Today’s designated hitter marks the end of a source of blogfodder I could really use, now that Big Banging has become de rigueur at The Glasshouse at 400 Second Street, NW. And it’s The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Inveterate, Ineluctable, Indefatigable, Illustrious, Ineffable, Imperturbable, Insurmountable, and Incontrovertible Foe of the Partitive Genitive, Old China Hand and Ace Silt Stirrer, Judge Mark V. Holmes.

Here’s the end of the road for Eugenio Espinoza Martinez, Docket No. 29472-12, filed 5/10/17. Remember Eugenio, a former contestant in the Taishoff no-prize “best excuse” competition? Well,, in case it slipped your mind, here’s some light refreshment for your recollection.

“Hitting the Superfecta,” 3/26/15; “Hitting the Superfecta – Part Deux,” 3/16/16; and “The Prisoner’s Friend,” 8/18/16.

With refreshed recollections, you now recall that Eugenio was hanging ten in a correctional facility in The Lone Star State, and unlikely to emerge therefrom any time soon.

Helpful Judge Holmes tries “to develop and resolve” Eugenio’s tax beeves, rather than wait until Eugenio returns from the Stony Lonesome.

But it’s no go.

“After slowly working through the stipulation and summary-judgment process, the Court ordered Mr. Martinez to file written testimony stating why he disagrees with the notice of deficiency as to his 2009 tax year. We gave him a deadline of March 13, 2017. A check of the docket shows that he has not filed such testimony….” Order, at p. 2.

Judge Holmes laments that subpoenas ad testificandum from Federal Courts directed to State correctional institutions present procedural, and more to the point, financial, difficulties. And the amounts at issue are small. The two years at issue here involve little more than $5K.

So Eugenio is done, and IRS gets a Rule 123(a) default for the deficiencies.

And I get to find some more blogfodder. This is one tough gig, let me tell you.

Today’s designated hitter from STJ Daniel A. (“Yuda”) Guy revives the old cliché. In the case of Steven Schwartz & Wendy Schwartz, Docket No. 4354-16L, filed 5/9/17, it really pours.

First, Steve & Wendy late-filed their return for the year at issue, reported hefty tax due but didn’t pay, either with the return or after notice and demand from IRS. And IRS threw in late-filing, nonpayment, and no estimateds chops.

Steve & Wendy don’t pay, the NITL follows, and Steve & Wendy drop a 12153 into the Appeals hopper. They give Appeals a Form 433-A but with no back-ups, and a Form 656. Appeals bounces their CDP, but during all the back-and-forthing, IRS gives Steve & Wendy a SNOD.

IRS claims their self-reported tax was $7K low. But they can have a further late filing  and negligence chops.

Steve & Wendy don’t petition the SNOD.

To begin with STJ Yuda says the $7K is off the table, along with the chops thereto appurtenant. No petition from SNOD, no jurisdiction.

As for the chops arising from the unpaid self-reported tax, while Steve & Wendy said they wanted to dispute those in their 12153, they had a chance to dispute those at Appeals, but didn’t.

“Petitioners stated in their petition that they wish to dispute penalties for the [year at issue]. The record shows, however, that petitioners failed to place those penalties in dispute during the administrative hearing. Consequently, they are precluded from disputing their liability for penalties in this proceeding. See Thompson v. Commissioner, 140 T.C. 173, 178 (2013) (‘A taxpayer is precluded from disputing the underlying liability if it was not properly raised in the CDP hearing.’); sec. 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.” Order, at p. 4.

As for the OIC, by not producing back-ups for their Form 433-A, that’s off the table.

IRS can levy, but only for the self-reported and chops.

Apparently New Jersey’s real estate tax assessors fall short of the mark in Tax Court, but Los Angeles’ valuations are right on the money.

Compare and contrast Judge Ruwe laying a blast on the Garden State’s valuers in my blogpost “Quanto? Il Prezzo,” 7/24/12, with STJ Lewis (“That Fine Name”) Carluzzo’s encomium to the Los Angeles County Office of the Assessor in Sharon M. Nielsen and Steve L. Nielsen, 2017 T. C. Sum. Op. 31, filed 5/8/17.

S&S were claiming depreciation on some LA rental properties, and apparently they got some of their depreciation deductions allowed. They started with a rookie error, taking depreciation based upon their basis in both land and building. Land is not depreciable because it does not wear out.

So once S&S concede the rookie error, the question is what portion of the total value of each property is the land (non-depreciable) and the improvements (buildings and fixtures, which are)?

