Fifty-four (count ’em, fifty-four, and I have) years of practicing law. Still enthusiastic.

There’s a live horse tale coming off the bench in the LA regular session today, Laurel Daphne, Docket No. 8615-19.

It’s coming from Judge Emin (“Eminent”) Toro, and it’s live as I write this (2:40 p.m., EDT, 3/26/21). I’m writing this as it’s coming through the internet, and the YouTube video is none too clear, so bear with me. Look for the whole story to hit the opinions page next week.

Diva, Sugar and Cherry (? phonetic) are the horses. Plus a healthy gelding for petitioner’s personal use, who was “healthy and didn’t eat much,” so she didn’t need to segregate his expenses.

It’s a seventeen (count ’em, seventeen) year string of losses, and a sad tale of injured foals. Only one foal sale. And no logs, separate bank account, and “(S)he should have kept better records.” Her ranch appreciated in value, but that appreciation was independent of the horsing around, and she didn’t buy the property (it was a gift).

Of course, she and her children had fun.

There’s the usual trudge through the “goofy regulation,” Reg. Section 1.183-2(b), and Judge Eminent can trudge with the best. The usual “somber reasoning and copious citation of precedent” results in a loss in Tax Court to match the horse-drawn losses. Judge Posner would reiterate his often-expressed review.

Tax Court is manifesting a deep understanding of horse breeding, horse training, and other horse-related matters.

I remember seeing a film, long ago, when I made E-5 and was freed from guard duty and elevated to CQ. If this is incomprehensible to you, reader, consider yourself lucky. CQ was Charge of Quarters, one who sat all night long next to a telephone, prepared for any emergency. The film showed a counterpart, stationed in Germany, answering the telephone, running through a barracks shouting “Alert! Alert!” as the troops vaulted from their racks to rehearse for World War Three.

It seems this has happened in Long Leaf Property Holdings, LLC, Long Leaf Manager, LLC, Tax Matters Partner, Docket No. 11982-16, filed 3/24/21, although not quite so dramatically.

I’ll let Judge Albert G (“Scholar Al”) Lauber tell the story.

Last September, “…we received a joint status report indicating that a tentative settlement had been reached between respondent and petitioner Long Leaf Manager, LLC, the tax matters partner (TMP) of the partnership. …respondent filed a motion for entry of decision to which petitioner did not object. By Order…we instructed any partner who objected to respondent’s motion to file, by March 1, 2021, a motion for leave to file a notice of election to participate out of time. See Tax Court Rules 245(b) and 248(b).

“On March 1, 2021, two partners filed… separate Motions for Leave to File Notices of Election to Participate, and lodged…separate Notices of Election to Participate. The partners represent that they collectively hold approximately a 99% interest in the partnership. They represent that the TMP does not object to the granting of their Motions, but they do not know whether respondent objects.” Order, at p. 1.

Well, today IRS gets a month to answer.

Turns out back in May last year, the Long Leaf Manager stiped to be bound by 11838-16.

One might echo the Cockney enquiry “Who’s 11838-16 when ‘e’s at ‘ome?” Why, nobody but our old friend Railroad Holdings, LLC, who, three months earlier, had their conservation easement blown up by Judge David Gustafson, as more particularly bounded and described in my blogpost “The Old Texas Maxim,” 2/5/20.

I strongly suspect the minute the partners glanced at the proposed decision, the TMP got The Phone Call; in fact, more than one Phone Call. I’ll bet the TMP didn’t object.

Today Judge James S (“Big Jim”) Halpern allows that, when you’re down and out, IRS can still levy. American Limousines, Inc., 2021 T. C. Memo. 36, filed 3/24/21, offers a $2K per month IA for its $1.17 million FICA/FUTA/ITW liabilities.

Except, even allowing its own figures, it’s $900 in the hole every month. Of course, that includes the principal payments on the new cars it bought before it started paying the taxes it owed. Reminds me of Will Rogers’ famous Depression-era statement: “We own the distinction of being the only nation in the history of the world that ever went to the poorhouse in an automobile.”

Anyway, since the Limousine types can’t pay by their own figures, and won’t pay per IRS’ (leaving out the principal payments on the new cars aforesaid, IRS reckons the Limousines could pay $22K per month), looks like the Limousines are going broke, so no IA.

The Limousines are game, trying for CNC, but give that game away.

