Well, the tax season has crept up on us once again. (Those of us who are a little older remember how, once upon a time, there used to be boxes of tax forms in post offices. Now, most tax filing is done online.) But because April 15 passed just this past week, when many people find their assets in a sling, one must once again sit back and be amazed at the remarkable source of humor that is tax law.
Yes, taxes have long passed on from being just a way to figure out how much money to give the government. Consider, after all, two legendary chairmen of the Ways and Means Committee of the House of Representatives, the body that actually writes the tax laws. (Even the name “Committee on Ways and Means” is pretty funny. They might as well have named it “Committee on Getting and Spending” or “Committee on Stuff and Nonsense.”)
But who, after all, can forget that time, back in the ’70s, when Ways and Means Chairman Wilbur Mills took a midnight plunge into the Potomac’s Tidal Basin with his . . . uh, consultant (?) Fanne Fox, better known as “the Argentine Firecracker?” And more recently, we had Darlin’ Dan Rostenkowski of Chicago, who back in the 1990s became the most powerful congressman (so far) to go to jail.
And these were the guys in charge of writing the tax laws! So with folks like this in charge of the Internal Revenue Code, why shouldn’t tax laws be a source of merriment?
And then there was the case of Mose Duberstein — a case all young tax lawyers learn practically the minute they enter law school. Duberstein owned a metals company in Dayton, Ohio. A business associate named Berman operated out of New York. Every so often, Duberstein would refer a customer to Berman.
One day in 1951 Berman called Duberstein and said that, in gratitude for Duberstein’s sending so much valuable business his way, Berman wanted to give him a present. Duberstein insisted Berman owed him nothing, but Berman said Duberstein had a Cadillac waiting for him in New York and told him to send someone to pick it up.
Duberstein already owned a Cadillac and an Oldsmobile, and really didn’t think he didn’t need another car, but finally agreed. (Question: How do you know that this happened in the 1950s? Answer: Because Berman gave Duberstein an American car.)
A heartwarming story — at least until you find out Berman’s company deducted the Cadillac as a business expense. Duly notified, the Internal Revenue Service contacted Duberstein and wanted to know why he hadn’t reported the car as income. Duberstein said it was a gift — and under federal tax law, a gift isn’t “income.” (In fact, the tax on a gift is paid by the giver, not the recipient!) The IRS disagreed, and a legal battle ensued, eventually making its way to the U.S. Supreme Court.
So right away we know two things: first, Duberstein spent enough money on lawyers to buy a whole car lot full of Cadillacs; and 2) Berman never got another business referral from Duberstein.
The late Justice William Brennan wrote the opinion, and demonstrated that, when it came time to assign tax opinions to someone, Brennan should have stuck to the civil rights cases for which he was famous. For instance, Brennan wrote, “Decision of the issue presented . . . must be based ultimately on the application of the fact-finding tribunal’s experience with the mainsprings of human conduct to the totality of the facts of each case.”
“Mainsprings”? Was this a case about cars or watches?
Well, anyway, just to lay out some crystal-clear rules that could easily be applied by the IRS and taxpayers in future cases, Brennan quoted another precise edict from a case written by Justice Benjamin Cardozo. In explaining how you know whether something is deductible, Brennan quoted from Cardozo that, “Life in all its fullness must supply the answer to the riddle.”
Whew, that clears everything up!
So, imagine you’re a tax lawyer. A client comes into the office and wants to know if a car given to him by a business associate in “gratitude” for all the business he’s referred to a friend is deductible as a gift or income that has to be reported. You lean back in your chair, gaze at the ceiling, reply, “Life in all its fullness must supply the answer to the riddle.”
You can kiss that client goodbye. You won’t even have to use lipstick.
But that’s those tax-writing lawyers (and judges) for you. Just a bunch of cut-ups.
Really. Just ask Wilbur or Dan.
Frank Zotter, Jr. is a Ukiah attorney.
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