That’s Judge Patrick J. (“Scholar Pat”) Urda. His scholarship is attested by his summa cum laude degree in classics from The University of Notre Dame and his law degree from Harvard University. That he is a gentleman will, I am sure, be vouched for by Danny Fabricant, Docket No. 20050-18, filed 3/17/21, especially as today is a special day for everyone named Patrick.

Danny needs a continuance to file his Section 7430 motion for legals and admin. Both IRS’ counsel and Danny are behindhand with the stip of settled issues.

“…the Commissioner filed a motion for entry of decision. The Commissioner explained that he had received a signed decision document from Mr. Fabricant, but that the document had contained typed additions that were not acceptable to the Commissioner. Given the parties’ previous dealings, the Commissioner elected to move for entry of decision.” Order, at p. 1.

Sounds like Danny had been giving IRS’ counsel a quantum of grief, but it might just could be maybe so that IRS and its counsel are not wholly blameless. I’m sure I don’t know, and there’s no substantive order on the docket sheet.

But Judge Scholar Pat must have joined Judge David Gustafson in the ranks of the obliging jurists.

It seems Danny resides on Klein Blvd. (a mighty hard road) in Lompoc, CA, in a dwelling maintained by your tax dollars and mine. The operator of said dwelling is imposing COVID-engendered restrictions on Danny.

“Mr. Fabricant explained that he was experiencing delays due to the lockdowns within the prison facility.” Order, at p. 1.

Judge Scholar Pat is understanding.

“We are sympathetic to Mr. Fabricant’s circumstances and will give him one last chance to file a motion for reasonable litigation or administrative costs. Respondent may respond to the motion subsequent to the filing of the motion. We warn Mr. Fabricant that if he does not file a motion by the due date, we intend to grant respondent’s motion for entry of decision, which would end this case (absent further Court action).” Order, at p. 1.

The demise of the designated hitter was a real disservice to the blogger. Hunting through some hundreds of orders to find material worthy of e-space is burdensome. I know, under the old much-lamented system, many judges didn’t bother to designate their orders, and my attempts to proselytize the non-designators yielded little.

But now, with a few minutes to spare after a CLE, I came upon All-Rite Leasing Company, Inc. Docket No. 16216-18L, filed 3/16/21. Ex-Ch J Michael B (“Iron Mike”) Thornton canvasses Rule 123, Section 6673 and Section 7456, and finds none applies to IRS; the All-Rites’ bœuf is with Appeals.

Appeals didn’t give the All-Rites a face-to-face on remand because COVID. Appeals offered the All-Rites a Zoomie, but wouldn’t let the All-Rites record it. Ex-Ch J Iron Mike says there’s caselaw holding that CDP remands can’t be recorded. The All-Rites claim Appeals didn’t consider the financial statements underpinning their OIC. Appeals claims they reviewed the admin record, and ex-Ch J Iron Mike rejects the All-Rites’ attempt to limit what in the admin record Appeals can consider. If the All-Rites think the admin record is incomplete or contains extraneous matter, they can raise that at this second remand ex-Ch J Iron Mike orders.

This second remand puts paid to the All-Rites’ Rule 123 motion for default against IRS. “Rule 123(a) provides that the Court may hold a party in default for ‘failure to plead or otherwise proceed as provided by these Rules or as required by the Court’. Respondent has not failed to plead or otherwise proceed as provided by the Rules or as required by the Court. In any event, insofar as petitioner seeks remand of this case as a sanction, the request is rendered moot by our granting of respondent’s motion to remand this case….” Order, at p. 8.

