The Court issued two 2 full opinions and 8 Memorandum opinions through October 10, 2008. I will be summarizing each of the rulings in my next ten posts. You can click on the case name for the full text of the opinions.
Patrick S. Arnold v. Commissoner – Ah, the perils of Tax Court. The taxpayer filed his tax returns late (after a tax court petition had been filed and the case had been docketed) and claimed sizable charitable contribution deductions and Schedule C expense deductions on them. Predictably, IRS counsel disallowed a substantial portion of the claimed expenses on the grounds that the taxpayer lacked receipts to prove that he had incurred the expenses.
But even without the proof, the taxpayer and his attorney proceeded to trial.
Big boo boo!
Judge Michael B. Thornton lambasted the taxpayer’s attorney:
The record is sparse. Petitioner’s counsel was unprepared at trial, called no witnesses, and filed neither a pretrial memorandum nor a posttrial brief as ordered. The evidence consists almost entirely of the parties’ limited stipulations and the testimony of respondent’s revenue agent.
Lesson: The IRS’s notice of deficiency is presumptively correct. Consequently, the burden of proof is on the taxpayer to show that it is in error. If you’re an attorney and you decide to make your case to a tax court judge, it is wise to assume that the Judge knows this very basic fact of tax law. In short, be prepared or settle the case with IRS counsel. The last thing you want as an attorney is a published tax court opinion announcing to the world your incompetence.