No opinions or designated hitters issued today from The Glasshouse on Second Street, N.W. Rather, we have 300+ plus orders.

But I do see that Ch J Maurice B (“Mighty Mo”) Foley is giving the recalcitrant nonpayers and defective petitioners two tries at complying with the law and rules in most of the 200+ want-of-jurisdiction tosses he’s dishing out today.

I’m pleased to note that the quick kicks, which I formerly lamented in my blogpost “Four Days in October,” 10/26/18, are a thing of the past.

But No Boss Hoss

Nathaniel A. Carter and Stella C. Carter, 2020 T. C. Memo. 21, filed 2/3/20, had a “Swiss cheese” conservation easement permitting the building of eleven (count ‘em, eleven) homes at various undisclosed locations on the old plantation in Glynn County, GA. While the 501(c)(3) beneficiary of this easement in gross is OK, the Swiss cheesery fails the Pine Mountain test, for which see my blogpost “Perpetually Swiss,” 12/27/18.

“Regardless of whether building houses on each of 11 two-acre lots would impair conservation purposes in the easement area as a whole, it would impede the achievement of those purposes within each building area.  Pine Mountain establishes that the building of a single family home on a given site does not preserve the site itself as an open space or protect natural habitats or similar ecosystems within the site.  Petitioners’ argument might establish their easement’s compliance with section 170(h)(5)’s perpetual protection requirement; it does not establish compliance with section 170(h)(2)’s perpetual restriction requirement, as interpreted by Pine Mountain.” 2020 T. C. Memo. 21, at p. 21.

And Judge James S (“Big Jim”) Halpern says mox nix that the Carters and their partner Ralph claim the homesites will be developed only for them and their families, not for commercial sale. The deed of easement doesn’t say that, and anyway, a home is a home, regardless who lives there.

And even though 5 Cir shot down Tax Court in Bosque, (see my blogpost above-cited), the Carters are Golsenized to 11 Cir.

But the RA on this case fired off Letters 5153 and his Revenue Agent’s Report (RAR) before getting the Boss Hoss Section 6751(b) sign-off.

“That the RARs were sent with Letters 5153 rather than 30-day letters appears to have been attributable solely to petitioners’ unwillingness to provide Appeals sufficient time to consider their cases.  Under the circumstances, the absence of 30-day letters did not indicate a lack of formality or finality in Agent Dickerson’s determination.” 2020 T. C. Memo. 21, at p. 30.

A Letter 5153 is a transmittal for the RAR, telling the addressee to pay up, talk about payment plans, or extend IRS’ time to assess tax to let Appeals have a whack; but if the addressee does nothing by a date certain, IRS will give them a SNOD at no extra charge.

That’s enough for Judge Big Jim. That the Boss Hoss signed off eleven (count ‘em, eleven) days later doesn’t help. So substantial valuation misstatement chops go by the board.

A Rule 155 beancount is just that: an arithmetic show-and-tell where IRS and petitioner each do the numbers, proffer the correct arithmetical solution, and nothing else.

Judge Pugh holds the parties to their stipulated issues, and refuses to consider anything not pled, proven or stiped, in Manatt’s Enterprises, Ltd., Docket No. 17908-17, filed 2/3/20.

Manatt petitioned the SNOD denying their NOL carryforward and certain management fees they paid and received.

Now Manatt want to throw in a Section 199 DPAD, an increased State tax deduction, and a dividends received deduction (which depends upon the outcome of another case).

As for wild-carding in matters in a Rule 155, see my blogpost “Non-Virgin and Non-Deductible,” 2/4/19. There is no after-party in Tax Court, just a clean-up.

IRS and Manatt stiped to “…all correlative adjustments that arise from the other adjustments set forth herein.” Order, at p. 2. And they also agreed that the stip settled everything in the SNOD and the petition.

Judge Pugh: “Petitioner does not ask us to set aside or modify the stipulation. Rather, petitioner asks us to interpret the word ‘correlative’ in the stipulation to include the additional adjustments it asserts are appropriate. Respondent counters that none of the additional adjustments petitioner requests are correlative, but instead are new issues that were never raised in the petition or at any point in this proceeding until respondent sent petitioner the proposed decision. Consequently, respondent argues, these issues are deemed conceded.” Order, at p. 3.

And because Manatt may have mentioned DPAD in an attachment to its return doesn’t matter if they never stated it in the return proper nor petitioned disallowance. “The fact that petitioner may have included information on a form attached to its tax returns that respondent could use to determine the section 199 deduction petitioner now is asserting does not make the section 199 deduction purely computational. Petitioner never claimed a section 199 deduction in either tax year so there is no indication respondent accepted or scrutinized the information on those forms. Moreover, petitioner’s tax returns are merely statements of its position; they do not constitute substantiation.” Order, at p. 5.

And the dividends received deduction depends upon whether the payout in the other case came from E&P. Judge Pugh isn’t going to wait for that omelet to heat up.

Once again there falls the shadow of my mantra: Stipulate, Don’t Capitulate.

Off-Topic, but Unique

Today, February 2, 2020, is absolutely unique. Its like will not appear for another thousand and ten (count ‘em, one thousand and ten) years, wherefore I salute it with an invocation from my long-gone youth.

