Sirius XM Connected Vehicle Services Holdings Inc. and Subsidiaries f.k.a. Agero Holdings Inc. F.K.A. CCAS Holdings, Inc. and Subsidiaries Consolidated Group, Docket No. 17641-18, filed 10/22/19, has worked out a way to resolve most or all of the key issues in its current dust-up with IRS. And Judge Albert G (“Scholar Al”) Lauber is down with this.

Only I, an humble blogger, an outsider looking in, have got a question.

The parties think a motion for summary J would do it, and each party should make one. Only Sirius goes first, and when IRS responds, as Rule 121(b) mandates, IRS can cross-move for summary J.

Now it is well-known that I am a great fan of summary J, so much that I will not cross-reference all my blogposts wherein I waxed lyrical on the subject.

But cross-motion? The Rules never mention cross motions, although it would be a good thing if they did. Rule 121 seems to require separate motions, individually labeled.

But I applaud Judge Scholar Al for cutting through an ambiguity, even though he does so only in an order that cannot be used as precedent.

Doesn’t Work for Whistleblowers

Vincent J. Apruzzese, 2019 T. C. Memo. 141, filed 10/21/19, claims that, in the course of suing the adm’rs/ex’rs of a certain estate, he turned up substantial undervaluation of estate assets, which had been sold for invalid installment notes.

IRS was about to “No Change” the 706, which was under audit, when Vince’s Form 211 swam into their ken.

IRS took Vince’s ammo and fired it, to the tune of $424K disgorged by the adm’rs/ex’rs. And IRS stumped up 22% thereof to Vince, admitting that, without Vince connecting the dots and shining the flashlight, the fisc would have folded.

So why is Vince suing? He’s not grousing about how much he got on this award. He’s claiming IRS could have gotten a lot more. So Vince wants Judge Vasquez to order IRS to squeeze the adm’rs/ex’rs harder, so that more goodies would fall to the fisc (and maybe a small piece to Vince).

Nonstarter.

Judge Vasquez: “While we have jurisdiction to review the Commissioner’s award determination, we do not have authority to ‘review the Commissioner’s determinations of the alleged tax liability to which the claim pertains.’  Nor do we have authority ‘to direct the Secretary to proceed with an administrative or judicial action.’ 2019 T. C. Memo. 141, at p. 9 (Citations omitted).

Vince got his award, and had no quarrel with the amount thereof.

It may be that the IRS attorney on the estate audit was a wee bit less than ultimately aggressive, but Judge Vasquez cannot second-guess him.

Of course, since IRS put five (count ‘em, five) attorneys on this barrel-shoot of a case, against Vince, who was pro se, mayhap IRS might want to consider putting a few more horses in harness on the Estate & Gift Stagecoach, and leave such cases as this to one attorney.

I can’t stress it often enough: THIS IS A NON-POLITICAL BLOG.

But sometimes keeping it that way makes my head ache.

I’ve been accused of making sardonic comments in the past. I neither affirm nor deny, and can only tell my accusers that, if the cliché fits, you know what to do.

But today Ch J Maurice B (“Mighty Mo”) Foley has, I’m sure unintentionally, pushed my long-standing resolution nearer the breaking point than it has gone in many a day.

Here’s State of New Hampshire, Docket No. 18493-19, filed 10/21/19. Yes, that’s the one and only Granite State, one of the Original Thirteen Stars on the Oriflamme of Our Great Republic. I haven’t a clue why the sovereign State has paid the sixty bucks at the 400 Second Street, NW, turnstile.

Anyway, Ch J Mighty Mo, no doubt overtaxed with inept pro ses and counsel of imperfect knowledge, and with a certain want of attention on the part of the flailing datestampers and hard-laboring intake clerks who guard the aforementioned turnstile, issued an order that must now be withdrawn.

“On October 11, 2019, petitioner filed a petition in this case. Due to an inadvertent clerical error the Order dated on October 16, 2019, ordered petitioner to file an Ownership Disclosure Statement by December 2, 2019.” Order, at p. 1.

