Jesus R. Oropeza and Fabiola Anaya Oropeza, 2020 T. C. Memo. 111, filed 7/21/20, engaged in micro-captivity (no, that’s not the prequel to Fifty Shades of Grey, that’s a micro-captive insurance company that siphons taxable income). With the SOL running out, Examination offered J and F a Form 872 waiver of SOL, or an immediate SNOD with a 40% insubstantiation chop (there was a cool million bucks-plus of extra income at issue). This was conveyed via Letter 5153.

J&F elected neither, so they got the SNOD at no extra charge.  Though the SNOD included the 40% chop, the underlying CPAF only mentioned 20%, and showed zero for the 40 percenter. And the SNOD wasn’t issued until RA, Group Manager, and IRS Chief Counsel Attorney eyeballed same.

My diligent readers surely by now will have divined that this was a Graev mistake.

And Judge Albert G (“Scholar Al”) Lauber is on this blunder like couple color on a Hopkins brindled cow.

IRS claims that J & F neither got issued a thirty-day letter nor a sixty-day letter, therefore that was no final determination when the 40% chop was first broached. “A 30- or 60-day letter is one way of communicating to a taxpayer that the Examination Division has concluded its work. But it is not the only way. The Letter 5153 clearly communicated the same message to petitioners: It told them that they could now go to Appeals, but only if they first executed a Form 872 that would give Appeals enough time to consider their case.” Order, at pp. 8-9.

Having disposed of IRS’ argument, Judge Scholar Al turns to J and F and their trio of trusty attorneys. They claim the Group Manager didn’t look closely enough at the penalty issue, and signed only one page of the CPAF.

As for the latter “(T)his argument is a nonstarter. Both pages are part of a document that is denominated ‘Civil Penalty Approval Form.’ Page 1 of the form contains a space at the bottom for ‘Group Manager Signature’ and ‘Date.’ Group Manager P affixed his signature and date in the spaces provided; there is no space on page 2 for a signature, and he was not required to interpolate one. We have repeatedly relied on Civil Penalty Approval Forms signed and dated as this one was.” Order, at p. 2 (Citations and name omitted).

As for the former, all the statute requires is the sign-off by the right overseer. Nowhere is Tax Court empowered to go behind the hoofprint of the Boss Hoss.

The twenty percenter was timely Boss Hossed. The forty percenter was unhorsed.

As I said in my blogpost “From My Notebook,” 7/8/20, it seemed then that a lot of cases were being transferred from Judge Ruwe to Judge Greaves. I have not heard from the Ch J’s chambers, but I suppose the staff are working remotely and have more pressing matters with which to deal.

I discovered from rereading the press release dated 6/24/20 yesterday that there exists a Public Affairs Office, “the office that dares not speak its name,” nowhere listed on either the old well-designed website or the new, unimproved, jazzy website. I telephoned today, identified myself and my purpose, and asked about the reassignments: was it simply rebalancing the portfolio? The officer could not comment.

I draw no inference: given the dislocations caused by COVID-19, any inference would be mere speculation, hence valueless.

But today a new transfer piques my curiosity. It’s a case already tried and briefed.

Akeem Adebayo Soboyede, Docket No. 13146-18S, filed 7/21/20, was tried last December. Both sides’ briefs were submitted by early February.

I’ll let Ch J Maurice B (“Mighty Mo”) Foley take it from here.

“This case was tried by and submitted to Judge Robert P. Ruwe. The Court proposes to reassign this case to another judicial officer of this Court for purposes of preparing the opinion and entering the decision based on the record of trial previously held in this case.” Order, at p. 1.

Unusual, but not unprecedented. And as this case is a small-claimer, it might be a good idea to let a new appointee to the Tax Court Bench, even if not named in this order, take a preliminary canter before trying to jump Becher’s Brook at Aintree: metaphorically, of course.

And of course both Akeem and IRS’ counsel have time to consent, or move for a new trial, or move to supplement the trial record.