But the All-Rites aren’t done. They want their Section § 6673(a)(2) excess costs, expenses, and lawyer’s fees, claiming Appeals botched the first remand. Except Appeals is a distinct component of IRS and isn’t a party to this case. “In any event, nothing in petitioner’s allegations suggests bad faith or recklessness on the part of Appeals personnel. We are astonished that petitioner would suggest that Appeals acted in bad faith or recklessly in declining to hold an in-person conference during the COVID-19 pandemic, when respondent’s offices were closed because of safety and health concerns. And insofar as petitioner’s complaint relates to Appeals’ declining to reconsider petitioner’s OIC on its merits, we expect any such concern to be addressed on remand of this case as requested by respondent….” Order, at pp. 5-6. (Footnote and citation omitted, but I’ll give you the footnote later.)

I said the All-Rites aren’t done. They want sanctions per Section 7456, the contempt of court power. Merely being a nonparty to a case doesn’t mean exempt from contempt. But the nonparty must be an abettor of the contemptuous act. “Petitioner has not meaningfully alleged that respondent or his counsel were involved in any contempt of this Court’s authority or orders. In any event, for reasons similar to those previously discussed, nothing in petitioner’s allegations suggests contemptuous disobedience to this Court’s orders by ‘Appeals’, SO L, her ‘Appeals’ bosses’, or anyone else. Indeed, petitioner has suggested no legal basis for holding ‘Appeals’ in contempt and seems implicitly to acknowledge the absence of any such legal basis when it asserts: ‘Alternatively, if the Court determines that I.R.C. §7456 sanctions can only apply to an individual, then I.R.C. § 7456(c)(1) allows this court to award the sanction Petitioner requested, as against SO L and her bosses as “misbehavior of any person in its presence, or so near thereto” as obstructing the administration of justice of Respondent’s refusal to comply with the Court’s May 27, 2020, Order.’ This assertion is wholly without merit. None of the alleged misconduct occurred in the Court’s presence (there have been no hearings in this case to date) or otherwise constitutes sanctionable misconduct under section 7456(c)(1).” Order, at p. 7. (Name omitted).

So ex-Ch J Iron Mike sends the All-Rites and IRS back to Appeals. And they can fight about the admin record there.

But here’s the footnote I promised to give you. And tell me if you think ex-Ch J Iron Mike got it right.

“That petitioner has predicated his motion to impose sanctions, twice supplemented, on this and other equally ill-considered notions causes us to question whether it is petitioner who is seeking to vexatiously multiply these proceedings.” Order, at p. 6, footnote 6.

Unfortunately, the new, improved (??), jim-handy DAWSON electronical wondersystem doesn’t show appearances, so I can’t tell if the All-Rites were represented by counsel. I somehow doubt it.

In my youth, a batter was said to “hit for the cycle,” when he hit a single, a double, a triple, and a home run, all in one game. Robert Wesley, Docket No. 4647-20, filed 3/16/21, hasn’t exactly done that, as it has taken him until now, case number four, to reach the $25K Section 6673 max chop.

RW is an accomplished frivolite. See my blogpost “Bargain Day,” 3/14/19. Then, he was mulcted to the tune of $10K.

Today, Judge Emin (“Eminent”) Toro gives IRS a Rule 120 judgment on the pleadings, even though Tax Court never issues “judgments.” What we State courtiers call a “judgment” US Tax Court calls a “decision.” Go figure. Howbeit, IRS moves more than thirty days after pleadings are closed (RW never replied to the answer), and not too close to trial so as to delay same. There’s nothing to try, as RW raised no issues of fact. And RW didn’t dispute that he received the income IRS claimed he got but never paid tax on, so no BoP or BoProd for chops.

And Judge Eminent Toro shows he can go upsides with ex-Ch J. Michael B (“Iron Mike”) Thornton in the Somber and Copious stakes.

“The Commissioner has also shown that he is entitled to judgment as a matter of law. Mr. Wesley’s petition and his response to the Commissioner’s motion assert various arguments as to why he is not liable in this case, including that he did not receive a statutory notice of deficiency from the Commissioner (although the petition attaches the first two pages of the notice of deficiency); that Mr. Wesley is not liable for the additions to tax asserted by the Commissioner because he was not engaged in any business related to ‘Alcohol, Tobacco, and Firearms;’ that Mr. Wesley is not liable for tax because he received no ‘taxable income’ under section 861 or section 1.861-8, Income Tax Regs.; and that there are no Federal statutes subjecting him to any income tax for the year at issue. These arguments are frivolous and have been rejected repeatedly.” Order, at p. 7. (Citations omitted, but Judge Eminent Toro has filled almost an entire page with copious citations).