Today is 02/02/2020, a perfect palindrome. Moreover, it remains a perfect palindrome whether one writes this date American-style (month first, date second, as February 2) or Continental-style (date first, month second, as 2 February). It’s 02/02/2020, either way.

The last such date was January 1, 1010, 01/01/1010.

The next will occur (assuming anyone is here to note the date) on March 3 (or 3 March), 3030.

Judge Pugh goes public with a form of Rule 103 protective order for computer software and proprietary business info in Facebook Inc. & Subsidiaries, Docket No. 21959-16, filed 1/31/20.

There’s thirteen (count ‘em, thirteen) pages of order, with form of Acknowledgement and Agreement to be Bound by same.

Copy, drag and drop to your form file as a template for what a major player and IRS can agree.

I don’t boost other peoples’ blogs. I have been known to recognize a colleague who feeds me good copy (hi, Mr Reilly), but the attribution is there every time. But today I break with precedent, because the topic is important and close to home.

One of my nearest and dearest is on leave from a Big Four and in a tough fight. Depression and mental health are topics we avoid, lest anyone should doubt our omniscience and have-it-all image. After all, we are the tax gurus, right? We are the ones who deal with The Phone Call, the three a.m. OMG did I (do)(not do) thats, the clients facing disaster (losing their heads and blaming it on you), and all that jazz.

Except.

As I said in my blogpost “NOL A Nullity,” 2/27/12, “I can understand anyone being acutely anxious about taxes, even a CPA like J.” (Name omitted). Especially.

I can’t think anyone reading this my blog is reading it for fun. It’s not written to amuse or divert. I am writing for the in-the-trenches practitioner who needs to know what is going on, the grunt about to deploy from the chopper into what may be a firefight and needs some idea about what is going down at the Glasshouse on Second Street, N.W.

Fast.

And s/he can’t show indecision, fear, or the slightest doubt that, whatever the problem, s/he’ll fix it fast and cheap.

I submit, with all due deference and respect, that ain’t the way it is. The great French actress Sarah Bernhardt put it best: When a young actress joined the Comédie Francaise and boasted that she didn’t know what stage fright was, Bernhardt shot back “Wait until you get to be good, my girl, then you’ll know.”

I further submit that the best way to deal with the killer stress we all face is to talk about. Honestly.

My baby is trying. Follow her blog “Seriously, Jerkbrain?” on WordPress.

While it looked like out-of-hand tosses by the Ogden Sunseteers would hit the Lacey wall, the Obliging Jurist Judge David Gustafson, obliges the OS crew when the Form 211 is clearly off-the-wall. Case in point: Christian Bernd Alber, 2020 T. C. Memo. 20, filed 1/30/20.

This furnishes a counterpoint to Lacey, for which see my blogpost “The Whistleblower Office – Blown,” 11/25/19.

Chris’ bœuf reminds me of my youthful days in Our State’s Attorney General’s Office, where such complaints as his were routine. “His Form 211 alleges violations of the income tax laws of Germany, as well as ‘identity theft, tax theft, suppression and destruction of * * * [his] life through fake statements’ and generally alludes to rights under the United States and German Constitutions that afford ‘right[s] for * * * [his] property.’  In the attachments to his Form 211, Mr. Alber identified 17 discrete persons or entities as the perpetrators of his alleged grievances, but he asserted no facts that would connect any of these alleged bad actors to a specific violation of an internal revenue law of the United States.” 2020 T. C. Memo. 20, at p. 3.

Chris also has problems with his divorce, child custody, a hotel in Thuringia, and “a ‘highly criminal “psychological assessment” by a German doctor “even though * * * [he is] totally healthy’….” 2020 T. C. Memo. 20, at p. 3.

True, the OS’ toss letter used the contemned “and/or” conjunction, but that’s no obstacle.

“The Commissioner’s form letter contained the same ‘and/or’ conjunction that led to unclarity in Lacey v. Commissioner, 153 T.C. __, __ (slip op. at 39-40) (Nov. 25, 2019).  But on the record of this case, with the benefit of the detail in the ARM [award recommendation memorandum, the toss note prepared by the tax analyst at Ogden], all of the listed reasons for the rejection are warranted, so we need not pick and choose.  However, we continue to be concerned that, in a closer case, this form text may create confusion when we review a summary rejection of a whistleblower claim.” 2020 T. C. Memo. 20, at pp. 8-9, footnote 5.

No credible evidence of an IRC violation, and nothing that might lead to recovery of money. So the issue isn’t no action and no proceeds, but rather no action could go anywhere based on what was submitted.

In short, when there’s no allegation of an IRC violation, we don’t need Lacey.

The traditional “mailbox rule” states that, absent direct evidence of receipt, proof of mailing presumes official regularity and delivery.

But proof of mailing is not so easy, when jurisdiction requires a timely-mailed Form 12153 as foundation for a CDP and petition therefrom.

Just ask Hubert W. Chang, 2020 T. C. Memo. 19, filed 1/29/20. Or better, don’t ask him, as he lost; ask Judge Gerber.