I hope all is well with everyone at Tax Court.

Once the Ogden Sunseteers have done the Lacey SME mambo and come up dry, STJ Daniel A (“Yuda”) Guy is powerless to help Dannez Westbrook Hunter, Docket No. 11453-19W, filed 7/20/20.

And this is so, even when Dannez claims “… one of the taxpayers had ‘money laundered stolen proceeds of Aunt Jemima royalties that belong to my family’ and that the others had failed to pay a certain individual’s ‘$3,500,000,000.00 UCC lien for [sic] involving theft of Terminator and Matrix franchise copyrights’. Petitioner claimed that he was the administrator of the individual’s purported UCC lien. Attached to the Forms 211 were various documents, including copies of court filings, taxpayer biographies, news articles, and a letter from petitioner.” Order, at p. 2.

And Dannez also claims two or more of the targets bribed the FBI and a judge and his clerk to sink his whistleblower claim.

“The administrative record in this case establishes that the WBO received petitioner’s applications for award, evaluated petitioner’s information, which included receiving input from an IRS classifier, and based on that classifier’s recommendation, determined that petitioner’s information did not warrant further investigation by the IRS. In doing so, the WBO performed its evaluative function. See Alber v. Commissioner, T.C. Memo. 2020-20, at *8-*9.” Order, at p. 4.

All y’all will recall Christian Bernd Alber. If not, check out my blogpost “We Don’t Need Lacey,” 1/30/20.

“Petitioner is clearly frustrated that information he believes is actionable was not pursued by the IRS. However, as petitioner has failed to show that the WBO’s determination in this case was arbitrary, capricious, or without sound basis in fact or law, we find that the WBO did not abuse its discretion in rejecting petitioner’s whistleblower claims. Consequently, in the absence of any justiciable dispute as to the actions that the WBO took in response to petitioner’s whistleblower claim, it follows that respondent is entitled to decision as a matter of law.” Order, at p. 5.

BTW, if you’re as curious as I am about the judge and clerk, check out Dannez’s other order today, wherein Ch Judge Maurice B (“Mighty Mo”) Foley must deal with “…petitioner’s memorandum memorandum in support of objection to U.S. Tax Court Chief Judge Maurice B. Foley, fraudulent court order to strike dated July 9, 2020, petitioner’s supplemental pleadings as a pro se litigant under U.S. Tax Court Rule, Title IV, Rule 41(b)(2)(c), filed July 16, 2020….” Order, at. p. 1.

And nobody had better mess with Aunt Jemima; the Girl of My Dreams will not countenance anyone else’s waffle and pancake mix.

It’s SOP for Tax Court litigants to try to bar each other’s expert witnesses’ reports and testimony. Every form file should contain at least one boilerplate Daubert-Kumho Tire gatekeeper motion in limine.

But to move for reconsideration “woefully late” because your expert’s report was admitted into evidence is a new one on me. Trust Robert G. Taylor II, Docket No. 400-13, filed 7/20/20; Mr. Taylor and his expert figured in my blogpost “Appraisals – From Texas to Oregon,” 8/19/19. You’ll recall Mr. Taylor’s expert relied too much on mold, asbestos and the Black ’08, rather than on physical damage to his “ornate and architecturally significant house.” Order, at p. 4.

And Mr. Taylor was a wee bit parsimonious with the details he told his expert.

“Petitioner either did not correct the report before submitting it to the court as evidence or petitioner had failed to inform his own expert witness that he had removed value from his fee simple property by transferring ownership of certain fixtures and sculptures to a trust, to include some portion of the stained glass windows in his dining room and wall paneling throughout the house. Nor did it appear that petitioner had disclosed to his own expert that he had originally purchased the subject property in an ‘as is’ condition with no warranties.” Order, at p. 4.

But Judge Paris gets to the point.