IRS goes with the LA County appraisers, but S&S claim the LA guys go high on land and low on improvements. S&S put in an October 4, 2012 billet doux from the chief deputy assessor to the County exec, talking about upgrades to the assessment system.

STJ Lew: “Petitioners assert, among other things, that the Los Angeles County Office of the Assessor’s data ‘is extraordinarily inaccurate’ and internally inconsistent.

“We have carefully reviewed the record, including the October 4, 2012, letter and a document titled ‘Parcel Detail–Los Angeles County Assessor Portal’ on which petitioners rely, and do not share their concerns with respect to the reliability or unreliability of the Los Angeles County Office of the Assessor’s assessments.

“Nor do we give much weight to the after-the-fact allocations that petitioners advance in this proceeding.  Although we acknowledge that the owner of property is qualified by his ownership alone to testify as to its value, see Dehmer Distributors, Inc., v. Temple, 826 F.2d 1463, 1466 (5th Cir. 1987); United States v. Laughlin, 804 F.2d 1336, 1340 (5th Cir. 1986); Dietz v. Consolidated Oil & Gas, Inc., 643 F.2d 1088, 1094 (5th Cir. 1981); Kestenbaum v. Falstaff Brewing Corp., 514 F.2d 690, 698 (5th Cir. 1975), modified on other grounds en banc, 575 F.2d 564 (5th Cir. 1978), we are aware of no authority that suggests that the qualification extends to an allocation of the value of property between land and improvements.” 2107 T. C. Sum. Op. 31, at p. 8.

Besides, when S&S bought one of the properties, they got a professional appraisal that showed the ratio of land to building not out of line with what the County gang were doing. I will comment that the appraisal was done nine years before the year at issue.

Howbeit, apparently LA does it better than NJ. In Tax Court, anyway.

“My Well of English Seems To Be Permanently Defiled”

Last week I filled in a blogpost with seventy-year-old British slang. Today I can only say “Whassup wit’ that?” This remark has to be completely obsolete by now, but I am without alternative.

Here’s that Obliging Jurist Judge David Gustafson being obliging as usual.

An example. Woodie H. Powell, Docket No. 22250-16L, filed 5/8/17. And there are two orders here with the same docket number.

In the first, Woodie wants a Wagner toss of his CDP petition, IRS gives anihil obstat and Judge Gustafson obliges.

But within ten days, IRS is back with a Rule 162 vacation, and it’s Woodie’s turn to consent, so the toss is out and Woodie’s petition (and case) is back in.

OK, might be a mere “whoops!”

Except.

See Precision Plumbing of Mississippi, Docket No. 5881-16L, filed 5/8/17; see also Charles E. Patton & Linda D. Patton, Index No. 30250-15L, filed 5/8/17; see also Franklin Dyche & Elizabeth Dyche, Docket No. 13555-26L, filed 5/8/17; see also Gregory Courtney, Docket No. 8895-16L, filed 5/8/17; see also Ronald T. Atkinson, Docket No. 25512-15 L., filed 5/8/17; see also Cook & Riley, Inc., Docket No. 32051-15L, filed 5/8/17; see also Arthur Jenkins, Docket No. 1058-16L, filed 5/8/17; see also Jeff Jones, Docket No. 30460-15 L, 5/8/17. No links; you can check this out for yourselves.

Nine (count ‘em, nine) cases, all Wagnerized by motion made the same date and order issued same date, and all unWagnerized by motion made the same date and order issued same date.

Was Wagner overruled, and did I miss it somehow? Did IRS claim a bunch of deficiencies or non-assessables were paid, when they weren’t? Was there a Rev. Proc., Rev. Rul., Notice, statutory enactment or executive order that slipped by while I wasn’t looking?

I crave enlightenment.

Or, Jersey Bounced

I need not complete the cliché. And I’m sure I need not add “There but for the grace of you know Whom.”

I won’t summarize, paraphrase, nor will I comment further on Clark J. Gebman & Rebecca Gebman, Docket No. 15941-12, filed 5/5/17, than to say that there is no such thing as casual advice from an attorney; that even when no client-attorney relationship was created or intended, an attorney is chargeable with the full force of the Rules of Professional Responsibility (with or without one’s own State’s variations thereon); that judges are protective of non-attorneys, going to helicopter-like extremes to prevent any imposition upon the layperson; and that, reader, this could happen to you.

The “bounce” to which I refer is RAF slang from seventy-plus years ago, meaning an attack, usually from out of the sun, by enemy fighters, unseen until they strike, usually with bad results to the targets of the bounce.

Remain vigilant. Especially when trying to do a good deed.

