The Long Night is over. Starting by dawn’s early light tomorrow, January 28, 2019, the Glasshouse doors will be flung wide, the formerly furloughed flailing datestampers and hard-laboring intake clerks will stand to their action stations, Judges and STJs will once more pour forth “somber reasoning and copious citation of precedent,” and I shall again take up keyboard and electron to chronicle the sixty-buck ticket to justice.

Cain’t hardly wait.

It’s been a long time since I looked at an AR (not a rifle, an Army Regulation), but one of the cases at this morning’s calendar call in New York City sent me off to AR 601-50, Part VI, Par. 19 (15 Dec 86), whence comes the title of this blogpost.

The case is Gerard J. McEnroe and Regina McEnroe, Docket No. 7381-18S, 1/14/19, but the formal order won’t be around for some time, what with the shutdown and all. And if and when the order does come, it may not embody today’s developments as they may then be moot.

It’s another of those Section 72 pension loan cases. This variation has to do with whether the loan was in fact in default, and the balance paid from Gerard’s account as a taxable distribution. There was to be a trial on that point. Remember that cancellation of debt goes off on facts and circumstances.

So up steps Gerard and his counsel, whom I’ll call Denny. Denny tenders a massive pre-trial brief, but IRS’ counsel has a wee problem.

Though admitted in Our Fair State, and otherwise apparently eligible, Denny never got admitted to Tax Court. When he tried to get the application form from the Glasshouse Gang, Tax Court was shut down.

Although STJ Daniel A (“Yuda”) Guy rightly pointed out that Form 30 and instructions are available on the still-operating Tax Court website in down-loadable and form-fillable PDF, filling in and sending in the form, check and certificate of good standing today would do no good, as there is no one at the Glasshouse to process same.

What to do?

STJ Yuda checks in with the Glasshouse High Command, and obtains from Denny an undertaking to apply as soon as the shutdown ends, but in the meantime, he invokes Rule 24(a)(4) top-of-the-stretch provision.

“…counsel may be recognized as counsel in a pending case to the extent permitted by the Court and then only where it appears that counsel can and will be promptly admitted.”

I’d never seen this before, but I expect we will see it again if this shutdown continues.

I headed down to 26 Federal Plaza on this U. S. Minor Outlying Island this morning. I was suffering an extreme case of Blogger’s Withdrawal during the record-breaking shutdown. Tax Court’s website said Our Fair City would host a calendar call, and my reportorial instincts told me there might be blogfodder here.

Well, there were the volunteers from the New York County Lawyers’ Association’s Calendar Call, trying to help the self-representeds; IRS had counsel working, and STJ Daniel A (“Yuda”) Guy  was on the bench, with his trial clerk close at hand.

I heard through the grapevine that true emergencies are being addressed, even as IRS and Tax Court are handcuffed as to personnel. IRS managers are stepping up, I am told.

One certainly hopes the current emergency is swiftly abated.

I will say nothing more here. My views on the current record-breaking shutdown are extensively stated elsewhere.

To the best of my admittedly-imperfect memory, the flailing datestampers and hard-laboring clerks at The Glasshouse in Shutdown City have today set a record they’ll be hard-pressed to equal, much less excel.

They’ve managed to put up 260 (count ‘em, 260) orders today, and three (count ‘em, three) are designated hitters off-the-bench from STJ Lewis (“Ya Can’t Shut That Name Down”) Carluzzo.

Apparently they pushed long and hard to clear the clichés before “the long winter’s nap” that faces The Land of the Free.

STJ Lew’s cases are two duplicates of the old “delegation of authority to sign a SNOD” variety, and the last is an OIC that gets bounced (and there are no “preliminary” bounces).

But STJ Lew has some useful advice for the few going to court despite the shutdown.

Here’s Khadidiatou Donatelli Neumann, Docket No. 979-18S, filed 12/28/18. Khadid is bound for LA in a couple weeks (hi, Judge Holmes, enjoy the break), and STJ Lew hands out a handy hint.