“The Court found petitioner’s expert witness credible and her report aided the Court in understanding the evidence. While the aid ultimately helped the Court find for respondent on whether petitioner was entitled to a casualty loss deduction, the expert witness report does not become inadmissible because it did not have the desired effect for petitioner.” Order, at pp. 8-9.

And I wasn’t alone in finding Mr. Taylor’s claim unique.

“Petitioner appears to be arguing that his substantial rights were affected by the Court admitting his expert witness report. The Court is not aware of and could not find any instance where a party has been unduly prejudiced by their own expert witness report being admitted into evidence.” Order, at p. 9.

The good news is that Mr. Taylor recovered from his insurer for the damages. “Petitioner’s ornate and architecturally significant house only reflected damage at best and described as proportionately minor according to insurance documents admitted into evidence. The damage and the subsequent repairs were fully reimbursed to the petitioner by his insurance company.” Order, at p. 4.

I hope he recovered for his 6,889 bottles of wine, half of which were submerged by Hurricane Ike.

Has anybody encountered the new, unimproved, jazzy United States Tax Court website? Note that most, if not all, of today’s online orders have no links. This requires a separate docket search for each of the unlinked, from which webpage one is shortly and summarily evicted. And the monuments of unageing intellect who devised the new, unimproved, jazzy website moved the docket search feature from the old easy-access link on the orders search page to the e-filing section, necessitating opening a new window.

See my blogpost “Updating Mark Twain,” 11/12/19. The famous “contractors,” whoever they may be, clearly have not heeded the time-tested admonition hereinabove set forth at the head hereof, as my high-priced colleagues would say. The last time they fussed (I wanted to use another word, but this is a blog for family reading) with the site, they took out all the links.

As for improving the “search” function, as was alleged back last November, there is no link for “search” on the website.

Why was no beta version released for public comment? Those of us who actually use the website every working day might have had a seasonable word or two, from which even the genius barflies who produced this might have profited.

Perhaps some person from the Public Affairs office (an outfit which dare not speak its name, as it is nowhere listed anywhere on the website) might deign to explain why this mother of abominations was foisted on a public that never did them any harm, and at taxpayers’ expense, to boot.

The new, jazzy homepage of US Tax Court announces the retirement of Judge Joel Gerber. Here’s a link: https://ustaxcourt.gov/resources/press/07172020.pdf

The words of an Authority even more exalted than Judge Nega echo through his order in Alan L. Davis & Deborah D. Davis, Docket No. 13791-18, filed 7/17/20. Seems Al & Deb maybe so petitioned a SNOD, having something to do with Clean Energy Systems.

But the envelope wherein the petition arrived bore a return address other than Al’s & Deb’s, namely, that of Management Concepts, PLC. And when Al & Deb moved to dismiss same, the signatures on the motion didn’t match those on the petition. Of course, you can’t dismiss a timely petition from a SNOD without handing IRS a win on all counts.

But doesn’t this all sound a wee bit familiar? If not, see my blogpost “Eh Bien, Voila Au Moins Qui N’est Pas Banal – Redivivus,” 6/4/19.

Looks like Carl Rex Olson, honcho of Management Concepts, PLC, whence came the dubious petition in this case, is at it again.

Judge Nega doesn’t mention Judge Buch’s takedown of Carl Rex, particulars of which can be found in my blogpost hereinabove cited. But he did find the same Federal statute to use in a footnote, just like Judge Buch.

“It appears that Mr. Olson is no stranger to this Court and we warn him that if he continues to engage in similar conduct in the future, the Court would strongly consider referring him to the U.S. Department of Justice for prosecution.” Order, at p. 3. (Footnote omitted, but here it is).

“18 U.S.C. sec. 1001 generally makes it a crime to knowingly and willfully submit to a court ‘any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry.'” Order, at p. 3, footnote 3.

Of course, Al’s & Deb’s non-petition is tossed because not signed by petitioners.

But may I most respectfully suggest that, once the lights go on again all over the world, Judges Nega and Buch get together in the Tax Court Judges’ cafeteria, over a cup coffee and a piece pie (hi, Judge Holmes), and sort out how to handle Carl Rex.