The Big Bangers at 400 Second Street NW really were working overtime yesterday, 5/4/17. Not one single order of 125 (count ‘em, 125) issued that date was worthy of a blogpost.

So I did what I have often been encouraged or directed to do: I said (and wrote) nothing.

But today there appears an item that at least satisfies the criterion that General Galieni set so long ago as the Taxis of the Marne brought up reinforcements: “Eh bien, voila au moins ce qui n’est pas banal!”

It’s Estate of James P. Keeter, Deceased, Garry L. Holton, Jr., and Thomas W. Schaefer, Co-Executors and Julie L. Keeter, Docket No. 6771-16, filed 5/5/17.

You remember the sad tale that even in death the claws of TEFRA still grip the late James P. See my blogpost “Inside, Outside – Redivivus,” 4/3/17.

Well, Ch J L Paige (“Iron Fist”) Marvel wanted the Co-ex’rs and Julie to join IRS in briefing whether the various penalties are computational, in light of Woods, therefore not subject to deficiency jurisdiction as nonassessable.

The Co-ex’rs and Julie respond.

“…petitioners filed a Motion for Leave To File a Short Brief which the Court will recharacterize as petitioner’s letter. In that letter petitioner state they wish to be given leave to file a short brief as to why their pending motion to restrain the tax assessment made against them… should be sustained even if the Court finds that it lacks jurisdiction in this matter.” Order, at p. 1.

I give counsel for the Co-ex’rs and Julie a Taishoff “Best of luck with that one,” second class.

This is a very rare occurrence in Tax Court. I can remember only one prior instance, as to which see my blogpost “The Carousel Is Closed,” 10/10/14, anent the mystery fact witness in the great Amazon case. In fact, Tax Court even issued a press release on that occasion.

So when I was scrolling and scraping through today’s post-Big Bang flotsam, in search of blogfodder when neither opinion nor designated hitter swam into my ken, I was surprised to find Charlotte Dow Manning, Docket No. 3393-16, filed 5/3/17.

Charlotte gave Judge Chiechi a most unusual motion.

“…this case was called from the calendar for the Trial Session of the Court at Boston, Massachusetts. There was no appearance by or on behalf of petitioner. Counsel for respondent appeared and filed with the Court a motion to dismiss for lack of prosecution…. The Court orally indicated that respondent’s motion would be granted.

“…this case was recalled. Petitioner and counsel for respondent appeared and were heard. Petitioner then orally moved to seal the record and to vacate the courtroom….” Order, at p. 1.

Not even the great Jeff Bezos asked for the whole record to be sealed. And he asked for an empty courtroom in advance.

Judge Chiechi was not amused.

After Charlotte refused to sign the Rule 91(f) stip of agreed facts, to which three exhibits were attached (and Judge Chiechi made special mention of the three exhibits), Judge Chiechi tosses Charlotte’s petition for want of prosecution.

And Judge Chiechi doesn’t vacate the courtroom.

I was lamenting the shortage of blogfodder earlier today, 5/2/17, as the order clerks at The Glasshouse at 400 Second Street, NW, seem to have gone in for the Big Bang Theory, an explosion of opinions, decisions and meaty orders one day, and nothing but banalities for days thereafter.

But as I settled into my easy chair after back-to-back meetings of my American Legion Post (9/11 Memorial, NY Post 2001), which we hold on board a retired warship, moored to this Minor Outlying Island off the coast of North America, a piece of nautical apocrypha was brought to mind by the venue and Louis J. Baumgartner, Docket No. 6708-17, filed 5/2/17.

You remember Lou (“Too Bad About The Spelling”) J., of course. You do not? Sad. But take heart and see my blogpost “Oh, Ch J Iron Fist, You Crafty Devil,” 11/10/16.

In that tale, Lou (“TBATS”) J. was joined by Beth A. in this protester rap, and got tossed by Ch J L Paige (“Iron Fist”) Marvel.

Well, in today’s installment, Lou (“TBATS”) J., tout seul, tries it on again with the identical rap and the same result.

The nautical apocrypha?

First, the facts. During the epic Battle of Flamborough Head in 1779, Admiral John Paul Jones, USN, commanding USS Bon Homme Richard (ex-French Duc De Duras), his ship on fire, sinking, half his crew dead or wounded, made his immortal reply to the demand for surrender by the captain of HMS Serapis: “Sir, I have not yet begin to fight!”

The apocrypha? As Jones’ words rang out into the pages of history, a mortally-wounded sailor, black with gunpowder and gushing blood, yelled from the scuppers “Man, you ain’t got the word yet!”