“To avoid potential complications caused by the partial government shutdown, it is ORDERED that a paper copy of any document submitted to the Court for filing, either electronically or in paper, between the date of this Order and the date of the above-referenced trial session, shall be made available at the trial session by the party who submitted the document.” Order, at p. 1.

Even the electrons may be shut down.

In any case, I wish all my readers a very happy new calendar year. I’ll see all y’all when The Glasshouse is back in action.

Two Mondays in January are still scheduled for trials and motion practice. January 7 still goes forward in Birmingham, LA and Santone, while a week later LA, The Apple and Phoenix host the Great Roadshow from the Glasshouse.

In the meantime, at one minute to midnight this very evening, The Glasshouse Gang turns out the lights, puts up the shutters, and locks the doors.

And here’s the skinny for the rest of y’all: eFiling and eAccess will be available. Taxpayers may comply with statutory deadlines for filing petitions or notices of appeal by timely mailing a petition or notice of appeal to the Court. Timeliness of mailing of the petition or notice of appeal is determined by the United States Postal Service’s postmark or the delivery certificate of a designated private delivery service.

Remember to get the list of acceptable subsets of the PDSs in Notice 2016-30.

No, this is not a Helvetian patriot’s hymn to the Alpine cantonments. Rather, we have a 116-page (count ‘em, 116 pages) battle of the heavyweights between Judge Albert G (“Scholar Al”) Lauber and Judge  Morrison, over whether one can move the holes in a slice of Emmenthaler by cutting new holes and filling the old ones, thus encumbering said slice in perpetuity. We also review Belk and Bosque, diss 5 Cir’s take on Bosque and end up with one $4 million deduction (out of three tries) for Pine Mountain Preserve, LLLP f.k.a. Chelsea Preserve, LLLP, Eddleman Properties, LLC, Tax Matters Partner, 151 T. C. 14, filed 12/27/18.

The Pine Mountaineers lose Easement One because they could build too much and move around where they could build. And Judge Scholar Al (and the majority) like how Judge Dennis of 5 Cir, dissenting in Bosque, put it.

“Our thinking about this issue is well captured by the ‘Swiss cheese’ metaphor that Judge Dennis employed.  See BC Ranch II, L.P., 867 F.3d at 562 (Dennis, J., dissenting).  For this purpose one must imagine the entire easement related area as a large slice of Emmenthaler cheese.  The cheese represents the real property initially restricted by the conservation easement.  The holes represent the zones reserved for commercial or residential development.  Section 170(h)(2)(C) requires that the land restricted by the conservation easement be protected from development in perpetuity.  The statute thus bars the developer from putting any new holes in the cheese.

“As relevant here, the developer could consider two techniques for putting new holes in the cheese.  First, he could put new holes in the cheese and make up for it by adding an equal amount of previously unprotected land to the conservation area.  That was the pattern in Belk.  Alternatively, he could put new holes in the cheese and make up for it by plugging the same number of holes elsewhere in the conservation area.  That was the pattern in Bosque Canyon and in the instant case.  In each instance the acreage subject to the easement remains exactly the same.  But in both instances the developer has achieved the impermissible objective of putting new holes in the cheese, i.e., subjecting to commercial or residential development land that was supposed to be protected in perpetuity from such development.

“Like Judge Dennis, we are unable to discern any meaningful legal distinction between these two paths to the same bottom line.  In both scenarios, the developer has retained the right to develop a portion of the conservation area by substituting other property.  The only difference among Belk, Bosque Canyon, and this case is whether the other property lies inside or adjacent to the conservation area.  We do not see why it matters where the other property lies.  What matters is whether there is a perpetual use restriction on ‘the real property’ covered by the easement at the time the easement is granted.  Sec. 170(h)(2)(C).” 151 T. C. 14, at pp. 43-44.

The majority are JJ. Foley, Gale, Thornton, Marvel, Gustafson, Kerrigan, Buch, Nega, Pugh, and Ashford.