Today, said order is “vacated and set aside.”

Who owns New Hampshire?

I wish Ch J Mighty Mo left that order in place. I think more than a few of the Granite State’s citizens, and even citizens far afield, might be interested in the disclosure statement. Perhaps it might be well to extend the reach of the order, so that we might get Form 6 for our own Empire State. Let’s see what parent companies, publicly held corporations, large partnerships, and limited liability companies own 10% or more of our State.

Pat Henry’s famous House of Burgesses 1765 showstopper gives rise to yet another dust-up about stamps and taxes. King George III would get a real good laugh out of this, since stamps and taxes were rather a specialty of his.

Veronica Lynn Hicks, Docket No. 9829-19S, filed 10/21/19, may be only running in a small-claimer, and IRS wants to toss her petition for late filing, but Ch J Maurice B (“Mighty Mo”) Foley would like to hear more about Veronica and her Stamp Act.

Unlike King George’s Stamp Act, Veronica utilized a computer. And she didn’t use Stamps.com or another private postageflogger. Veronica used USPS Click-N-Ship. But IRS’ answer didn’t discuss Pearson. My astute and wide-awake readers will of course remember Linc & Vic Pearson, and 7 Cir’s kick-out of Tax Court’s “only USPS postmark” rule for Section 7502 mailed-is-filed cases. What, no?

Then see my blogpost “Does Not The Wild Boar Break Cover Just As You’re Lighting A Weed?” 11/30/17.

OK, says Ch J Mighty Mo, IRS, discuss Pearson in the USPS Click-N-Ship context in your response to Veronica’s objection to your motion to toss.

Hint: Connect-Ya Communications won’t help you. They used USPS Click-N-Ship, but their label showed a date one (count it, one) day late. See my blogpost “Last Minute Fails to Connect,” 9/28/18.

As long as Tax Court refuses to allow online filing of petitions and amendments thereto, the Stamp Act will give me plenty of blogfodder.

References to the Taxpayer Bill of Rights (TBOR) are immaterial and maybe frivolous, right? Isn’t that what Judge Halpern said, as more particularly bounded and described in my blogpost “The Taxpayer Bill of Goods,” 4/17/19? And as repeated, realleged and restated in my blogpost “The Taxpayer Bill of Goods – Part Deux,” 6/20/19, wherein Judge Goeke berated The Jersey Boys for raising TBOR, no?

Well, comes now Ch J Maurice B (“Mighty Mo”) Foley, who allows that maybe one can mention the TBOR, which hitherto dared not speak its name in the precincts of 400 Second Street, NW.

Here’s Estate of John Hajdukovich, Deceased, Robert M. Hajdukovich, Personal Representative, Docket No. 13752-18, filed 10/18/19.

The PersRep’s intrepid Colorado counsel “… asserts that this Court has authority to consider violations of 5 U.S.C. section 706(2) and I.R.C. section 7803(a)(3) in the course of redetermining the deficiency asserted by respondent.” Order, at p. 1. That’s the Administrative Procedures Act for one thing, and TBOR for another.

IRS has the by-now-boilerplate response. “…even if the references to 5 U.S.C. section 706(2) and I.R.C. section 7803(a)(3) are merely part of petitioner’s claim under I.R.C. section 6213(a), any references to them should be stricken from the petition on the grounds that they are immaterial or frivolous.” Order, at p. 1. So when TBOR is mentioned even in passing, IRS has gone beyond arguing “mere recapitulation of existing rights” to “immaterial or frivolous.”

Taxpayer Bill of Goods on steroids.

Ch J Mighty Mo isn’t buying…yet. A Rule 52 strike needs showing of no possible connection to case and prejudice to wannabe striker.

“Respondent did not identify any prejudice from the references in the petition to 5 U.S.C. section 706(2) and I.R.C. section 7803(a)(3). At this stage of the proceedings, we cannot clearly conclude that these references have no possible relation to the controversy. In light of the high standard governing this matter, we will deny respondent’s motion without prejudice.” Order, at p. 2.

