Exceptional Circumstances in Discovery - Not in Stein.

In United States v. Stein, 2007 TNT 32-19 (S.D.N.Y. 2007), the Court denied the Government’s motion to depose certain witness that live abroad. The denial was based on the Court’s reading of Federal Rule Criminal Procedure 15, (hereinafter referred to as “FRCP 15”). Being that Tax Court Rules contain similar language and the Tax Court decisions/orders are infrequently reported, the district court’s decision is worth taking “a look at”. Continue Reading...
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U.S. v. Davenport, -- F.3d - (5th 2007) - Is it Res Judicata or is it collateral estoppel

If asked how many of us could succinctly tell a client the difference between res judicata and collateral estoppell? Well it appears that the 5th Circuit and the 10th Circuit have trouble differencing these judicial terms as well as the rest of us. Unfortunately for Davenport, the 5th Circuit’s definition of res judicata caused them to be found liable for the gift’s taxes under § 6324 while a co-personal representative of the same estate may be off the hook.

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Call it the Government just being obstinate or worse call it for what it is - just plain dumb idea - Klamath Strategic Investment Fund, LLC v. United States, --- F.Supp.2d ----, 2007 TNT 66-9 (E.D.Tex.. 2007). (Part II).

Well the Government asked the Court to reconsider its opinion. Let’s just say for the Government that said motion was not a wise choice but for taxpayers in the Fifth (and maybe the Eleventh) they say “Thank You”!!!

Not only did the Court not reconsider its opinion but it further elaborated as to why the plaintiff’s were entitled to deduct operational and interest expenses. Bottom line – It looks like the taxpayers did a lot better than they would have if they had agreed to the settlement initiative offered by the IRS.
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Multiple Issues - When can you "rely" on the IRS; Did the Tax Cheat really beat the system; Jenkens & Gilchrist; and the 40% penalty issue surfaces again!

This past week there was a lot of interesting news that came around. The first issue really came out two weeks ago in an order issued by the United States Court of Claims in Evergreen Trading, LLC v. United States. I did not consider it worth mentioning it until I overheard a conversation between two distinguished tax planners with one of them bemoaning the IRS’s lack of guidance on a particular subject but then bragging about how he conducted a search on the IRS’s web-site to ascertain the IRS’s position which allowed him to render advice to the client. Continue Reading...