But Judge Morrison, dissenting, says yes it does. The easement area is protected in Easement Two, which the majority dumped. While some building can go on, the entire parcel is guarded by the easement. He does dump Easement Two on other grounds, viz., said easement allows inconsistent uses sufficient to knock out preservation for conservation. If the most exhaustive (and exhausting) analysis of put-and-take scenic easementing to date floats your boat, this is the real deal.

Everyone agrees that Easement Three, which permits a water tower and piping and nothing else, is OK. And Judge Morrison does a King Solomon in evaluating the worth of that easement in Pine Mountain Preserve, LLLP f.k.a. Chelsea Preserve, LLLP, Eddleman Properties, LLC, Tax Matters Partner, 2018 T. C. Memo. 214, filed 12/27/18, taking 50% of petitioner and 50% of IRS, as the errors made by each side’s expert cancel out those of the other’s.

“Using an equally weighted average, we conclude that the value of the…easement is $4,779,500, equal to 50% of [Pine Mountaineers’] $9,110,000 value plus 50% of [IRS’] $449,000 value.” 2018 T. C. Memo. 214, at p. 36.

Shutdown or no shutdown, Tax Court is in there pitching.

While Judge David Gustafson, obliging as ever, lets IRS’ legal crew stand down from trial prep without pay, (see my blogpost “The Big Sleep” of even date herewith, as my expensive colleagues say), Judge Robert (“TNP”) Goeke (I’ll explain the cognomen later) is cracking the whip down in AL.

Here’s Christopher Struzik, Docket No. 18384-17, filed 12/27/18.

As they say down Birmingham way, it don’t make no nevermind that the eagle has closed down a vital function.

“Despite the fact that the Federal Government may continue to be partially shut down, this case will be called for trial at 10:00 a.m. on January 7, 2019, in Birmingham, Alabama.” Order, at p. 1.

Be there or beware, both sides.

Oh, the “TNP” at the head hereof? “Take No Prisoners.”

No, not the Raymond Chandler 1939 hard-boiler that featured the debut of Philip Marlowe. Rather, this is that Obliging Jurist David Gustafson relieving IRS’ trial counsel, now unpaid due to matters the particulars of which are now readily available to my readers in the public press. I therefore will make no further reference to such matters, much less comment thereon in this avowedly-non-political blog.

My personal views are stated in extenso elsewhere.

All y’all must be following with anticipation the scheduled trial in Palmolive Building Investors, LLC, DK Palmolive Building Investors Participants, LLC, Tax Matters Partner, Docket No. 232444-14, filed 12/27/18. Barely four (count ‘em, barely four) weeks before the opening gun in this knock-down, drag-out Section 170 donnybrook over a famous Cleveland façade, Judge Gustafson calls a major-league timeout.

“…as the parties are aware, there has been a lapse in the funding of the portion of the Government that includes the Tax Court and the Department of the Treasury (including the Internal Revenue Service). The Anti-Deficiency Act, 31 U.S.C. sec. 1341, imposes limits on Government operations in the absence of Congressional appropriations. Of course, petitioner’s counsel’s operations are unaffected by this circumstance; but the personnel in the IRS Office of Chief Counsel are currently unable to prepare for that trial. We have no way of knowing when there will be an appropriation, and even if Congress were to act by January 22, we cannot be confident that Congress will act in time for Chief Counsel to have a reasonable opportunity to prepare for trial.” Order, at p. 1.

So all bets is off, game called, and telephone to chambers when the eagle does its thing again, to prepare and get back on track.

As aforesaid, I eschew oral or written comment on “we cannot be confident that Congress will act.” I am, however, thinking very loudly.

I found this gem on a site called webdoctx.com.

“taishofflaw.com has registered on 1915-02-15 and has updated on 2018-12-27 and will expire on 2018-12-27. This domain is 103 years old.
taishofflaw.com opened on 15.02.1915 and this domain is 103 years, 10 months old. We see that taishofflaw.com is using Google Adsense to monetize and , 701987 Alexa Rank and Country rank shows us how good and useful this site is.”