However, lest Colorado counsel celebrate by lighting up vegetation legal in that State, thereby developing a Rocky Mountain high, Ch J Mighty Mo counsels prudence.

“The denial of respondent’s motion without prejudice should not be interpreted as an evaluation of the merits of petitioner’s assertions regarding violations of5 U.S.C. section 706(2) and I.R.C. section 7803(a)(3). The Court has recently addressed 5 U.S.C. section 706(2) in Ax v. Commissioner, 146 T.C. 153 (2016) and the Taxpayer Bill of Rights in Moya v. Commissioner, 152 T.C. __ (Apr. 17, 2019) and in Atlantic Pacific Management Group, LLC v. Commissioner, 152 T.C. __ (June 20, 2019).” Order, at p. 2.

Moya and Atlantic Pacific are covered in my blogposts above captioned. You can find the Ax case in my blogpost “A Retrieved Reformation,” 4/11/16.

Motion to strike denied without prejudice.

Don’t Ask Tax Court For Help

Derrick Tartt needs to go to the Dominican Republic next month, and to the Cayman Islands in January. But Ch J Maurice B (”Mighty Mo”) Foley is not the one to ask for help in letting Derrick go.

Derrick has a wee problem. Readers of this my blog might recall that Derrick, sub nom (as my expensively-schooled colleagues say) Derrick Barron Tartt, owes the fisc a hefty bunch of income tax plus additions, against which Judge Lauber told him he could not offset his employment discrimination claims against the US gov’t. See my blogpost “Penalty Shots,” 9/3/19.

So when Derrick Tartt, Docket No. 16879-19P, filed 10/18/19, moves to speed up his Tax Court hearing so as to pry his passport from the grasp of the State Department, Ch J Mighty Mo isn’t the one to ask.

“Petitioner’s motion is most analogous to a Motion To Calendar and we will treat it as such.

“Petitioner’s request cannot be granted. The record in this case reflects that respondent (the IRS) has not yet filed an answer to the petition, and this case is not yet at issue. See Rule 38,Tax Court Rules of Practice and Procedure.” Order, at p. 1.

Of course, if he’s gotta go, Derrick can stump up the cash and spring his passport.

“Petitioner may wish to contact the IRS at the address and/or phone number listed in the letter attached to the petition to inquire about expediting payment of his seriously delinquent tax debt in order to secure his passport for his planned travels. Petitioner is further advised that general information concerning the litigation of a Tax Court case is posted in the Taxpayer Information section of the Court’s website at www.ustaxcourt.gov.” Order, at pp. 1-2.

So if you gotta go, but your passport is hung up, don’t try 400 Second Street, NW.

Edited to add, 11/1/19: Looks like Derrick is gonna go, after all. See Derrick B.Tartt, Docket No. 16879P, filed 11/1/19.

On a personal level, I liked Judge Mark V. Holmes before I ever met him. And when I met him at the Tax Court Judicial Conference a couple years ago (hi), I liked him even more, despite his grammatical lapses. But I can comment on a Judge’s orders in an impersonal way, being sure the comments are made and taken in good part.

Today I am surprised that Judge Holmes is not surprised by the behavior (or rather, non-behavior) of Yaroslav Kirik & Galina Kirik, Docket No. 21292-13, filed 10/17/19.* Seems like a corporation owned or controlled by Yar & Galina, and Yar & Galina themselves, were the subject of some criminal investigation. Since 2014, said criminal investigation seems to be on hold, no explanation given.

But after Yar’s & Galina’s counsel bailed a year ago, the lines of communication went dead.

“We have not been able to speak with petitioners since then, and they have not submitted updated contact information. We have no phone number or email address for either petitioner, and we ordered each petitioner to file updated contact information by April 19, 2019. They did not do so. In May we ordered them to show cause why we should not dismiss the cases for failure to prosecute. A check of the Court’s docket in this case shows that petitioners have still not responded to our order….” Order, at p. 1.

