No, neither Sam’l T. Coleridge’s “grey-beard loon” nor a certain first baseman, now deceased, known as “The Man With the Iron Glove,” for he also “stoppeth one of three” hit to him. Today it’s The Great Dissenter/Concurrer, a/k/a The Judge Who Writes Like a Human Being, Old China Hand and Master Silt Stirrer, Judge Mark V. Holmes (and, I must add, a delightful dinner companion; the walls at the Wright Ballroom echoed with our laughter), telling the sad tale of Lisa M. Brigulio & James M. Murray, Docket No. 11087-12, filed 4/6/18.

There are three conjoined cases, but this one is Lisa’s sad tale, as she’s the sole petitioner. She loved not wisely but too well; James turned out to be a wrong ‘un.

“…she was married to petitioner Murray for only a little over three years and during that time filed joint returns for [two of those years]. She did not know that he was a white-collar criminal whose nefarious schemes were producing a large amount of income which he did not report on their returns. And none of the adjustment items on the notice of deficiency are allocated to her under I.R.C. § 6015(d). Ms. Brigulio established these facts by serving her former husband with requests for admission, to which he did not respond. See Tax Court Rules 90(c) and (f).

“Toward the end of the marriage, Mr. Murray fled to Monaco. He was arrested while trying to return,  and has since been convicted of several counts of wire fraud and aggravated identity theft. He is currently imprisoned. “ Order, at p. 1.

James obviously has other things on his mind than Tax Court Rules 90(c) and (f).

Lisa got innocent spousery summary J. But she’s still joined at the petition with James on a couple other cases (it is Judge Holmes’ case, after all).

Lisa should follow the advice of my daughters’ dear childhood friend, and get out, but Judge Holmes forgot to remind her about Siewert.

Even I didn’t blog the Siewert order of 9/15/15, to which Judge Holmes refers. When I blogged Siewert it was back on 6/1/15. See my blogpost “To Bifurcate or Not to Bifurcate – That Is the Question.”

Judge Homes held a phoneathon with IRS and Lisa, but forgot to tell Lisa about how Teresa Siewert bailed.

So Judge Holmes gave us a designated hitter, to help Lisa “stoppeth one of three.”

The Section 6751(b) Boss Hoss is a gift that keeps on giving. Today we have Scott T. Blackburn, 150 T. C. 9, filed 4/5/18, a full-dress revisitation, wherein Judge Goeke, writing for a unanimous court, concludes that the signature of the Boss Hoss need not be manifest or manual, but an electronic abstract naming the Boss Hoss is sufficient.

Scott is fighting the chops on a Section 6672 TFRP. He admits he owes the TFRP.

“…petitioner asserts that the Form 4183 does not have an actual signature.  This is true; however, the form does show Ms. R as the party who approved the TFRP as the revenue officer’s supervisor.  A finding of fact that Ms. R signed the Form 4183 might be based upon rule 803(6) of the Federal Rule of Evidence, but in the context of an abuse of discretion determination the mere existence of the form in the administrative record supports the settlement officer’s verification.” 150 T. C. 9, at p. 9. (Name omitted).

Judge Goeke doesn’t have to deal with whether or not Section 6751(b) applies to TFRPs, because IRS got one. Says the administrative record.

But this begs the question. It assumes assertion of a mere signature is sufficient to satisfy Section 6751(b). Scott objects, says there has to be some kind of evaluation manifested.

Here’s Judge David Gustafson dissenting in Graev I.

“Through its Conference Report, Congress made its intent clear:

‘The Committee believes that penalties should only be imposed where appropriate and not as a bargaining chip.’ S. Rept. No. 105-174, at 65 (1998), 1998-3 C.B. 537, 601. Taxpayers had complained to Congress that, in disputes about income tax liability, IRS agents sometimes unreasonably asserted penalty liability on top of the tax liability in order to create a bargaining chip for use in settlement negotiations with taxpayers.” 147 T. C. 16, at p. 85.

So Congress wanted someone with shoulder boards to see that the grunt wasn’t overdoing it.

What assures the taxpayer that there was the “second look” Congress directed? Anyone can drag-and-drop a name into an electronic document. And even if the Boss Hoss did sign something, was there even a second look?

I’ll reiterate what I wrote back in 2016, in my blogpost “Robosigner?” 12/23/16. When the subprime mortgage debacle exploded and foreclosures rained from the skies, we dirt lawyers “…saw the flurry of ‘robosigners,’ junior clerks given titles above their pay grades who signed affidavits and pleadings at the rate of ten a minute, with flailing notaries at their elbows stamping their nights away. None had any idea what they were signing or to what they were swearing.”

