The Jarndyce Case, Judge Mark Holmes, and the Taxation Literary Tradition

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We welcome back guest blogger Bob Kamman. Although Bob has practiced tax law in the Phoenix area for many years, he began his studies and his career as a journalist. Today, he draws from the Tax Court judge most likely to make literary references to provide us with a literary background on one of Judge Holmes’ opinions as well as some additional literary happenings at the Court. Because the supporting references needed for this post differ from those in most of our post, Bob has used footnotes which can be found, appropriately, at the end of the post. Keith

Lawyers and law students can be categorized as those who already recognize the name Jarndyce, and those who eventually will. Tax Court Judge Mark Holmes falls into the first category, as shown by his reference in his “undesignated” order of October 23, 2017, in an estate-tax case filed in 2005.

“This complex case,” Judge Holmes wrote, “was on the Court’s December 10, 2007 trial calendar for Miami, Florida, and stems from the death of Mr. Boulis back in 2001. Related cases sprawled over two continents and several different courts, but the last pieces were several peripheral issues in the probate proceeding that remained on appeal in the state-court system until last year. The final state-court issues are about fees appropriately charged to the estate during this Jarndyce v. Jarndyce – like litigation. The parties report mediation ongoing. If this mediation succeeds in producing a settlement, it remains likely that the liquidation of administrative expenses will be the last remaining chores in this long-running case.”

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The reader will not find Jarndyce in any published case reports, nor with a Lexis search. Rather, its story is one of the related plots in the classic novel by Charles Dickens, “Bleak House.” To understand the English legal system of the 19th Century, much of which provided the framework for American procedure, one must read Dickens. He was not a lawyer, but as a young man he worked as a court reporter, as in both meanings: Shorthand transcription of court proceedings, and newspaper coverage of trials. The fictional Jarndyce case may be an exaggeration of how prolonged litigation can deplete an estate, but it was a familiar story to readers on both sides of the Atlantic in 1853.

I searched other Tax Court orders and decisions available at the Court’s website. Surprisingly, this is the only reference to Jarndyce. I searched for Dickens. There were petitioners named Dickens, and petitioners with an address on Dickens Street. But the only other Dickens reference came from an opinion by the same Judge Holmes.

That Summary Opinion was written in 2004, and gained some media attention at the time. The case involved a playwright who had not yet shown a profit. Judge Holmes wrote his 28-page opinion in two acts. Act 1 was “Background” and Act 2 was “Discussion.” Next time you research Section 183, this case would be a good starting point. But for everyone, Judge Holmes’ “Prologue” is like Dickens’ “Christmas Carol.” It can be read and enjoyed, one taxable year after another. Before the start of another busy filing season may be the best time to renew our appreciation:

* * *

“Taxation! Wherein? And what taxation?”

       Henry VIII act I, sc. 2 [Footnote *1]

Prologue

It is a truth little remarked on by scholars that tax law has been a fount of literature for 5,000 years. The oldest literary work still extant–the Epic of Gilgamesh–is a long narrative of a friendship begun during a protest against government exactions.[*2] In more recent times, some of our language’s most notable authors have used fiction to delve into tax policy: consider Shakespeare’s criticism of the supply-side effects of a 16-percent tax rate; [*3] Swift’s precocious suggestion of a system of voluntary self-assessment; [*4] and Dickens’ trenchant observation on the problems of multijurisdictional taxing coordination:

[The town’s] people were poor, and many of them were sitting at their doors, shredding spare onions and the like for supper, while many were at the fountain, washing leaves, and grasses, and any such small yieldings of the earth that could be eaten. Expressive signs of what made them poor, were not wanting; the tax for the state, the tax for the church, the tax for the lord, tax local and tax general, were to be paid here and to be paid there, according to solemn inscription in the little village, until the wonder was, that there was any village left unswallowed. [*5]

Taxation has also sparked creativity in newer literary genres. See It’s a Privilege on Urinetown: The Musical (RCA Victor) (musical re excise tax); J. Kornbluth, Love and Taxes (staged monologue re income tax) (unpublished manuscript, 2003). Tax collecting jobs have helped finance the careers of such notable revenue agents as Chaucer,[*6] Paine,[*7] and Hawthorne.[*8] And tax records are a famously important source of information for scholars of both ancient civilizations [*9] and modern authors.[*10]