So Judge Holmes tosses Yar & Galina for want of prosecution.

Judge, with a $3.5 million decision, including Section 6663 fraud chops, plus interest from 2007-2009, hanging over them, are you surprised that Yar & Galina took off?

Reminds me of the old joke. If I owe you $500, I gotta worry; If I owe you $5 million, you gotta worry.

*Yaroslav Kirik 21292-13 10 17 19

Edited to add, 9/2/21: “Yar & Gal hired new counsel, and appealed the toss to 2 Cir. They lost.

The tagline hereof fits K. Slaughter, 13256-14, filed 10/17/19, though Judge Wells refuses to vacate the opinion more particularly bounded and described in my blogpost “The Brand,” 6/4/19, to which the reader is respectfully referred.

K.’s trusty legal team wants Judge Wells to opine that K.’s brand promotion business, to which she allegedly devotes the majority of her time, is separate from her writing business. K. apparently tosses off murder mysteries featuring bloody corpses and Georgia Bureau of Investigation supersleuths in her spare time while promoting.

But it’s all one to Judge Wells.

“We find no unusual circumstance or substantial error in the opinion we issued in the instant case. Our holding is consistent with the fact that petitioner was engaged solely in the writing business. Ultimately, we agreed with respondent’s contention that petitioner’s brand formed part of her writing business. Petitioner presented a considerable amount of evidence regarding the value and role of branding in the publishing industry. Once we determined that branding was part of petitioner’s writing business, a separate allocation of the value of petitioner’s brand was moot. As we stated in our opinion, ‘an allocation [between amounts paid for writing and for branding] within petitioner’s contracts is beside the point if all elements are to be allocated to a trade or business,’ Slip. op. at 18. We do not agree with petitioner’s contention that our opinion holds that petitioner’s brand was a separate trade or business, nor did we intend to make such a conclusion.” Order, at p. 2.

Writing for dollars in the Twenty-First Century goes beyond sitting at the keyboard or the voice-recognition. As the radio hero of KXTN in Santone told us, ya gotta hit the bricks.

But maybe now-retired Judge Big Julie’s words about Jonny Ramirez’s separate activities might have been useful to K.’s high-priced team, even if those words came from a not-for-nuthin’ small-claimer. See my blogpost “Hit The Bricks,” 5/20/13.

“Why Don’t Everybody Smoke Their Own?”

The nasal drawl of the immortal Humphrey Bogart forms the background for my review of Judge Patrick J. (“Scholar Pat”) Urda’s unhorsing of Plano Holding LLC, 2019 T. C. 140, filed 10/16/19.

Plano Holding is the child of one of Canada’s largest pension funds, which bought the plastics manufacturer Plano Holding holds from a US hedge fund. The Canadians had been hunting for a US firm for its portfolio, and agreed to compensate  B (name omitted) for their previous efforts in locating the target, although the deal was brought off by an investment banker unrelated to B.

Plano Holding took the payment to the investment banker as a reduction in purchase price to the hedgies, and Judge Scholar Pat says OK. But when parent (Plano Holding) and child (the plastics manufacturer) filed their first consolidated return, child wrote off $1.5 million to B as a Section 162 business expense. IRS says no, and Judge Scholar Pat agrees.

“A taxpayer generally may not deduct the payment of another person’s expenses.  We have recognized a narrow exception to this rule where (1) the taxpayer’s primary motive for paying the other’s obligation is to protect or promote the taxpayer’s own business and (2) the expenditure is an ordinary and necessary expense of the taxpayer’s business.” 2019 T. C. Memo. 140, at pp. 8-9. (Citations omitted).

Child flunks both tests.

First, the deal between the Canadians and B was entered into a week after the deal was inked between Canadians and child. There was no adverse consequence to child if it did not pay B, as the deal between the Canadians and child (the plastics manufacturer) was not contingent upon child picking up B’s tab, nor an adjustment to the purchase price, unlike the payment to the investment banker. And the Canadians were the real beneficiaries of the deal. They wanted a US company, and child fit the bill.