Eventually these got torn up in court, as the pro bonos and the defendants’ wolfpack deposed the signers.

Judge Gustafson, where are you?

Scott is Golsenized to 5 Cir., unless stiped otherwise. Might be worth a visit.

Not a great day for IRS, as their appraiser misses the point that sinks Wendell Falls Development, LLC, Gregory Alan Ferguson, Tax Matters Partner, 2018 T. C. Memo. 45, filed 4/4/18, when Wendell Falls goes for a conservation easement (disallowed, but IRS’ appraiser’s miscue lets Wendell Falls off the chops).

Then it’s a small-claimer, Alan A. Vest, 2018 T. C. Sum. Op., 18, filed 4/4/18, where IRS blew the Section 6402(g) mandated payment to the Small Business Administration for Alan’s defaulted loan, and applied Alan’s refund to his subsequent tax year. Doesn’t end well for Alan, though, as the Section 6402(g) grabs aren’t reviewable by any Federal court.

Wendell Falls’ conservation easement is worth nothing, because the Town of Wendell (NC) bought the adjoining land whereon Wendell Falls was going to build its tract housing for a good number to use as a public park, and Wendell Falls would get more for its houses with a 125-acre public park next door.

“The conservation easement therefore did not diminish the value of the 125 acres because it did not prevent it from being put to its best use.  The value of the easement is therefore zero.  Our answer does not change if the land valued before and after the easement is the entire 1,280 acres rather than the 125 acres.  See sec. 1.170A-14(h)(3)(i), Income Tax Regs. (fourth sentence).  We believe, as Wendell Falls did, that using the 125 acres as a park would make the master-planned community more desirable and therefore increase the value of the residential and commercial lots that Wendell Falls eventually intended to sell.  Taking this enhancement into account, the total value of the 1,280 acres would be undiminished by the easement, and this undiminished value leads to the conclusion that the value of the easement is zero.” 2018 Tc. C. Memo. 45, at pp. 14-15 (Citation and footnotes omitted, but read the footnotes; footnote no. 4 says Town of Wendell bought to property cum easement for the same price as they would have paid ex-easement.)

So Wendell Falls’ $1.7 million deduction fails. But the penalties? See the second of the two footnotes aforesaid, footnote no. 5.

“Neither valuation expert witness accounted for the enhancement to the surrounding land created by access to the park.  The IRS’s expert’s failure to consider the enhancement is inconsistent with the evidence in this case, which, as the IRS points out, includes a PUD showing that the park was linked to the residential units.  A court is not required to accept an opinion of an expert witness that is contrary to the evidence.” 2018 T. C. Memo. 45, at p. 15, footnote 5.

Judge Morrison: “Our determinations regarding substantial benefit depend on the resolution of tests for which the factfinder has broad discretion–(1) whether there was a substantial expected benefit to Wendell Falls, and if so, (2) whether the benefit was incidental.  We do not think that Wendell Falls’ failure to anticipate the adverse resolution of these tests shows that it did not make sufficient effort to assess the proper tax treatment of the easement. As to the value of the easement, Wendell Falls retained two different state certified real estate appraisers… to appraise the easement.  Although neither appraiser correctly accounted for the enhancement conferred by the easement on the unencumbered property, neither did the IRS’s trial expert.” 2018 T. C. Memo. 45, at pp. 16-17.

As Scotland’s greatest said, “Gude faith, he mauna’ fau’ that.” No penalty.

As for Alan A., IRS’ miscue doesn’t help. He owes the tax, because IRS erred in following his direction rather than Section 6402(g).

Judge Nega: “Section 6402(d), the Treasury offset program, requires the Commissioner, upon receiving notice from any Federal agency that a taxpayer owes a past-due legally enforceable debt to that agency, to reduce the amount of any overpayment due that taxpayer by the amount of such debt and remit that amount to the notifying Federal agency.

“This duty is mandatory upon the Commissioner and overrides any request by the taxpayer that an overpayment be credited or refunded otherwise.  Sec. 301.6402-6(g)(3), Proced. & Admin. Regs. In this regard, the terms of the Treasury offset program place the Commissioner in the limited and purely ministerial role of collecting those debts referred to him by other Federal agencies.” 2018 T. C. Sum. Op. 18, at pp. 7-8 (Citations omitted).

