplemented in Kenneth William’s case. 769-16W wants IRS to produce some documents, but remand can accomplish that as well. If it doesn’t, 769-16W’s motion to compel production is held in abeyance until after the remand, and the parties file a status report stating how they want to proceed.

THE PERILS OF SUB S

In Uncategorized on 04/10/2019 at 17:31

Judge Morrison points up a problem with the pass-through Sub S structure in Thomas J. Francel, 2019 T. C. Memo. 35, filed 4/10/19. That’s Doctor Thom, as he’s a successful plastic surgeon with lots of income, a good part of which comes in the form of cash and cashiers’ checks.

But Doctor Thom’s income flows through from his Sub S, which his bookkeeper and wife are looting. They siphon the cash and checks through an account unknown to trusty CPA, with wife grabbing all and investing in house improvements, car restoration and her drug addiction.

Bookkeeper goes undercover for IRS, and FBI raids the place. Wife goes down, serves 10 months, pays restitution, judicially separates from, but remains married to, Doctor Thom, and eventually moves back in with him.

Doctor Thom wants innocent spousery for a tiny deficiency and the heavy-duty accrued interest on the restitution. Of course, Doctor Thom and wife filed MFJ for years at issue.

There’s a jurisdictional joust, because Doctor Thom’s innocent spousery gets tangled up with a NITL that he was dealing with at Appeals. So there’s a question when Appeals issued a NOD on innocent spousery, if at all, but anyway Doctor Thom is safe. Procedure geeks can read it all.

So Judge Morrison can decide the shoot-down of his innocent spousery, and use de novo review rather than abuse-of-discretion as in a lien or levy CDP.

Here’s where the Sub S wrecks Doctor Thom.

“We need not determine whether the unreported cash fees could be characterized as the embezzlement income of Francel’s wife.  Even if the unreported cash fees were the embezzlement income of Francel’s wife, this does not preclude the fees’ also being income to the medical practice.  When an employer earns income and an employee embezzles the proceeds of the income, both the employer and the employee face income inclusions.  The employer may deduct any loss that it realizes from the embezzlement.  Sec. 165(a), (e); sec. 1.165-8(a)(1), (d), Income Tax Regs.  This deduction is allowed for the year in which the employer discovers the loss, sec. 165(e), or, if in the year of discovery the employer has a claim for reimbursement that has a reasonable prospect for recovery, the year in which it can be ascertained with reasonable certainty whether the reimbursement will be received, secs. 1.165-1(d)(3), 1.165-8(a)(2), Income Tax Regs.

“The medical practice earned the unreported cash fees because it provided the services that generated the fees and received those fees for those services.  The medical practice received the unreported cash fees:  Its receptionist collected the fees from the patients.  Thus, even if the fees were misappropriated from the medical practice by [bookkeeper] and Francel’s wife, the medical practice was required to report the fees as its income.  (Francel does not argue that the medical practice is entitled to loss deductions for the years [at issue], and the record does not establish that the practice is entitled to one.)  Although an S corporation, such as the medical practice, is required to file a return reporting its income, sec. 1.6037-1(a), Income Tax Regs., it is not subject to income tax, sec. 1363(a).  The income of an S corporation is included in its shareholder’s income.  Sec. 1366(a), (c).  Therefore Francel, the sole shareholder of the medical practice, was required to include the fees in his income.  The erroneous items of income on the Francels’ joint returns–the service income of the medical practice corresponding to the unreported cash fees that passed through to Francel as the owner of the medical practice–are attributable to Francel.  Because the fees were unreported, the fees gave rise to understatements of tax on the couple’s joint return.  Therefore, the second requirement of section 6015(b) relief is not met.” 2019 T. C. Memo. 35, at pp. 42-43. (Citations omitted).

The second requirement is that the items giving rise to the tax are those of the non-requesting spouse, but these are not.