“On brief, petitioner argues: ‘[It] is compliant with its current tax obligations and has substantial assets.’ The latter claim, alone, would seemingly disqualify it from currently not collectible status. SO D thought that the corporation was on its way to insolvency and could not pay the $2,000 monthly installments it had proposed and that it was in the best interests of the Government for collection by levy or otherwise to proceed. Petitioner’s claim on brief, unsupported by any citation of the record, that it is ‘optimistic about its prospects’ is insufficient to raise a question in our mind that SO D abused her discretion in determining not to classify petitioner’s past due account as currently not collectible. Her decision was neither arbitrary nor capricious or without a sound basis in fact and law.” 2021 T. C. Memo. 36, at pp. 15-16. (Name omitted).

When claiming you’re down and out, don’t talk about how much assets you’ve got.

Finally, says Judge Big Jim, it isn’t the role of us taxpayers to bail out failing businesses. 2021 T. C. Memo. 36, at p. 16.

I was hoping for some good blogfodder this week, but that hasn’t been coming so far. Judge Mark V. Holmes tempted me today with Linda J. Martin and John A. Martin, 2021 T. C. Memo. 35, filed 3/24/21; John A. was a “do it all” gearjammer and tranny whisperer for Landmark Motorsports, and tended to their round-the-clock racers at the American Le Mans, our version of the celebrated Vant Cat Errs. As I started reading, I was thinking of entitling the blogpost “Rev Up Yer Engines!” echoing a celebrated YouTube gearjammer.

But alas, it was all to do with a huge NOL, legal fees from family feuds, and enough undocumentation to furnish a political rant, if I went in for such.

So I was relegated to the 200 (count ’em, 200) Orders on today’s roster, which is not word-searchable.

And I found an order from the wordprocessor of that gentleman and scholar, Judge Patrick J (“Scholar Pat”) Urda, Estate of Peter T. Loftin, Deceased, Thomas J. Wilson, Personal Representative, Docket No. 4723-16, filed 3/24/21. TJ and IRS were narrowing issues, so they filed a joint status report asking for more time.

Scholar Pat was willing, despite Judge David Gustafson’s disapproval of Stealth Adjournments; see my blogpost “Ya Gotta Move, Move, Move,” 2/27/18.

But there’s a hitch (naturally).

“Additionally, after review of the joint status report, it appears to the Court that it is not properly signed by petitioner’s counsel. We will ask the parties to file an amended status report reflecting proper signatures.” Order, at p. 1. So Judge Scholar Pat sends off TJ’s trusty attorney, whom I’ll call Mike, to take a quick peek at Rule 23(a)(3), and sign the report.

This is to what we are reduced. Judge Scholar Pat, honors graduate of the University of Notre Dame, and Harvard Law School, veteran of distinguished whiteshoe law firms, and five-times-awarded DOJ trial advocate, must scan and correct routine orders.

And Taishoff, “a general practitioner of mediocre qualifications and limited experience,” seeking the bubble reputation in the cliché’s mouth, must chronicle the same.

My colleague Peter Reilly, CPA, seeks comment on the impact of the COVID-related stimuli payments, where custodial parent and noncustodial each receives unguided Congressional largesse.

Here’s his post:

https://www.forbes.com/sites/peterjreilly/2021/03/24/form-that-may-make-or-break-rebate-credits-for-noncustodial-parents/?sh=627314266369

Please contact Mr Reilly directly.

When Tax Court recognized the notion of the limited appearance of counsel (sort of like kickoff returner or punter; on the field for one play), Rule 24 was amended to allow such one-offs. Rule 24(a)(4)(A) deals with the very broad discretion accorded the Judge to permit and limit a limited appearance.

Entry of Appearance Form 7 still seems to be one-size-fits-all, notwithstanding the 7/15/19 amendment. Unlimited (general?) appearances and limited appearances apparently use the same form. Perhaps the limited attorney or USTCP must state any proposed limitations somewhere on the Form 7.

But how does the limited leave when the limit has been reached? I can find no form for the limited to file at that point. Is a motion necessary?

Judge Pugh will tell us in Linda Jean Johnson, Docket No. 14285-18L, filed 3/23/21.

“This case was called from the calendar of the Court’s February 1, 2021, San Diego, California trial session. Mr. William Hardsock entered a Limited Entry of Appearance on behalf of petitioner, with respect to the February 1, 2021, trial session. To date, we have not received a notice of completion from Mr. Hardsock.” Order, at p. 1.

As there’s neither a specific rule nor a specific form concerning the completion of a limited appearance, and as a quick docket search shows no published order requiring the lodging, filing, or service of such a notice, I’m not sure how Mr. Hardsock [sic; do you mean Wm. D. (“The Tax Lawyer”) Hartsock, Esq., of San Diego, CA, Judge?] is supposed to effectuate Judge Pugh’s direction to file either a notice of completion or a notice of ongoing appearance.

