Hersch v. Commissioner

1992 T.C. Memo. 222, 63 T.C.M. 2763, 1992 Tax Ct. Memo LEXIS 256
CourtUnited States Tax Court
DecidedApril 15, 1992
DocketDocket No. 18049-90.
StatusUnpublished
Cited by4 cases

This text of 1992 T.C. Memo. 222 (Hersch v. Commissioner) is published on Counsel Stack Legal Research, covering United States Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hersch v. Commissioner, 1992 T.C. Memo. 222, 63 T.C.M. 2763, 1992 Tax Ct. Memo LEXIS 256 (tax 1992).

Opinion

MELVIN HERSCH AND FLORENCE HERSCH, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Hersch v. Commissioner
Docket No. 18049-90.
United States Tax Court
T.C. Memo 1992-222; 1992 Tax Ct. Memo LEXIS 256; 63 T.C.M. (CCH) 2763;
April 15, 1992, Filed

*256 An order denying petitioner's motion will be issued.

Sidney Eagle, for petitioners.
Wendy S. Sands, for respondent.
BEGHE

BEGHE

MEMORANDUM OPINION

BEGHE, Judge: This opinion deals with an "Application For An Order of Protection" by Melvin Hersch (petitioner). We will treat petitioner's submission as a motion under Rule 103. 1

Petitioner wishes to avoid answering almost all of respondent's requests for admissions.2 Respondent argues that the matters for which she seeks admissions were established as facts in two cases in which petitioner was a party. In United States v. Philatelic Leasing, Ltd., 601 F. Supp. 1554 (S.D.N.Y. 1985), affd. 794 F.2d 781 (2d Cir. 1986), the District Court and the Court of Appeals held that the Government was entitled to an injunction under section 6700 against further "stamp master" tax shelter activities by petitioner. *257 In Hersch v. United States, 685 F. Supp. 325 (E.D.N.Y. 1988), another District Court held that petitioner was not entitled to a complete refund of a gross overvaluation penalty under section 6700, but reduced the amount of the penalty from $ 234,600 (the gross income derived from the tax shelter activity) to $ 23,400 (10 percent of the gross income derived from the tax shelter activity).

*258 In her notice of deficiency in this case, respondent determined that a successor entity to Philatelic Leasing -- Charterhouse Leasing, Ltd. -- made distributions to petitioner of $ 64,600 in 1982 and $ 104,000 in 1983, that the distributions constituted taxable income to petitioner, that petitioner did not report the income, and that failure to report the income constituted fraud. Respondent states that she requested the admissions to avoid protracted controversy on issues that had previously been litigated.

Petitioner makes three basic arguments for the proposition that the requests to admit were improper. First, petitioner complains that the requests have not "been limited to matters of a factual nature". For instance, petitioner objects to respondent's request that he admit "Philatelic Leasing was thinly capitalized throughout its existence." Petitioner contends that the request improperly requires him to draw a legal conclusion regarding the capitalization of Philatelic Leasing, a company in which petitioner had an interest. Petitioner also objects to this request to admit: "The transfer of an uncollateralized loan to petitioner rendered Philatelic unable to pay its tax *259 liabilities." Petitioner argues that the terms "transfer", "loan", and "uncollateralized" either are ambiguous and thus open to many interpretations, or are technical words whose meaning can be divined only by the Court. Petitioner makes similar arguments regarding the terms "arm's length", "tax shelter", and "purported leasing". Petitioner states that answering the requests for admission "will result in conclusions of law and are such that they can only be made by the ultimate trier of fact". Petitioner asserts that the admissions are improper because they go to "the heart of the dispute". Second, petitioner asserts that respondent should have used some other method of discovery to learn petitioner's position on these issues. Finally, petitioner contends that the matters covered by the requests are not relevant.

Petitioner's arguments are crystallized by the following passage from his motion papers:

The purpose of a notice to admit is to attempt to eliminate from contention those factual matters which can be readily demonstrated and about which there can be no dispute. It may not be used in lieu of other disclosure devices and it may not be used to relate to technical, detailed*260 and scientific matters which are the proper subject of an expert witness.

Petitioner cites no authority for this proposition. 3 Our reading of the authorities is that petitioner's statement of the law is oversimplified and misleading. Rule 90(a) states that a party may seek an admission regarding "statements or opinions of fact or of the application of law to fact" (emphasis added). A notice to admit may relate to any matter, factual or not, disputed or not, provided the request does not ask for admission of an abstract legal proposition. Estate of Allensworth v. Commissioner, 66 T.C. 33 (1976). Admissions may be used, within the limits of Rule 90 itself, even when other discovery devices are available. Id. We have found no binding authority that places limitations on the subject matter of a request for admission, other than that it may not ask for an admission about abstract principles of law and may not be overly burdensome.

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Bluebook (online)
1992 T.C. Memo. 222, 63 T.C.M. 2763, 1992 Tax Ct. Memo LEXIS 256, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hersch-v-commissioner-tax-1992.