And if that weren’t bad enough, “The fourth requirement, that it be inequitable to hold Francel liable for the…deficiencies, see sec. 6015(b)(1)(D), is not met.  The deficiencies are attributable to the Francels’ failure to report the unreported cash fees on their joint returns, which in turn is attributable to the medical practice’s failure to report the proceeds on its tax returns.  Francel benefited from the unreported cash fees because his wife spent some of the cash on Francel’s house and car.  See sec. 1.6015-2(d), Income Tax Regs. (providing that a relevant factor in determining whether it is inequitable to hold a spouse liable for deficiencies on a joint return is whether the spouse ‘significantly benefitted, directly, or indirectly, from the understatement’ and defining a ‘significant benefit’ as ‘any benefit in excess of normal support’).  Today Francel still lives in the house that was improved by the unreported cash fees.  He still owns the car that was restored with the unreported cash fees.  His accumulated wealth is attributable in part to the unreported cash fees and to the unpaid tax from the [years at issue].  In our view the equities are against relief.” 2019 T. C. Memo. 35, at pp. 44-45.

Sub S is a great tool for adroit tax and asset protection planning. But its insulation is not impermeable.

A “WILL ASS GUESS”

In Uncategorized on 04/10/2019 at 16:52

If the person, not an actuary, who sets the premiums for your captive insurance company states on the stand at trial that this was how said premiums were computed, you may be sure that Judge Ruwe maybe so might could just find that your insurance company wasn’t an insurance company at all, but a roundy-round cash circle to set up phony deductions.

And he did, in Syzygy Insurance Co., Inc., et al., 2019 T. C. Memo. 34, filed 4/10/19.

Here’s a sample.

“Mr. T is not an actuary.  We recognize that premiums can be set by nonactuaries, but Mr. T’s underwriting report has no calculations showing how he arrived at the premium prices.  Mr. T does not appear to have used any type of actuarial rating model or compared premium prices with similar publicly available policies.  As stated by Mr. Taylor, he was using a ‘will ass guess’ at one point during the pricing process.” 2019 T.C. Memo. 34, at p. 35.

Of course, the head honcho of the nominal insured never bothered to file some claims. And finally quit the scheme because the premiums were too low.

Now it beggars belief that any insured would object to premiums too low, only too high.

Judge Ruwe marches through some old friends, like Avrahami (see my blogpost “The Selfies – Eclipsed,” 8/21/17), Rent-A-Center (see my blogpost “Insurance – Are You Sure?” 1/14/14), and Securitas (see my blogpost “Third Time Lucky,” 10/29/14).

Syzygy fails every test. Undercapitalized (assets included life insurance policies it couldn’t touch); any real risk reinsured; rate-on-line (ratio of premium to occurrence limit) six times normal, so big premiums for low cover; State (DE) regulators concerned with solvency of Syzygy, not with whether premiums were too high; and the only paid claim was one that could have been successfully fought (but editorial query; it was $20K, so was that worth fighting?).

But Syzygy’s principals relied upon their trusty and well-qualified CPA, so no chops.

“Will ass guess”? Don’t you mean “wild ass guess”?

 

THE DISCOVERY WALTZ

In Uncategorized on 04/09/2019 at 18:46

This is disfavored in the courtroom of that Obliging Jurist, Judge David Gustafson, who upbraids in Trilogy Inc. & Subsidiaries, Docket No. 12097-16, a designated hitter filed 4/9/19.

IRS and the Trilogists have had three (count ‘em, three) years to discover, and with trial six weeks away, the Trilogists want Judge Gustafson to suss out eight (count ‘em, eight) responses to requests for admissions. I love requests for admissions, but Judge Gustafson decides enough is enough already.

In five of the eight, IRS says it doesn’t now contend, but might in future, depending upon how the trial goes.

“It is true that in this case the Commissioner can point out that he has imperfect knowledge of the facts, that he may yet learn additional facts before or at trial, and that the petitioner has the burden of proof. But these propositions are true in nearly every case, and while they are relevant considerations for setting and revising deadlines, they do not constitute reasons that the Commissioner cannot be required to give reliable answers to questions about his contentions.