It’s a run-of-the-mill Rule 91 motion, a show-cause why facts and evidence should not be  deemed admitted. And ex-Ch J Michael B (“Iron Mike”) Thornton grants motion, nemine contradicente. Happens all the time.

So why am I blogging Clovis Chadmar Partners, LLC, Charles R. Lande, Tax Matters  Partner, et al., Docket No. 11903-18,filed 7/16/20?

Because the order is confusing, or maybe I am easily confused.

Ex Ch J Iron Mike notes that “(P)etitioners have filed no response to the Court’s order to show cause…, even though petitioners are currently represented by counsel.” Order, at p. 1.  Well, doesn’t the need for a lawyer’s reply depend upon what the facts and evidence are? If none thereof hurts the client, or if objection would invoke a Section 6673 delay-of-the-game chop, why waste time or money replying? Besides, aren’t the facts and evidence already stipulated?

Ex-Ch J Iron Mike says so, unless I’m much mistaken. He orders “the facts and evidence set forth in the stipulation of facts attached as Exhibit A to respondent’s motion to show cause” are deemed admitted. Order, at pp. 1-2. Well, if the facts and evidence are stipulated, which to me means agreed to by both parties and assented to in writing, why agree twice? Or is this stipulation only a proposed stipulation, not consented to? Then opposing counsel’s non-response would evoke comment.

But there’s always the strategic thought that petitioners’ counsel is giving IRS rope wherewith to do the cliché. See my blogpost “Short Sale – Part Deux,” 7/13/20, where a weasel-worded sentence in a stip torpedoed a bunch of chops.

Once again, dear friends and followers, stipulate…don’t capitulate.

Only yesterday I praised a pair of attorneys, to whom I’d given a Taishoff “good try, third class” a month ago, saying their never-say-die attitude deserves a better cause. See my blogpost “$7 Million, $3.3 Million, Who Cares?” 7/15/20.

I say that again today, as The Jersey Boys go down fighting for Robert Elkins, 2020 T. C. Memo. 110, filed 7/16/20. Bob (that’s Doc Bob) got his OIC bounced, despite being 71 years old, recently and expensively divorced, and having only rapidly declining current income.

Except ex-wife was supporting him handsomely, he kept upping the ante on his OIC, and the SO happened to see the nasty Wall Street Journal.  That alleged dispenser of “fake news” (a nonpolitical comment not found in the record) “…recounted that [Doc Bob’s now-bankrupt but formerly largest nursing home chain in the country] executives had received loans of ‘nearly $60 million–most of it going to Dr. Elkins himself’ that they were never required to pay back. The article further stated that Dr. Elkins used ‘company * * * [i.e., nursing home giant] money contributed to a retirement plan set up for him’ to amass an art collection worth more than $8 million, with pieces being displayed at Dr. Elkins’ home despite being booked as company assets.” 2020 T. C. Memo. 110, at p. 11.

Now I’m sure my hip readers, echoing The Jersey Boys, have yelled “Hearsay! Inadmissible! Declarant not in court! No exception in FRE!” Ah, but trust Judge Patrick J. (“Scholar Pat”) Urda. A CDP is informal, and FRE don’t apply.

“Of course, our Rules provide that a declaration in support of summary judgment ‘shall set forth such facts as would be admissible in evidence’. Rule 121(d). But the Wall Street Journal article, which was attached as an exhibit to the settlement officer’s declaration, does not constitute inadmissible hearsay. Hearsay is a statement offered in evidence to prove the truth of the matter asserted. Fed. R. Evid. 801(c). The article is part of the administrative record, which was submitted to this Court not for the truth of the matters asserted but to show the documents that the settlement officer relied upon in making her decision to sustain the rejection of the OIC (and the NFTL filing). The article thus would be admissible at trial or hearing for that purpose. See Fed. R. Evid. 105 (use of evidence admitted for limited purpose must be restricted to that purpose)….” 2020 T. C. Memo. 110, at pp. 27-28. (Citation omitted).