And RW’s track record shows he’s climbed the Section 6673 frivolity ladder from $2500 to $7500 to $10K, and now reaches the max – $25K.

But ya gotta give RW credit for chutzpah – he asks for his sixty Georges back. Order, at p. 2.

RW has yet another case pending. Cain’t hardly wait.

I’ve blogged often enough that lawyers can’t add, so I won’t chain-cite. Turns out lawyers also are wretched bookkeepers; I’ve admitted as much myself.

Lateesa Ward, Esq., is also in that category, as her numbers and those of her Sub S law firm, Ward & Ward Company, 2021 T. C. Memo. 32, filed 3/15/21, vary enough to send Judge Mark V. Holmes into one of his tabular exercises, from which Ms. Ward does not emerge well. For the tables, see 2021 T. C. Memo. 32, at pp. 4-5, 9, 12, and 13.

There’s the usual officer’s compensation for services (wages, with FICA) vs distribution of profits (taxed only above basis, and no FICA) contest, but as Ms. Ward cannot show basis or profits, it’s all compensation subject to FICA. Sched C is out, because Ms. Ward can’t show she was employed anywhere but at her Sub S. Filing a Sched C as well as Sched E for the same items didn’t help, especially when the forms didn’t agree. Fortunately, both Ms. Ward and IRS stiped out the Sched C as irrelevant.

There’s more, but I think we can stop here.

We’ve heard a lot about 401(k) to IRA rollovers. And we’ve also heard a lot about the Law of the Fifty and Five (see my blogpost “Exempt from the Law of the Fifty and Five,” 4/20/20). The Law of the Fifty and Five (that’s Section 72(t)(2)(A)(v) to you) says a distribution from a 401(k), taken by an employee at or after age fifty-five upon separation from the employer, is exempt from the 10% Section 72(t) whatever-it-is.

Well, John Catania, 2021 T. C. Memo. 33, filed 3/15/21, rolled over his 401(k) into his trad IRA when he retired from his employment at the age of fifty-five. But John was under the age of 59-1/2, when he took the distribution at issue from his trad IRA a couple years later (hi, Judge Holmes).

Judge Vasquez has the bad news for John. He gets rolled under.

“On brief petitioner suggests that the section 72(t)(2)(A)(v) exception should apply to the distribution at issue because he was 55 years old when he retired from Home Depot. As stated above, section 72(t)(2)(A)(v) is not applicable to premature IRA distributions. See sec. 72(t)(3)(A). Although petitioner had a section 401(k) plan when he worked for Home Depot, he transferred the funds from that account to a traditional IRA at Vanguard in 2014. Because he withdrew the distribution at issue from a traditional IRA in 2016, section72(t)(2)(A)(v) does not apply.” 2021 T. C. Memo. 33, at p. 5.

And there are no equitable exceptions.

Islander

The unguided Congressional largesse afforded Our Insolvent Islands in the Sun have provided me a perennial source of blogfodder. Here’s an eleven (count ’em, eleven) year old well-aged case strained clear by Judge Patrick J. (“Scholar Pat”) Urda.

Patrick A. McGrogan, Petitioner and The Government of The United States Virgin Islands, Intervenor, Docket No. 456-10, filed 3/15/21, started back in January, 2010. Today, Judge Scholar Pat is mooting out motions made, respectively, six, five, and three years ago. It seems the parties finally filed a stipulated decision a couple weeks ago (hi, Judge Holmes). Judge Scholar Pat signed off on same.

Unfortunately, the Genius Baristas who gave us DAWSON have seen fit to prevent anyone not a party or attorney from viewing same.

