Estate of Kanter v. Commissioner, T.C. Memo. 2007-21

One of the most highly anticipated decisions was rendered today. The opinion is 457 pages long and as to the issue of fraud, the Tax Court (Judge Haines) found for the IRS.  As we are aware the Supreme Court in Ballard v. Commissioner, 544 U.S. 40 (2005) reversed the Eleventh Circuit and the Seventh Circuit because the United States Tax Court was found not to have followed T.C. Rule 183.  

By order dated July 10,2006, the Eleventh Circuit instructed the Tax Court as follows:

"In view of the prolonged history of this case, however, we remind all involved that certain facts control. This case cannot be retried as the witnesses are dead. Judge Couvillion heard the witnesses, gave careful consideration to all evidence, made credibility evaluations and rendered a detailed report (now referred to as the "original" report). The law requires that Judge Haines give "due regard" to the credibility determinations of Judge Couvillion, that his findings are correct unless manifestly unreasonable."

In his opinion Judge Haines cites to this language of the Eleventh Circuit. Judge Haines  then attempts to demonstrate that Judge Couvillion's findings are manifestly unreasonable. See page 228["manifestly unreasonable certain of the credibility determinations and associated legal conclusions in the STJ report"].   

Because the opinion is 457 pages long, I have not had the opportunity to fully read and assimilate the opinion. But, I can render this observation: For the integrity of the Tax Court, I hope Judge Haines is correct because as the sun rises from the east and sets to the West, this case will be appealed. The Eleventh Circuit will review this case and if Judge Haines's statement is incorrect one can be sure that the Eleventh Circuit will not only take him to task but will severely criticize the forum that all tax litigators fully respect - the United States Tax Court. 


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