Ye don’t say so.

Despite his vociferous assertions that Merrill Lynch stole his book (of business: that’s what we call client lists, client info, client goodwill), all His Honor Big Julie, Judge Julian I Jacobs (sometimes hereinafter referred to as “HHBJJJIJ”) can find is that when FINRA (an organization that rejected my application to join the ranks of their arbitrators after my brief pre-merger stint with MSRB) told Merrill Lynch they couldn’t make Robert A. Connell, of Robert A. Connell and Ann P. Connell, 2018 T. C. Memo. 213, filed 12/26/18 fame, pay back his unamortized signing bonus ($3,242,248), it was ordinary income.

Rob claims ML wooed him with promises of big bucks, then, four days before the end of his first year, made him walk the plank and hit him with a U-5. That’s not the sequel to the 1981 Wolfgang Petersen wet-and-wild saga about a World War II German submarine. Rather, that’s the termination statement for any registered rep type in the securities industry. And as a far finer writer than I put it, “After your death you were better have a bad epitaph than their ill report while you live.” I’ve fought those, and lost.

Well, Rob got their ill report while he lived, which guaranteed no reputable firm would pick him up. Plus, ML grabbed his book and had his former subordinates strip-mine his clients.

Rob ran to FINRA with his top-class attorney Thomas B. Lewis, Esq. And got a “very unusual” win, according to Mr. Lewis. He got to keep the $3 million, got back his computerized client templates (with the data wiped), got some compensatories (a little less than $500K) and even got $288K for Mr Lewis.

Rob claims it’s the price for the book of business ML stole from him, and the U-5 torpedo that sinks him. IRS says it’s ordinary income, like compensation.

The problem is having a top-notch lawyer get complimented by the Judge: that’s a sure sign you lost. The compliment, I suppose, is there to keep the client from stiffing the complimented one, as compliments pay no rent.

HHBJJJIJ: “Admittedly, the filings heavily emphasize Mr. Connell’s argument that Merrill Lynch lured Mr. Connell to Merrill Lynch in order to acquire his book of business and that thereafter it set out to ruin his professional reputation so as to keep him from working at a competing financial services firm. But this argument was not the only one Mr. Connell presented to the FINRA Panel.  Mr. Connell’s attorney, Mr. Lewis, an experienced and successful litigator, made certain of that.  Mr. Connell’s filings forcefully argue that the FINRA Panel should reject Merrill Lynch’s position and conclude that Mr. Connell need not pay the balance of the upfront forgivable loan.  Indeed, Mr. Connell’s filings emphasized that Merrill Lynch breached the terms of the employment contract, not Mr. Connell, causing Mr. Connell to suffer damages. This argument, by itself, would relieve Mr. Connell of his obligation to pay the outstanding balance of the promissory note to Merrill Lynch.” 2018 T. C. Memo. 213, at pp. 33-34.

The answer lies in what FINRA decided, but there’s no opinion, decision or judgment. Just an order giving Rob most (but not all; the bad U-5 remains) of what he wanted.

So what did FINRA really decide? Like the 5-7-4 doubleplay, for explication of which see my blogpost “FIIK,” 4/19/18, one has to try to parse out what went through the arbitration panel’s minds.

“The record herein does not reveal the specific argument the FINRA Panel found most persuasive when it extinguished the balance of the upfront forgivable loan.  Petitioners bear the burden of answering the question ‘in lieu of what were the damages awarded?’  On the basis of our examination of the record, we conclude that petitioners have not met their burden to establish that the amount at issue was solely for the acquisition of Mr. Connell’s book of business.  Consequently, we sustain respondent’s determination that the extinguishment of Mr. Connell’s debt to Merrill Lynch constitutes cancellation of debt income and that the amount of the extinguishment is taxable as ordinary income.” 2018 T. C. Memo. 213, at p. 34.