Trier of fact, just disregard that elephant in the courtroom. It’s only there to prove there are such things as elephants.

But interest of the government wins the day. Doc Bob was in with the Delta Trading crowd (the same outfit that figured in the Billyhawk debacle (see my blogpost “The Hawklings Come Home to Roost,” 11/6/17), and the pure-at-heart Alterman escape (see my blogpost “It’s Not Fraud,” 12/1/15). Delta as TMP in the phony LLC hung Doc Bob out to dry in the FPAA, even though he participated, by extending the SOL. So Doc Bob got hit with $10 million in tax, interest, additions and chops.

The fight is over a NFTL. The SO had reason to bounce Doc Bob’s OIC: he was doing unpaid work for his wife’s nursing homes she got in the divorce, and Doc Bob was still living the good life.

It’s a mark of the high regard in which the Jersey Boys are held that they get tough cases like this one. So I say again the title of this blogpost.

The GA syndicated conservation easements are the blogger’s delight. Always there’s good blogfodder as IRS marches through GA, making Crazy Billy Sherman look like an amateur. Today’s designated hitter from Judge Albert G (“Scholar Al”) Lauber dunks Oakhill in Oakbrook. Here’s Oakhill Woods, LLC, Effingham Managers, LLC, Tax Matters Partner, Docket No. 26557-17, filed 7/15/20.

Judge Scholar Al recapitulates 2020 T. C. Memo. 24, but you can read it all in my blogpost “We Don’t Need No Basis Disclosure,” 2/13/20. But having made low the Oakhills, IRS wants the remaining rough places made plain. And Judge Scholar Al is the man for the job.

The Oakhills went down back in February without a test of the validity of Reg. Section 1.170A-14(g)(6), the extinguishment split-of-proceeds rule. At the time Oakhill was decided, Oakbrook hadn’t been, so ruling was deferred. Well, the time has come.

“If the regulation is interpreted, as we have interpreted it, to make Oakhill ineligible for a charitable contribution deduction, Oakhill contends that the regulation is invalid. It urges that section 1.170A-14(g)(6), Income Tax Regs., is an ‘arbitrary and capricious’ rule promulgated in violation of the Administrative Procedure Act. And it contends that the regulation is substantively invalid under the test set forth in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). We comprehensively addressed and rejected both of these arguments in a recent Court-reviewed Opinion. See Oakbrook Land Holdings,154 T.C.at ____ (slip op. at 15-33). We need not repeat that analysis here.

“Finally, petitioner draws our attention to Priv. Ltr. Rul. 200836014 (Sept. 5, 2008) (PLR), in which the IRS found unobjectionable an easement deed with a judicial extinguishment clause resembling that here. Petitioner contends that respondent’s interpretation of the regulation as set forth in that PLR is binding on respondent under Auer v. Robbins, 519 U.S. 452, 461 (1997). Petitioner’s argument ignores the fact that determinations embodied in a PLR ‘may not be used or cited as precedent.’ Sec. 6110(k)(3). The taxpayer in PBBM-Rose Hill brought the same PLR to the Court of Appeals’ attention, but that court paid no heed to it, finding the regulation unambiguous on its face. See PBBM-Rose Hill, Ltd.v. Commissioner, 900 F.3d 195, 207-208 (5th Cir. 2018). We have done the same. See Coal Prop. Holdings, 153 T.C. at 144. In Oakbrook Land Holdings, LLC v. Commissioner, T.C. Memo. 2020-54, we dismissed reliance on Auer deference because ‘the “traditional tools of construction” le[d] us to hold that the Commissioner’s construction of the regulation is correct even if we look at the question de novo.’ Id. at *25 (quoting Kisor v. Wilkie, 588 U.S. __, __, 139 S. Ct. 2400, 2415 (2019)).” Order, at pp. 4.

Now, guys, where do we go from here?