My blogging colleague Mr. Paul Streckfus has called this the “hidden law.” Matters are settled, and the veil of secrecy is dropped, without benefit of a Rule 27 motion, and a judicial ruling thereon.

Either Rule 27 is adequate, or it is not. If it is, nothing should be sealed or excluded from public view except as protected in compliance therewith. If not, revise it.

Decisions, whether stipulated or not, should be public. Rule 27(b)(2)(B) provides that “any other person… may have remote electronic access only to: (B) any opinion, order, or decision of the Court, but not any other part of the case file.” Emphasis added.

The docket shows no motion made pursuant to Rule 27.

So let’s see the stipulated decision. It must be great if it took ten years to make.

I thought that DAWSON, the brand-new, improved (most affirmative, right?), jim-handy, electronic staircase to The Cloud, would finally bring into being electronic petitioning and amending.

After all, Rule 34 cleared the way, three years ago. See my blogpost “I Dreamed a Dream,” 11/25/20.

But no.

For no apparent reason, Tax Court is still enamored of Fourth Century B.C. technology. For example, see Donald L. Adkins & Janette Adkins, Docket No. 13060-20, filed 3/12/21. Ch J Maurice B (“Mighty Mo”) Foley is still expending scarce judicial resources on “(T)he Amended Petition should be signed by both petitioners (preferably in blue ink) and submitted in PAPER FORM (not eFiled), as petitioners’ original signatures are needed to support jurisdiction in this proceeding.” Order, at p. 1.

If it be objected that the petition (or any amendment thereto) must be executed under penalty of perjury, and therefore must be wet-ink papered, what price the electronically filed tax return, which now constitutes the overwhelming majority of returns filed? Are these not filed under penalty of perjury? And must IRS’ answer be wet-ink papered? Or need the answer not comply with FRCP 11? Perhaps Chuck Rettig and the 1111 Constitution Ave guys are exempt somehow.

Paper submissions, whether via mail or PDS (hand delivery is out during COVID as The Glasshouse is closed), are slow, cost money, and produce useless debates about timeliness, and potential malpractice claims. So what price Rule 1(d), the darling of The Great Chieftain of The Jersey Boys?

“The Court’s Rules shall be construed to secure the just, speedy, and inexpensive determination of every case.” Rule 1(d).

Time to get past Herodotus and the Persian posties.

I need not, of course, translate, but Brian E. Harriss, 2021 T. C. Memo. 31, filed 3/11/21, is playing the Leroy Muncy variation of that gambit.

I’m sure y’all remember Leroy Muncy, no? What, no? How fleeting is fame. Well, check out my blogpost “Delegati Non Potest Delegare – Redivivus,” 5/17/17. And 8 Cir affirmed Judge Nega that time.

Brian petitioned, however, before 8 Cir put the hems on Leroy, and fired off the usual protester jive after his three all-zeros returns got SNODed. IRS was late with one year, so conceded on SOL.

Ex-Ch J Michael B (“Iron Mike”) Thornton has a bunch to say about IRS’ “ill-considered” concession. See 2021 T. C. Memo. 31, at p. 7, footnote 4. Brian would lose on the delegation of authority to the signer of the SNOD issue anyway.

I’ve often spoken of ex-Ch J Iron Mike’s lexicographical prowess and inexhaustible appetite; dictionaries prostrate themselves when he devours them to bring forth deeper explications of the subtleties of our English tongue. Now I must add praise for his exhaustive research into the entire delegation issue.

When it comes to “somber reasoning and copious citation of precedent,” ex-Ch J Iron Mike can somber with the best, and out-copious the rest. But, surprisingly, when kicking Brian’s reliance on 8 Cir’s initial toss of Judge Nega’s first Muncy opinion, ex-Ch J Iron Mike goes off on Golsen (Brian filed from AK, so 9 Cir rules). He doesn’t note that 8 Cir tossed Leroy the second time around.