This case follows in that long, but little-noted, tradition. Petitioner, N. Joseph Calarco, is a respected professor of theater at Wayne State University in Detroit. He also writes plays. On his 1997 tax return, he deducted his playwriting expenses as a Schedule C business loss. Respondent disallowed both the loss and several itemized deductions that petitioner took on his Schedule A. These disallowances created a deficiency of $3,869 to which respondent added an accuracy related penalty of $774. Petitioner, following the lead of Henry VIII’s first Queen Katherine, [*11] filed a timely petition in this Court. . . .

* * *

Judge Holmes added an Epilogue to his opinion in the Boulis case. I had read it several times before I realized that “survive” rhymes with “155.”

Epilogue

Dramatists used to finish with some rhymes,

Mostly iambs with a pinch of dactyly,

But in these more prosaic times

Works usually end more matter-of-factily.

In our Court, though, the oldest ways seem somehow to survive–

A decision will be entered

under Rule 155.

FOOTNOTES:

1 This case was heard pursuant to the provisions of Internal Revenue Code section 7463. Section citations are all to that Code. This decision is not reviewable by any other court, nor should the opinion or its literary references be cited as precedent in future proceedings.

2 David Ferry, “Gilgamesh, A New Rendering In English Verse”, 14-15 (Farrar, Straus, and Giroux 1992).

 

3 Shakespeare, “Henry VIII”, act I, sc. ii. (“A sixt part of each? / A trembling contribution! Why, we take / From every tree, lap, bark and part o’ th’ timber; / And, though we leave it with a root, thus hack’d, / the air will drink the sap.”)

4 Jonathan Swift, Gulliver’s Travels, A Voyage to Laputa, Etc. 162 (W. W. Norton & Co., Inc., New York, 1964) (1726). (“The highest tax was upon men who are the greatest favourites of the other sex, and the assessment according to the number and natures of the favours they have received; for which they are allowed to be their own vouchers. . . . The women were proposed to be taxed according to their beauty, and skill in dressing; wherein they had the same privilege with the men, to be determined by their own judgment.”) See generally Levmore, “Self-Assessed Valuation Systems For Tort and Other Law”, 68 Va.L.Rev. 771, 779 (1982).

5 Charles Dickens, “A Tale of Two Cities” 119 (Everyman’s Library, Knopf, 2002) (1859).

6 While Controller of the Customs, “[t]here was great variety in what [Chaucer] had to do, and he came in contact with a variety of people. He must have seen infinite venality, witnessed colorful subterfuges, heard improbable and ridiculous dodges and lies and excuses.” Donald Howard, “Chaucer” 212 (1987).

7 “I act myself in the humble station of an officer of excise, though somewhat differently circumstanced to what many of them are, and have been a principal promoter of a plan for applying to Parliament this session for an increase in salary.” Letter of Thomas Paine to Oliver Goldsmith, December 21, 1772, Reprinted in George Hindmarch, “Thomas Paine: The Case of the King of England And His Officers of Excise”, Published by the Author in 1998, Surrey, England.

8 Indeed, it is reported that Hawthorne once contemplated writing sketches entitled “Romance of the Revenue Service” and “an ethical work in two volumes on the subject of Duties”, though sadly neither project was ever undertaken. Randall Stewart, “Nathaniel Hawthorne, A Biography” 53 (Archon Books, 1970).

9 See, e.g., Tonia Sharlach, “Provincial Taxation and the Ur III State” (2004).

10 See A. L. Rowse, “William Shakespeare, A Biography” 280-281 (1963) (use of obscure records to trace author’s movements); Vitale v. Commissioner, T.C. Memo. 1999-131 (use of obscene records to trace author’s movements).

11 “These exactions, whereof my sovereign would have note, they are most pestilent to the bearing; and, to bear’ em the back is sacrifice to the load.” “Henry VIII”, I. ii. 11. 47-50.