“The possibility of mistake does not relieve a party from disclosing his contentions. Rather, a party who has in good faith answered questions about his contentions and later learns that his answer was mistaken may ask to be permitted to revise his answer (e.g., by requesting to withdraw an admission under Rule 90(f) or by amending his pleading to conform to the evidence under Rule 41(b)). As the Court decides whether to permit such a revision, the Court will take into account the culpability (if any) of the party who made the mistake and the prejudice (if any) to the party objecting to the revision. We need not now attempt to anticipate whether or how that might hereafter occur in this case.” Order, at p. 3.

As for the back three, “[T]he Commissioner has made unequivocal denials, and if his reasons for those denials are erroneous, Rule 90 is not the means by which the merits of the Commissioner’s position will be litigated. Rather, if his denials later prove to have been ‘unjustifiabl[e]’, then the sanctions of Rules 90(g) and Rule104 may be available. However, Trilogy is entitled to more information about the Commissioner’s denials, and we will order the Commissioner to give that information.” Order, at p. 3.

Judge Gustafson gives them a month to sort it out, and he will enforce that time limit “with rigor.” Order, at p. 4.

 

 

THE CAPITAL OF NEW JERSEY

In Uncategorized on 04/09/2019 at 18:23

No, this is not a reprise of the game wherewith The Girl of My Dreams and her sister whiled away their childhood hours in the back of her father’s 1948 Ford coupe. Today we have before us the capital contribution of the State of New Jersey to Brokertec Holdings, Inc. f.k.a. ICAP US Investment Partnership, 2019 T. C. Memo. 32, filed 4/9/19.

Brokertec paid for its latest merger with the largesse showered upon it by the State of New Jersey Economic Development Program. And His Honor Big Julie, a/k/a Judge Julian I Jacobs, hereinafter “HHBJJJIJ” will tell us all about it.

The issue is whether the boodle bestowed on Brokertec when it fled Our Fair City after 9/11 (I will not mention that The Girl of My Dreams and I spent September nights volunteering at St Paul’s Chapel at Ground Zero in aid of the recovery teams) was payment for services or contribution to capital per the pre-2017 version of Section 118.

Brokertec’s predecessor fled as aforesaid, and agreed to provide jobs and rent specialty property immediately across the Hudson, in exchange for which the Garden State forked over around $170 million.

There were no restrictions on how Brokertec spent the money, so they merged as aforesaid. They could lose the money if they didn’t perform, but they did.

After plowing through years of caselaw, HHBJJJIJ says it comes down to intent of the transferor. Was the government paying for services like Detroit Edison, or helping out a business to grow like Brown Shoe? The cases are cited and elaborated in the opinion. The party contributing capital need not be a shareholder.

Anyway, “capital” is nowhere defined in the IRC, and the general meaning of “working capital” is “skin in the game.” Ultimately, the question is whether any benefit to the transferor from the grant to Brokertec was direct or indirect, specific or general, certain or speculative.

And of course there have to be factors, no one of which is ultimately dispositive and mere arithmetical tabulation is not sufficient. [1] It certainly must become a permanent part of the transferee’s working capital structure. [2] It may not be compensation, such as a direct payment for a specific, quantifiable service provided for the transferor by the transferee. [3] It must be bargained for. [4] The asset transferred foreseeably must result in benefit to the transferee in an amount commensurate with its value. And [5] the asset ordinarily, if not always, will be employed in or contribute to the production of additional income and its value assured in that respect. 2019 T. C. Memo. 32, at pp. 32-33.

But HHBJJJIJ eschews a mere pedestrian trudge through all the foregoing.

“It is undisputed that [NJ]’s purpose in making the … grant to petitioner’s affiliates was to induce them to establish their offices in a targeted area, i.e., an urban-aid municipality, not only to bring in new jobs, but also to revitalize the area. In the instant case we have clear evidence of the donor’s intent, and we find that [NJ]’s intent and motivation for the… grant was to provide a nontaxable contribution to capital. The statute enacting the [program] stated that the purpose of the program was to develop New Jersey’s economy and revitalize its cities by providing financial and technical assistance to, amongst other entities, businesses. Both witnesses from [the NJ gov’t]…stated that their only interest in making such grants was to bring new jobs to the State. The facts in this case fall squarely within the four corners of section 1.118-1, Income Tax Regs…..” 2019 T. C. Memo. 32, at pp. 35-36. (Names and citations omitted).