Better IRS training would save the money expended on these cases.

Today ex-Ch J Michael B (“Iron Mike”) Thornton grapples with an Emmenthaler administrative record (that’s the cheese with all those holes), multiple tax returns for the same year, an account transcript showing “$0,” an OIC-DATL IRS admits they got, with a Form 433-A to match, and documents without authenticating affidavits from both sides.

Ex-Ch J Iron Mike, exhibiting patience worthy of a professor reading essays from law students only vaguely aware of the subject matter but desperately in need of what we called a “hook-minoo” on The Hill Far Above, gently suggests as follows.

“We will give the parties an opportunity to supplement their motion and opposition to bring them into compliance with the Court’s Rules.” Order, at p. 3.

There follows four (count ‘em, four) pages of How To Do It, supplementing the two previous pages.

The case is Eddie Booker, Docket No. 27354-16L, filed 4/4/18.

To avoid embarrassing counsel, I’ll not quote ex-Ch J Iron Mike’s remonstrances.

But I advise counsel to read the order, and to mark, learn and inwardly digest the same, lest they, too, fail to get the “hook minoo.”

I wish ex-Ch J Michael B (“Iron Mike”) Thornton had designated this one, as it’s a cautionary tale for lawyers. Even when the client comes tearing at the last red-hot minute at day’s end of Day Ninety, if there’s anything spousal in play, ask if both spouses are in.

Here’s Cardell S. Jones, Docket No. 3996-17, filed 4/3/18. But it’s not Cardell’s story, rather it’s Johnnie M. Jones; in private life she’s Mrs. Cardell.

IRS issued separate but equal SNODs to Cardell and to Johnnie. But only Cardell petitions, and Cardell’s attorney enters appearance for Cardell only. No mention of Johnnie until long after Day Ninety, when attorney moves to change caption, adding Johnnie.

Attorney claims  “Petitioner gave Counsel his Notice of Deficiency however, Counsel was not apprised of a separate Notice of Deficiency for Petitioner’s wife, Johnnie M. Jones.” Order, at p. 1.

IRS says, so sad, too bad, but Rule 41(a) prohibits any amendment that would confer jurisdiction where none had theretofore been established.

“Petitioner’s counsel asserts that because petitioner and Ms. Jones ‘are married[,] * * * own the same assets[,] and filed their tax returns jointly’, she ‘has an interest in the subject matter and not joining as an indispensable party would impede her ability to protect her interest.’ Although a husband and wife may file a joint tax return, they are treated as separate taxpayers; nothing in section 6212(b)(2) prohibits respondent from sending separate notices of deficiency even though a joint return may have been filed. See Garfinkel v. Commissioner, 67 T.C. 1028, 1030 (1977); Rodney v. Commissioner, 53 T.C. 287, 307 (1969); Dolan v. Commissioner, 44 T.C. 420, 433 (1965).” Order, at p. 2.

Now Johnnie could ratify the petition if she had been named therein to begin with and hadn’t signed.

But that doesn’t cut it here.

Ex-Ch J Iron Mike: “…this case involves not a joint notice of deficiency but separate notices of deficiency issued to petitioner and Ms. Jones. And in the light of the representation by petitioner’s counsel that he was ‘not apprised’ of any notice of deficiency having been issued to Ms. Jones when he filed the petition in this case, we do not see how he could have intended to file the petition on behalf of Ms. Jones as well as petitioner. In addition, the petition makes no mention of Ms. Jones but rather references petitioner only in the singular. In these circumstances we conclude that there was no intent on behalf of petitioner’s counsel to file a timely petition placing Ms. Jones’ tax liabilities…in issue and thus there was no original petition filed on Ms. Jones’ behalf for her to ratify. See Normac, Inc. v. Commissioner, 90 T.C. 142, 148 (1988); Cordero v. Commissioner, T.C. Memo. 1991-9, at *14.” Order, at p. 3.

But wait, there’s more, as the late-night telehucksters say.