Maybe so might could be this question of getting the limited off the field at the end of the play might be added to Ch J Maurice B (“Mighty Mo”) Foley’s to-do list for future Rules tinkering.

Edited to add, 3/26/21: I was wrong. Here’s the AO 2020-03, with all the information and forms I missed.

Click to access Administrative_Order_2020-03.pdf

Judge Christian N. (“Speedy”) Weiler is quick to unstay Longwood Preserve Holdings, LLC, Longwood Preserve Investors, LLC, Tax Matters Partner, Docket No. 12421-19, filed 3/22/21, only nine (count ’em, nine) days after both the Longwoods and IRS asked Judge Speedy to lift the stay he put on last month.

Lift partially, that is.

The Longwoods and IRS were part of the sequence holding short of trial, waiting on Dave Hewitt and his platoon of conservationists. Dave and Co. are appealing IRS’ “very contestable readings” of conservation easement deeds, and the regulations whereunder such readings are permitted. I’ve blogged this throwdown extensively.

Now 11 Cir has the Hewitt case, and Tax Court Judges agree that “the Hewitt case will likely rule on the issues central to the parties’ cross motions for summary judgment in this case, including the validity and proper interpretation of Treas. Reg. sec. 1.170A-14(g)(6)(ii).” Order, at p. 1.

And every other shortchanged 501(c)(3) extinguishment case. So why unstay the Longwoods?

Both the Longwoods’ and IRS’ experts want to inspect the servient tenement (that’s the property encumbered by the easement, not a crashpad for extras from Fifty Shades of Grey). So Judge Speedy will let them trek out to Glynn County, GA, and scope out the same.

“…as stated in the joint motion to partially lift the stay of proceedings, the parties will need to address the value of the property and disputed conservation easement regardless of the outcome of the Hewitt case and subsequent disposition of the parties’ cross motions for summary judgment. As such, a partial lift of the stay of proceedings for the limited purpose of a site visit would simplify the issues in question and reduce the burden of litigation on the parties and on the court.” Order, at p. 1.

Can’t read too much into this, but just possibly might could be IRS is less than sanguine about what 11 Cir will do.

The words of the great Smokey Robinson’s most-covered 1962 smash echo through the ranks of the conservation dodgers, as Oakbrook and Hewitt advance through the appellate ranks. Dave Hewitt, he who saved Daddy’s farmstead from the mobile homesters and spawned a new industry, is up for 11 Cir review, and Oakbrook heads for 6 Cir.

Various regs and “very contestable readings of what it means for an easement to be perpetual” are in the mix. Backstory on Hewitt is in my blogpost “‘Gude Faith, He Maunna’ Fa’ That’ – Part Deux,” 6/17/20, and Oakbrook in my blogpost “They Always Must Be With Us,” 5/12/20.

So today I’m picking just one of a number of cases that Judge Elizabeth Crewson Paris is pulling off the Glasshouse conveyor belt and putting aside until one or another Circuit illuminates us all.

Here’s North By Northwest, III, LLC, Bryan Kelley, Tax Matters Partner, Docket No. 12105-19, filed 3/19/21. The Northers have land in WV, but their homeport is in GA (coincidence, huh?). And while “the property subject to the conservation easement is located wholly in the state of West Virginia and significant state property law questions may exist,” the GA homeport plants the Northers next to Dave Hewitt. Order, at p. 1.

As for the holdup, Judge Paris has the usual copious citation of precedent, all of which I’ll omit, but you might want for your next memo of law.

“‘[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.’ There is a good reason for staying a case when a controlling question of law is pending on appeal. The Tax Court has discretion to stay civil proceedings when the interests of justice seem to require such action.” Order, at p. 2.

And while the 11 Cir resolution will not dispose of everything in this case, it doesn’t have to. “…the Eleventh Circuit is likely to examine the issues central to the motion for partial summary judgment. Therefore, the Court agrees with petitioner that the outcome of the Hewitt appeal before the Eleventh Circuit will likely be insightful to the disposition of the current case and more specifically respondent’s motion for partial summary judgment.” Order, at p. 2.

And even though IRS agrees to the stay here, Judge Paris says waiting can’t hurt.

“As respondent is also a party in Hewitt before the Eleventh Circuit, a stay would also potentially benefit respondent since he will be able to avoid parallel litigation in multiple cases.” Order, at p. 2.

Note the parties don’t agree to be bound by whatever 11 Cir decides, despite the GA connection and Golsen.

As for Oakbrook, “(I)n challenging respondent’s determination, petitioner attacked both the substance of the regulation and the procedure the Treasury used in promulgating the 170A regulations.” Order, at p. 2, footnote 1.