Second, the payment to B was not for anything but finding child for the Canadians. “To the contrary, the parties agree that the B payment came about because [Canadians] felt obligated to B for its legwork… in identifying a potential acquisition for [Canadians].

“The B payment thus is in the nature of a finder’s fee that [Canadians] decided to bestow months after the fact.  Were we looking at the business of an institutional investor like [Canadians], we very well might conclude that a fee of this sort (if it were not a capital expenditure to acquire [child]) would be an ordinary and necessary expense that could be deducted.  But we are not.  [Child]’s business is manufacturing plastic goods, primarily storage items for outdoor sports. [Parent] fails to persuade us that such a payment qualifies as either ordinary or necessary in that line of business.” 2019 T. C. Memo. 140, at p. 13. (Footnote omitted, but it’s interesting.)

“Our holding today accordingly should not be seen to opine on whether a payment stemming from B’s [earlier] efforts on behalf of [child] would have been an ordinary and necessary expense of [child]’s business.” 2019 T. C. Memo. 140, at p. 13, footnote 4.

Speaking of innocent spousery, Lindsey Jones, 2019 T. C. Memo. 139, filed 10/16/19, is the first go-round of the expanded scope of review in such cases, arising out of the Taxpayer First Act (TFA), Pub. L. No. 116-25, 133 Stat. 981 (2019).

Judge Ashford let in a bunch of post-hearing stuff, including “…(1) the testimonies of petitioner, her ex-husband …, and three additional witnesses for petitioner without objection from respondent’s counsel and (2) four additional exhibits proffered by petitioner.” 2019 T. C. Memo. 139, at p. 2, Footnote 2. (Name omitted).

The footnote is the most interesting part of the case, as the rest is the usual fact-bound tiptoe through the factors.

“TFA sec. 1203, 133 Stat. at 988, amended sec. 6015(e) by adding paragraph (7), which provides for the standard and scope of Tax Court review.  Specifically, paragraph (7) provides that ‘[a]ny review of a determination made under this section [sec. 6015] shall be reviewed de novo by the Tax Court and shall be based upon–(A) the administrative record established at the time of the determination, and (B) any additional newly discovered or previously unavailable evidence.’  According to TFA sec. 1203(b), this provision applies ‘to petitions or requests filed or pending on or after the date of the enactment of this Act.’

“It would thus seem that the effective date provision calls on us to apply sec. 6015(e)(7) to cases tried before that section was enacted, which would include this case.” 2019 T. C. Memo. 139, at p. 2, Footnote 2.

But even the new stuff avails Lindsey naught. She loses even after “… allowing petitioner to present her case to the fullest extent and considering all of the evidence presented….” Idem, as my contemplating-their-spit-shined-Bruno-Magli-Maiocos-atop-their-two-acre-desks colleagues would say.

But I do want to give a Taishoff “Good Try, First Class” to Jonathan T. Amitrano, Esq., and Alvah Lavar Taylor, Esq., counsel to Lindsey.

All that said, I see nothing in Taxpayer First or this case to modify my earlier-expressed view that a nonrequestor had better put in everything at Appeals, lest IRS fold on the river, leaving the nonrequestor Michael Corleone’d.

Even the Taxpayer First second-bite provision limits the wild-cards to “newly discovered or previously unavailable evidence.” The “review de novo” language seems to apply only to the usual romp through the administrative record (but how can the Court try de novo a case that exists purely on paper, thereby substituting the judge’s impressions for the AO who saw the parties, heard their voices,  and observed their body language?), plus the new-or-previously-unavailable stuff. Unless the Court stands the language on its head (as appears to have happened with Lindsey, since her ex plus the other witnesses and stuff appear neither to have been unavailable nor newly-discovered), the requestor can always object to nonrequestor wild-cards on the ground that these folks and this stuff were around and available for the hearing, so ambush.

Howbeit, I’m sure we’ll see this latest Congressional coruscation enlivening my future blogposts.