“Although petitioner’s counsel claims in the motion that he was not ‘apprised of a separate Notice of Deficiency for Petitioner’s wife, Johnnie M. Jones’, we note that the notices of deficiency attached to respondent’s objection each include a Form 4089-B, Notice of Deficiency-Waiver. The Forms 4089-B each indicate that a copy of the notice of deficiency was sent to the taxpayer’s authorized representative, JGG, whose name also appears on the petition and who also filed the motion presently before us. The reliability of petitioner’s counsel’s foregoing statement is therefore called into question. Moreover, the fact that Ms. Jones’ name appeared on certain attachments to the notice of deficiency issued to petitioner should have alerted petitioner’s counsel that a notice of deficiency may also have been issued to Ms. Jones. As far as the record shows, however, counsel made no effort to determine whether Ms. Jones had also received a notice of deficiency and, having failed to file a petition on her behalf, did not attempt to remedy the dereliction until over a year after filing the petition on petitioner’s behalf.” Order, at p. 3. (Name omitted; there but for the grace of you-know-Whom goes any of us).

Takeaway- The hidden spouse trick can be played by IRS as well as by clients. Ask at intake. Even at the last hour.

Thus spake Gardner N. Marcy and Maria Marcy, 2018 T. C. Memo. 42, filed 4/3/18, and IRS’ counsel. Gardner and Maria tried to bury a million or so of capital gain in a Jenkins & Gilchrest son-of-BOSS, which IRS torched.

Everyone concedes there was no economic substance in the deal, no business was done, no true pooling of labor, goods, money or skill. But has l’il ole’ Tax Court jurisdiction make such a finding in a non-TEFRA deficiency proceeding?

Judge Gale: “We conclude that we do.” 2018 T. C. Memo. 42, at p. 12.

Whatever the litigants agree, they cannot confer jurisdiction on the court; only Congress can do that.

But the phony entity didn’t file a partnership return.

And the concessions plus trial evidence shows there never was a partnership, so Section 6221 doesn’t apply.

Thus Tax Court can redetermine the deficiency and the good-faith defense to the chops.

Three years ago this month I expressed myself hurt that Joan Farr f.k.a. Joan Heffington did not invite me to join Association For Honest Attorneys, 2018 T. C. Memo. 41, filed 4/3/18.

See my blogpost “Why Didn’t She Ask Me?” 4/20/15.

But now that I’ve read Judge Chiechi’s review of the goings-on at that ex-501(c)(3), I’m really glad Joan never asked me.

“Specifically, Ms. Farr used petitioner’s checking account … to make certain purchases from certain department stores and grocery stores, such as Dillard’s, Walmart, Kwik Shop, Kohl’s, Walgreens, and Dillons.  In addition, Ms. Farr used petitioner’s checking account … to make automobile-related purchases from certain vendors, such as QuikTrip, A&A Auto Salvage, Derby Quick Lube, K-15 Auto Salvage, and Meineke.  Ms. Farr also used petitioner’s checking account…to make certain home-related and real-estate related purchases from certain stores, such as Slumberland, Westar Energy, Lowes, T&S Tree Service, Gene’s Stump Grinding Service, Dutch’s, Echostar Dish, Allstate, Roberts Overdoors Inc., Lusco Brick & Stone, MY Construction, and Star Lumber & Supply.  In addition, Ms. Farr used petitioner’s checking account …to make certain payments with respect to a USAA credit card.  Ms. Farr also used petitioner’s checking account…to make a $189.50 payment to an animal clinic and a $7,750 payment to St. John’s Military School for tuition for her son, and another $100 payment to that school.  In addition, Ms. Farr used petitioner’s checking account…to pay $2,200 for the exhumation and DNA testing of Ms. Farr’s father’s remains.” 2018 T. C. Memo. 41, at pp. 7-8.

Oh, and the Eighteenth Judicial District Court of Sedgwick County, KS, entered default judgment against Joan for unauthorized practice of law and consumer fraud.

But Joan is irrepressible.

“Ms. Farr continued…to provide in petitioner’s name unauthorized legal assistance to certain individuals, including herself with respect to, inter alia,  her challenges to the …injunction and the fines imposed by the Sedgwick County district court against her for practicing law without a license, her arrest for hosting an underage drinking party, and a lawsuit filed against a local school district regarding her son.” 2018 T. C. Memo. 41, at p. 14.

Joan and the Association For Honest Attorneys aren’t exempt from tax. Why am I not surprised?

Footnote, 10/10/18: Joan Farr a/k/a Heffington has decided there is no honest attorney left, after 10 Cir. affirms Judge Chiechi in Farr v. Com’r, 18-9002, 10/1/18. I beg to differ, of course. Once again, my colleague Peter Reilly, CPA, brought this to my attention. I only report Tax Court.

I was writing yesterday, 4/2/18, about what I thought was a new dodge, ploy or gambit. See my blogpost “A New Gambit?” 4/2/18.