IRS objects that Brokertec went out of pocket to the extent of $40 million to run away, while raking in $170 million. But HHBJJJIJ says IRS is conflating capital assets with working capital, which is what businesses use to pay bills, operate and grow. And the NJ witnesses agree that the early grants were too rich, so they leaned out the mixture in amended statutes.

Besides, “[P]etitioner’s affiliates are financial services companies. They rely primarily on human capital, i.e., their employees, as well as the substantial cash reserves necessary to function as interdealer-brokers. Petitioner’s affiliates have no need for massive facilities. Rather, an office with computers and telephones is sufficient for them to conduct business. Petitioner’s affiliates made the cash grants a part of their stake in the game by using the funds to acquire all of the stock of [merger partner], which enhanced the efficiency of petitioner’s affiliates’ businesses.” 2019 T. C. Memo. 32, at pp. 39-40.

It’s the information age, y’know. The computer in a yurt in Mongolia equals glass-and-steel in FiDi or Jersey City.

Sure, NJ hoped for tax revenue. But they also hoped for thriving communities. And what Brokertec does (interdealer brokerage means making deals between other brokers, not dealing with the public) is not a service that NJ was buying.

No tax on the $170 million.

BTW, Judge “FF&E” means furniture, fixtures and equipment; what you use to outfit a plant or an office.

“WHAT IS TEMPORARY BECOMES INDEFINITE” – PART DEUX

In Uncategorized on 04/08/2019 at 16:36

Once again we have the travelin’ man unable to deduct his expenses for trekking from home to work. Michael E. Brown, of Michael E. Brown And Miriam L. Mercado-Brown, 2019 T. C. Memo. 30, filed 4/8/19, is a “concierge CFO.” He’s an IC CPA and finance dude, who in the years at issue, left his home in GA, but fetched up four days a week in Pennsauken, NJ, before returning to the Peach State and his nearest and dearest for the weekend.

No substantiation issue with the expenses, so all Judge James B (“Big Jim”) Halpern has is whether Mike was temporary or indefinite. It matters, and for IC’s it will continue to matter. EEs have to wait for 2026. And it’s facts-and-circumstances. See my blogpost “What is Temporary Becomes Indefinite,” 2/15/18.

Mike had more than a dozen clients over the years, but for the years at issue it was an outfit called AFR that had Mike on the road. He did have two (count ‘em, two) other clients he reported on separate Sched Cs, but had only $7 in travel for one and zero travel for the other.

Mike testified that, with an internet connection and his trusty computer, he could work anywhere mostly, but AFR needed him in Pennsauken.

“As we understand it, Mr. Brown is in essence a business consultant who, over the years, has had numerous clients for his concierge CFO business.  Often, he has had more than one client at once.  Many, if not most, of his clients did not require him to be present on, or, indeed, spend much time at, their business premises.  Such is a wonder of the information age.  But AFR was different.” 2019 T. C. Memo. 30, at p. 11.

Judge, I’ve sometimes said that I could do 90% of my work in a yurt in Mongolia, if I had climate control, a solid secure internet connection, and my MacBook Pro.

Mike’s deal with AFR was three years, cancelable on five days’ notice. He had to be on-premises four days per week. He kept his family in GA.

Remember, if your work is temporary, that is, reasonably expected to be of very short duration, your tax home never migrates to your workplace, so your tax home and real home remain the same. And you can deduct travel expenses.

“At trial, Mr. Brown suggested that, because, under the agreement, AFR could terminate his engagement at will, his engagement by it was temporary (implying that, because the engagement was temporary, Pennsauken never became his tax home).  And while petitioners do not pursue that argument on brief, the fact that the agreement, although terminable by either party, was to last for three years is indicative that Mr. Brown could not have expected his work for AFR in Pennsauken to be temporary; i.e., he could not have expected it to be concluded within a reasonably short period.” 2019 T. C. Memo. 30, at p. 12.