And, talking about “ill-considered,” IRS conceded the Section 6662(a) chops. A guy doesn’t know why.

No, not a misprint for Sir Peter Shaffer’s 1958 London hit, but Debra L. Zalk Spitulnik, Petitioner and Charles A. Spitulnik, Intervenor, Docket No. 21286-18L, filed 3/11/21, bring back theatrical recollections. See my blogpost “Now, Voyager,” 11/26/19, where Judge David Gustafson obligingly gave Deb & Chas a blueprint for the subsequent IA.

Deb & Chas forwent the IA route. Deb files for innocent spousery. Now Judge Emin (“Eminent”) Toro has the case, but Deb fares no better.

Judge Eminent Toro delivers an off-the-bencher. Although everyone admits Deb was in very poor health during the years at issue, the high-priced private school whereat she taught jumped through clichés to keep Deb on the roster, assigning her aides, interns, limiting hours, sending her home early, and limiting her to teaching lower grades. She was as eminent in her field as Judge Toro.

Chas was also solicitous to his spouse of 46 (count ’em, 46) years and counting. He insured his life for $1 million and Deb was beneficiary. Deb also got a brand-new Volvo when she felt unsafe in her three-year old CRV. And Deb & Chas were a wee bit casual with their tax compliance over the last thirteen (count ’em, thirteen) years. See the table at p. 11 of the transcript.

“Also recently, Mrs. Spitulnik traded in some family jewelry and paid more than $500 to buy gold and diamond necklaces for herself, her daughter, and her daughter-in-law.” Transcript, at p. 23.

While Deb’s income alone just ducks under the 250% of poverty, she’s married to lawyer Chas. “… when added to Mr. Spitulnik’s annual income of $241,240, the couple’s combined earnings of $272,538 far exceed 250% of the applicable Federal poverty guidelines for a household of two ($17,240 x 250% = $43,100). A review of the Spitulniks’ 2019 Federal income tax return leads to the same conclusion, as their adjusted gross income for the year was approximately $432,000.” Transcript, at pp. 18-19. (Citation omitted).

Deb also doesn’t help her cause on the stand. “Indeed, Mrs. Spitulnik stated repeatedly at trial that her husband’s top priority is and has always been to ensure her welfare. Consistent with the record and her statements, we conclude that nonpayment of the Spitulniks’ tax liability afforded significant benefits to Mrs. Spitulnik beyond normal support, and therefore that this factor weighs against relief.” Transcript, at pp. 23-24.

Taishoff says that factor plus the Volvo and the gold and diamond necklaces play a six-figure exercise on Deb’s case.

At least Deb & Chas saved the legal fees.

A microcaptive insurance company that takes prepaid, tax-deductible premiums up to the Section 831(b)(2)(A)(ii), $1.2 million limit (and pays no tax thereon), writes “claims made” policies taking effect only after the claims period has expired, covers over $1 million above the ten-year moving average claims, and pays what claims the insured tells them to pay (whether or not the policy is in effect)…that’s my kind of insurance company.

Alas, I don’t have one. But Caylor Land & Development, Inc., et al., 2021 T. C. Memo. 30, filed 3/10/21, based upon a country club pitch from a micromanager, started one. Wherefore, the wish I expressed back on 4/26/16 (see my blogpost “I Wanna Testify,” 4/26/16), namely and to wit, “I’m glad there’s going to be a trial, so I get more blogfodder.” Waited a long time, but here it is.

The Caylor family built up a major construction company in the wild west, and ran it accordingly, writing off family chats around the breakfast table as seven-figure “consulting fees,” and sending said fees to their various controlleds (about a dozen). The controlleds off-loaded same to the microcaptive.

It’s a replay of Avrahami. For that story, see my blogpost “The Selfies – Eclipsed,” 8/21/17. And Ben’s & Orna’s deal gets a good workout in the retelling, as Judge Mark V Holmes sends off the Caylors.

It’s a great try at a dodge, but it isn’t insurance as commonly understood.

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