 

 

Comments

  1. Bob,
    Still my favorite Judge Holmes literary opinion is the 80-page memorandum opinion in Estate of Hurford, T.C. Memo. 2008-278, which begins as follows:

    “It is a truth universally acknowledged, that a recently widowed woman in possession of a good fortune must be in want of an estate planner.

    “Thelma Hurford had devoted her life to family and friends, leaving the management of the finances to her husband Gary. When he died suddenly, she had to learn what they owned and decide what to do with it. While she struggled with this burden, she
    was herself stricken with cancer and so had to arrange the accelerated planning of her own estate. Two attorneys vied for her attention and she chose Joe B. Garza.

    “She lost her life to the cancer. We must now decide how much of her estate will be lost to taxes.”

    When I read the opening sentence of this opinion, I nearly fell out of my chair laughing. Of course, Judge Holmes was doing an homage to the opening of Jane Austen’ Pride and Prejudice, which begins:

    “It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife.”

  2. Lavar Taylor says:

    I will never forget the task of having to read Bleak House in a college literature class. Our professor reminded us that it was not originally published in novel form but was instead published in (monthly?) segments. I’m sure it was less painful to read in segments than as a novel.

    For those interested in recent novels involving a tax attorney, I highly recommend two novels by Nelson DeMille: The Gold Coast and The Gate House. DeMille is one of my favorite authors.

  3. Jim Malone says:

    Nicely done, but god I hated Dickens.

  4. Norman Diamond says:

    “Swift’s precocious suggestion of a system of voluntary self-assessment;”

    Swift’s precocious suggestion of frivolous tax protests?

    I’d seen the IRS abuse words which the IRS properly lists as frivolous, but this is the first time I’ve seen a judge do so.

    “and Dickens’ trenchant observation on the problems of multijurisdictional taxing coordination”

    Right, that might be why US Supreme Court, US Tax Court, and the IRS administratively recognize that some people who obey US tax law have legitimate reasons to apply the 5th amendment to specific questions even though they report the amount of income. Other US courts pretend not to understand.

    “J. Kornbluth, Love and Taxes (staged monologue re income tax) (unpublished manuscript, 2003)”

    Maybe it needs to be published. There’s been discussion this week of what Prince Harry is going to discover.

    Now for a sua sponte question:

    No Doyle references?

  5. There was a real case in the Chancery called Jennens v Jennens which started in 1798 and petered out during the First World War after the assets were bled dry by fees.

    Don’t forget to sign your will.

  6. My files contain several oeuvres of rhyming jurists. Here is one regarding the country music performer Conway Twitter. (Jenkins v. Commissioner, T.C. Memo 1983-667)

    Twitty Burger went belly up
    But Conway remained true
    He repaid his investors, one and all
    It was the moral thing to do.
    His fans would not have liked it
    It could have hurt his fame
    Had any investors sued him
    Like Merle Haggard or Sonny James.
    When it was time to file taxes
    Conway thought what he would do
    Was deduct those payments as a business expense
    Under section one-sixty-two.
    In order to allow these deductions
    Goes the argument of the Commissioner
    The payments must be ordinary and necessary
    To a business of the petitioner.
    Had Conway not repaid the investors
    His career would have been under cloud,
    Under the unique facts of this case
    Held: The deductions are allowed.

    Let nobody say the IRS is forever humorless, for they replied in
    Action on Decision 1984-022:

    Harold Jenkins and Conway Twitty
    They are both the same
    But one was born
    The other achieved fame.
    The man is talented
    And has many a friend
    They opened a restaurant
    His name he did lend.
    They are two different things
    Making burgers and song
    The business went sour
    It didn’t take long.
    He repaid his friends
    Why did he act
    Was it business or friendship
    Which is fact?
    Business the court held
    It’s deductible they feel
    We disagree with the answer
    But, let’s not appeal.
    RECOMMENDATION Nonacquiescence

  7. I rarely read fiction, because a continuing relationship with several hundred tax clients regularly produces more truth that is stranger, but when I do it is usually Dickens. To those who were compelled as students to read his work: reconsider losing yourself, voluntarily, in mid-19th Century England.

    As for that other Holmes (Sherlock) the Tax Court website lists 14 opinions and one order mentioning his name, although I think several of them are quoting the same one, “Quick Trust,” which sounds like a Dickens title.

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