It seems the gambiteers, if such indeed they are, were willing to stump up the sixty bucks, as their petitions weren’t tossed for nonpayment.

But here’s one who isn’t, and I find it inexplicable.

Crae Robert Pease, Docket No. 21854-17, filed 4/3/18, only wanted 1997 through and including 2016; he didn’t petition for a year presumptively still not concluded.

Why waste time with a petition for twenty (count ‘em, twenty) years of SNODs and NODs, and then fold when it’s time to ante up? Maybe he thought he’d get an answer for free.

What am I missing?

Edited to add, 12/12/20: He didn’t pay. 

We Tax Court aficionados are always on the lookout for the latest dodge, ploy or gambit. I’m seeing a trend lately that has to be one thereof,  but I can’t figure out what the game is.

It seems to be a variant of the flood-the-zone, where the dodger or ployer or gambiteer showers IRS with requests or demands.

The move seems to be to petition many years at once. When these petitions first started coming in the last couple months (hi, Judge Holmes), IRS moved for more definite statement (Rule 34), but those were denied.

So now IRS responds it can’t find a SNOD or NOD issued to the petitioner for any of those years, and the petition is tossed.

Here’s an example, Jason Terell Griggs, Docket No. 26913-17, filed 4/2/18.

JT petitions years 1997 to and including 2017. With a 2017 docket number. Sort of strange to petition a year that wasn’t then over for most individual taxpayers.

Anyway, JT never responds when IRS says they don’t have nothing, so Ch J L Paige (“Iron Fist”) Marvel tosses JT.

What’s going on?

What we all know cannot be told too often, said a much better writer than I. And we have another example today. Here’s Derrick Davidson and Angela Davidson, 2018 T. C. Memo. 38, filed 4/2/18.

It’s Derrick’s story, his and his loved-once Kelley’s. Was the court-ordered division of joint debt deductible alimony? It doesn’t take Judge Vasquez long to get to the point. AR law isn’t exactly straightforward, but debt allocations aren’t treated as alimony. The aim of alimony is to try to balance the moneyed spouse’s resources with the non-moneyed spouse’s needs, but Circuit Court Judge Joanna Taylor finds that Derrick’s income and resources are “…too speculative to set any kind of time frame on when his income would have to improve for it to inure to the benefit of the Plaintiff [Kelley], the issue of alimony will not be held open to allow Plaintiff [Kelley] to reopen this case and file a petition for alimony in the future.” 2018 T. C. Memo. 38, at p. 4.

Derrick is a lawyer. After fifty-one years at this, I can vouch for the fact that, for at least forty of those years, my income has been “too speculative to set any kind of time frame on when my income will improve.” And this year don’t look too much better. What we all know, part one.

Derrick and current spouse Angela took an alimony deduction for one-half of the joint liabilities Circuit Court Judge Joanna Taylor laid upon him. While Derrick and Kelley were jointly and severally liable for these, Circuit Court Judge Joanna Taylor laid them all on Derrick alone, and says Derrick can’t discharge them in bankruptcy. So maybe if loved-once Kelley died, Derrick could seek contribution from her estate, satisfying the Section 71(b)(1)(D) termination-at-death.

“In setting the amount of alimony, the Arkansas courts primarily consider the financial needs of one spouse and the other spouse’s ability to pay.  The Arkansas courts also consider, as secondary factors, the financial circumstances of both parties, the amount and nature of both current and anticipated income of both parties, the extent and nature of the resources and assets of each party, and the earning ability and capacity of both parties.” 2018 T. C. Memo. 38, at pp. 10-11. (Citations omitted).

AR law was apparently amended after the year at issue to provide that alimony terminates at death, which is nice after all the ambiguity I’ve blogged in the past, but Judge Vasquez finds this was a property settlement, not alimony.

OK, but unless we are AR lawyers specializing in family law, what do we all know?

Judge Vasquez will tell us, as he lets Derrick off from the accuracy chops.

Derrick told his CPA the whole story, and they reasonably relied on the non-discharged-in-bankruptcy language Circuit Judge Joanna Taylor put in her amended order.

Besides, “Petitioner is an attorney, but he does not practice tax law.  See Bursten v. United States, 395 F.2d 976, 981 (5th Cir. 1968) (‘We must note here, as a matter of judicial knowledge, most lawyers have only scant knowledge of the tax laws.’).” 2018 T. C. Memo. 38, at p. 167, footnote 8.

Maybe no penalty, but they can still practice in Tax Court. But we all know that.