So maybe in 6 Cir, with Reg. 1.170A-14(g)(6)(ii) being smitten both root and branch, we’ll get learning that will put an end to the debate.

Cain’t hardly wait.

For an explanation of the title first set forth at the head hereof (as my high-priced colleagues would say), see my blogpost “Add a Zero,” 6/26/15. And the need for a couple extra zeros (hi, Judge Holmes) is borne out today as Judge Elizabeth Crewson Paris shows us in her off-the-bencher Marc A. Julson & Cynthia D. Julson, Docket No. 25560-18, filed 3/18/21.

It’s Cindy’s story. She’s a hardworking car salesperson in OK in the year at issue, working strictly on commission and turning over 18 (count ’em, 18) cars a month. Notwithstanding the foregoing or anything else at variance therewith or contradictory thereto (see high-priced colleagues, supra), IRS disallows all of Cindy’s $8K unreimbursed employee business expenses. Naturally Cindy petitions the $1K additional tax this engenders. No mention of chops or add-ons.

But if you think Cindy was hardworking, her trusty attorney Brian C. Trent, Esq., blows the doors off the rest of us paperpushers.

Brian C. crushes IRS even before the trial starts. IRS stipulates and capitulates out nearly all of the disputed deductions. All that’s left is $50 for business cards (and IRS concedes that at trial), $100 in Christmas cards, which she sends every year to everyone who ever bought a car from her plus others, and $135 in thank-you cards, which Cindy sends to each person who bought a car from her that year.

Now you or I, having treated IRS before the trial like Muhammad Ali treated Sonny Liston, would tell the client to forget the tax on the $285 ($50 + $135 +$100), and call it a slam-jam win.

Not Brian C., who styles himself “a lifelong Okie who is originally from Enid.” He also says he “chose the tax field because it’s fast-paced and team-oriented work environment. He also is happy that it gives him the opportunity to help people facing tax problems.” Id.

So Brian C. goes to trial. Cindy goes on the stand, and Judge Paris agrees that the thank-you cards are a proper Section 162 expense, although she Cohans the deduction based on postage only.

“Petitioner credibly testified that she sold an average of 18 cars a month during [year at issue]2015 but could not substantiate her expenses for the cards. The Court takes judicial notice that in [year at issue] the Federal postage rate was 49 cents, and the Court finds that petitioners are therefore entitled to an expense deduction of $105.84 for Thank You cards. This amount consists of Ms. Julson’s rational basis for sending customers 216 cards in [year at issue] multiplied by the Federal postage rate of 49 cents per card.” Transcript, at p. 6.

I guess Judge Paris took pity on IRS’ counsel, thereby nicking Cindy’s deduction by $29.16, net effect zero. And as Cindy sent Christmas cards to persons other than past or potential customers, without differentiating among same, she loses.

OK, except.

My streetwise, hard-bitten, battle-hardened readers will be yelling “What about reimbursement? Did the dealership where Cindy worked reimburse employees? Cindy has to prove she didn’t get reimbursed.”

Cool it, chaps. Brian C. is on the case. Besides Cindy’s testimony about how her employer made her buy a computer and took the cost out of her pay, Brian C. shows a Broadway on the river.

“The Human Resources Director for the now-parent company of the dealership testified that the dealership had no written policy regarding Christmas cards.” Transcript, at p. 6.

Now don’t that beat all, as they say in Oklahoma maybe.

For a $100 deduction (subject to 2% AGI exclusion, so net to Cindy about another zero), Brian C. hunts out, convinces to testify, preps for trial, and puts on the stand a high-ranking officer of Cindy’s employer’s parent, in a case where the employer, parent and child, have zero stake in the outcome, have nothing to gain (there’s another zero for ya), to help a valued employee who’d probably stay with the employer no matter what.

A true happy warrior, Brian C. My kind of lawyer.

Now Brian C. may have done this all pro bono. Judge Paris doesn’t say. She does say Cindy and spouse reported AGI of $100K for year at issue (Transcript, at p. 3). Unless OK has the most unusual LITCs, I can’t think any would take taxpayers with AGIs in six figures. I can’t find any pro bono reference on Brian C.’s webpage, although with time constraints I couldn’t drill down.

I’ve reached out to him to ask. I’ve received no reply, but deadline is here, and I must go with what I have, however unsatisfying.

Even if Brian C. responds, I know I don’t deserve, and won’t ask for, an answer to the question I’d most like to ask: How can you negotiate a super settlement, do a top-class trial prep, and try a stormer of a case, where at most $1K of tax, net net net, is on the table, except for fun?

Or maybe a Taishoff “Good Job, First Class, Blue Max.”