Ch J Iron Fist echoes his words today.

No, today’s offering involves neither LeMaître nor Hubble, and definitely not the long-running sitcom to which my nearest and dearest is addicted. Rather, it’s the story of the hard-working order clerks at 400 Second Street, NW, who unload a mass of opinions and decisions on one day, and leave the poor blogger to scrounge and scrabble for copy for days after.

Yesterday I saw a plethora of post-worthy material. Today I have only the odd eccentric and the protest du jour among the file-status-reports and pay-the-sixty-bucks run of the mill orders.

I’ll spare you.

But dear order clerks, please cut me some slack. Stop adhering to the Big Bang Theory.

A refund is when you get back something you paid. Sounds simple, right?

Well, not so simple for Panagiota Pam Sotiropoulos, 2016 T. C. Memo. 75, filed 5/1/17. Remember Pam? No? Well, check out my blogpost “Do We Have Jurisdiction, Or What?” 5/5/14. All Judge Lauber decided two years ago was that the Court did have jurisdiction, leaving resolution of Pam’s UK tax refund for another day.

That day has come.

Pam paid withholding tax in the UK for the years at issue. Over there it’s called PAYE, but the idea is the same. Pam claimed overpayments due to some write-offs from a UK movie deal that HMRC (that’s the UK’s revenooers) claim is sketchy. Pam got the withholding back, but HMRC is still not convinced.

We know that when a US taxpayer takes the foreign tax credit but gets a refund, Section 905(c) says, “tell IRS and we’ll decide what you owe.” No SNOD necessary, just notice and demand from IRS.

“Petitioner contended that these sums had not been ‘refunded’ because her ultimate entitlement to refunds remained under investigation in the United Kingdom.  She accordingly did not notify the Secretary (by filing amended returns or otherwise) pursuant to section 905(c)(1).” 2017 T. C. Memo. 75, at p. 2.

IRS had given Pam a SNOD and a Section 6662(a) chop, but now they want to take back the SNOD, claim Section 905(c) controls, and oust Tax Court of jurisdiction.

Moreover, IRS is willing to drop the chops if it gets summary J tossing the case on Section 905(c) grounds, except maybe the amount of the tax due from Pam can be decided, along with penalties, in a Rule 155 beancount.

Judge Lauber isn’t so sure. “It is not clear that we have jurisdiction to determine the precise amounts of the refunded taxes–section 905(c)(1) provides that ‘the Secretary * * * shall redetermine the amount of the tax’–or of the asserted penalties.  But we need not address these issues in ruling on respondent’s motion for partial summary judgment.  Petitioner’s liability (if any) for penalties will be resolved in further proceedings after disposition of respondent’s motion for partial summary judgment.”  2017 T. C. Memo. 75, at p. 9, footnote 5.

Maybe IRS would have done better to stick with the SNOD. Without getting the numbers done, Pam may have a shot on a CDP, claiming she had no chance to dispute the numbers or the penalty.

Howbeit, ordinary language prevails. Pam got the cash in hand from HMRC, and if HMRC later determines that the movie deal was a prohibited shelter, well, them’s the breaks, Pam.

Or more elegantly, Judge Lauber: “Petitioner contends that rejection of her argument may result in ‘double taxation,’ contrary to the policies underlying the foreign tax credit and the U.S. U.K. income tax treaty.  She bases this contention on the assertion that, if she is required ‘to repay refunds previously received from H.M.R.C. * * * , and such repayments are considered creditable foreign taxes * * * in the year of payment, [her] personal circumstances are such that [she] would obtain no U.S. tax benefit from such credits.’

“Petitioner offers no explanation or factual support for this vague assertion, but it is unpersuasive in any event.  It often happens that taxpayers, because of individual circumstances or passage of time, are unable to derive full benefit from contingent tax assets they have booked or expect to receive, such as carryforwards of foreign tax credits, net operating losses, passive losses, or investment interest. This does not demonstrate any structural defect in the Code and does not give rise to double taxation.’  It ‘simply reflects the facts that the future is unpredictable and that taxable income must be determined on an annual basis.’” 2017 T. C. Memo. 75, at p. 18 (Footnote omitted, but it says that the Section 6689(a) penalty for not telling IRS about the refund is nothing to do with whether there was a refund; IRS hasn’t moved for summary J on the Section 6689(a) chop, and anyway, that chop is nonassessable and thus Tax Court has no jurisdiction to deal with it).

So Tax Court says Pam got a refund.

Do we have jurisdiction, or what?