For the second of the years at issue, Mike claims he negotiated with AFR, so he could spend alternate two-week periods in Pennsauken and in AFR’s GA office. Thus, he didn’t work a full year in Pennsauken. But Mike testified that, for 17 months, he was in a hotel room every week. And produced no evidence about his two-week rotations, thus getting a negative inference.

And Mike didn’t have a home office in GA, and evidence of his off-line business activity is scanty.

“AFR was the sole source of Mr. Brown’s business income.  He spent the majority of his time (four days a week) in Pennsauken, working for AFR.  While he may have engaged in activities with respect to his concierge CFO business while at home on long weekends in Atlanta, he did not describe any client meetings in Atlanta or otherwise describe work assignments or business-related tasks that necessitated his being in Atlanta to accomplish them.  Petitioners have not persuaded us that… he worked for multiple clients at various locations.” 2019 T. C. Memo. 30, at p. 14.

Mike wants Judge Big Jim to look at the Big Picture. For 15 (count ‘em, 15) years, Mike traveled all over the place, so he never had a permanent tax home other than GA.

Judge Big Jim isn’t a traveler. “We Do Not Take a Long-Term View.” 2019 T. C. Memo. 30, at p. 15. Mike’s tax home for the years at issue was Pennsauken. No deductions.

Mike does get the accuracy chops, though; he’s a CPA with a master’s degree in finance, and should know “the dubiousness of petitioners’ reporting position.” 2019 T. C. Memo. 30, at p. 20.

 

 

“RENT IS TOO **** HIGH!”

In Uncategorized on 04/08/2019 at 12:49

Ch J Maurice B (“Mighty Mo”) Foley echoes the cry of a failed mayoral and gubernatorial candidate from Our Fair City in his budget justification message to the Crosstown Crew Under the Dome. Ch J Mighty Mo wants more of our money “because reasons,” as my granddaughters say.

The first thing he mentions is the 4% rent increase the General Services Administration wants The Glasshouse Gang to stump up for continued occupancy. Then there are salaries and benefits for the nineteen (count ‘em, nineteen) Presidentially-appointed judges. Finally, the technological infrastricture. No, that’s not a typo, I meant technological infrastricture, the inability to access documents via PACER, and the filing process generally.

I hope Ch J Mighty Mo gets every penny, and “goes down justified,” as a much higher authority put it. But bar the rent increase. Jimmy MacMillan said it all.

EVEN THE CLERKS GET IT WRONG

In Uncategorized on 04/05/2019 at 15:43

I know I’ve been rough on Form 6, the Ownership Disclosure Statement. Mandated by Rule 20(c), the form is simplicity itself, but is either never filed at all, or filed incorrectly (left blank or unsigned), by the greatest number of affected entities.

More than once have I respectfully suggested modifying the form to instruct the self-represented (and perhaps even attorneys and USTCPs) to write “NONE” in the two places where the form requires that response.

Nothing has happened.

Now I certainly do not wish to disrespect Chief Clerk Servoss and the hard-laboring clerks and flailing datestampers, who labor from dawn to dusk with the bales of paper and coronas of electrons that flood 400 Second Street, NW, and the hapless and feckless self-representeds that fly to said premises like moths to a cliché.

But it seems that Form 6 has confounded even the Servoss company.

Here’s John Fitzgerald Kinnett & Dawn Ann Kinnett, Docket No. 25598-18, filed 4/5/19. JFK only wanted to file a Ratification of Petition, so is an innocent bystander.

But JFK’s efforts somehow befogged the clerks. As is often the case, unscrambling the frittata that ensued falls to Ch J Maurice B (“Mighty Mo”) Foley.

“…petitioner John Fitzgerald Kinnett submitted in the above-docketed matter a properly signed Ratification of Petition. However, due to inadvertent clerical error by the Court, such document was filed as an Ownership Disclosure Statement.” Order, at p. 1.

So Ch J Mighty Mo corrects the docket entry.

Maybe so it’s finally time to consider changing Form 6.