“Petitioner contends that he did mail two letters within 30 days of a lien notice and a levy notice, requesting CDP hearings. Respondent counters that both of petitioner’s letters were received after the 30-day period allowed and that neither of the envelopes containing petitioner’s letters was postmarked. The sole question presented for our consideration is whether petitioner’s letters were mailed within the 30-day period.” 2020 T. C. Memo. 19, at p. 2.

Hubert has a problem with some of the years he’s petitioning, as he’d petitioned a bunch of them twelve (count ‘em, twelve) years ago. And he doesn’t do much better with the ones he’s now disputing.

The envelopes were properly addressed and postpaid. Judge Gerber finds they were mailed a day late and a lot more than a dollar short.

Hubert’s trial testimony wasn’t the best. At first he testified he mailed the envelopes a day late, then backtracked and claimed mailing on the last day at the local mailbox. The local mailbox is found on that lovely island Oahu, and the local USPS manager and postal expert, Mr. Ikaika Bright, deciphering the barcode printed on the envelopes by USPS machinery, testifies they were most likely mailed one day late.

Hubert did get an equivalent hearing, at which he raised all his objections to the proposed collection activities, to no avail. And of course you can’t petition an equivalent hearing.

Hubert goes down swinging.

“On brief petitioner argued that it is possible that his requests were mailed on [Day 30], and that there could have been delays. He suggests that the USPS could have misplaced the requests or that they were delayed in the process of pickup from his local post office to the main processing facility in Honolulu. There have been instances where delay or other infirmities in the mail service have been shown, but in this instance it is purely speculation on petitioner’s part. To his detriment petitioner testified that he mailed the requests on [Day 30 + 1], one day late. Petitioner laments that it was only one day late and that the Court should take the initiative to provide him with a hearing. Sadly, we are unable to grant petitioner’s wish under these circumstances.” 2020 T. C. Memo. 19, at p. 8.

Now for Taishoff’s Mailbox Rule: Don’t use a mailbox. Get the envelope(s) hand-canceled by the clerk at the window.

That’s the story with Tax Court’s electronic filing system this summer. Judge Albert G (“Scholar Al”) Lauber has the bad news in Solar Eclipse Investment Fund III, The Sherwin-Williams Co., Tax Matters Partner, Docket No. 12449-17, filed 1/29/20.

Judge Scholar Al wanted a status report by June 22. Alas and alack, he “…received notice that the Court’s electronic filing service will be shut down from June 20, 2020 until July 6, 2020.” Order, at p. 1.

Judge Scholar Al reschedules the painters, but practitioners, mark your calendars.

And remember: you saw it here first.

I’ve mentioned before now staggering bleary-eyed into my high school class after hearing Prez eulogize the man he called ”Mr President of the DJ Committee.” Yes, I and my fellows were “gonna be up all night gettin’ with it.” Gone, alas, like my youth, too soon.

But today Judge Colvin, unlike the immortal Lester Young, decides he does think he’s “listenin’ to Lacey.” Only this Lacey isn’t easy-listening DJ Jack, it’s Richard E. Lacey, II, whose contribution to whistleblower lore is found in my blogpost “The Whistleblower Office – Blown,” 11/25/19.

And whom else to bring the Lacey gambit front-and-center but Thomas M. Comparini & Vicki Comparini, Docket No. 6674-13W, filed 1/28/20? I’ve blogged the Comparinis and their epistolary jamboree for upwards of six (count ‘em, six) years; you could look it up.

Today IRS is once again trying the played-out summary J “We started nothin’ and got nothin’” gambit, notwithstanding the Comparinis gave them 500 pages to start, and when the Ogden Sunseteers kicked their Form 211, gave them 300 pages more.

Turns out that while the OS sent the first 500 to examination, who sent it back as unsubstantiated, they never sent examination (or anyone else) the second 300. And IRS’ summary J motion doesn’t include the administrative record.

“The parties dispute whether petitioners substantiated their application and supplemental application. The parties have not provided the administrative record to the Court, and we are unable on this record to review the reasonableness of respondent’s determination set forth in the letter issued to petitioners after they submitted their supplemental application.

“Respondent does not explain why materials provided by petitioners do not constitute substantiation of their application. Considering our obligation to resolve doubt in favor of the non-moving party, on our record we are unable to find that it is not in dispute whether petitioners substantiated their application.

Respondent contends that petitioners are not entitled to receive a whistleblower award because no proceeds were collected and no action was taken based on petitioners’ claim. With respect to petitioners’ supplemental application, no action was taken by the WBO (except to repeat the denial of the original application) and there were no proceeds. In Lacey v. Commissioner, 153 T.C. __,__ (slip op. at 38) (November 25, 2019), we said ‘[t]he Tax Court’s review of a WBO determination to “reject” a claim is not preempted by the absence of “action” and “proceeds”.’ The absence of ‘action” and ‘proceeds’, without more, does not provide sufficient grounds to justify granting respondent’s motion for summary judgment.” Order, at pp. 2-3.

Gotta do better, Sunseteers. Looks like you too are “gonna be up all night gettin’ with it.” And listenin’ to Lacey.