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TAX COURT VISITS CHUCK'S PLACE ON ST. PAT'S DAY

March 18, 2008

While the police waited outside Irish-theme bars like grizzly bears waiting on the salmon run, Tax Court judge Mark V. Holmes visited Chuck's Place on St Patrick's day, deciding a case that turns on whether a taxpayer owned the bar, or was just its landlord.

Judge Holmes writes a lively opinion, providing more information than may be strictly necessary:

Raymond Monk has dabbled over the years in a variety of businesses, including drywall installation, plumbing, running a delicatessen, and even raising rabbits. He's also invested in more than a half dozen pieces of commercial real estate in and around Baltimore. In all but one of these rental arrangements, Monk declined to draft written leases, relying instead on "you pay, you stay" oral agreements.
Charles (Chuck) Maney met Monk more than twenty years ago when Monk was dating his sister. Their friendship grew and Maney went to work for Monk in both his plumbing and drywall businesses. When Monk decided to retire from construction, Maney decided to retire as well. But unlike Monk, who was leaving the city life to move to the bucolic mountains of western Maryland, Maney -- who had worked in a saloon before meeting his friend -- wanted to stay in Baltimore and run a bar. He faced just two obstacles: He didn't have the money or knowhow to buy a building for the bar, and in his distant youth he'd committed a felony which, as far as he knew, would keep him from getting a liquor license. Maney talked to Monk; Monk said that since Maney liked the bar business and Monk liked rental property, Monk would help Maney out.

So we learn here that Mr. Maney dated Mr. Monk's sister, but we don't know how the relationship worked out. We do learn that Western Maryland is bucolic, and we get hints of a dark secret of Mr. Maney's past... perhaps a misjudgement in a wild youth in bucolic Baltimore.

Judge Holmes ventures perilously near the "too much information" line in his footnote 7:

Maney also testified that he (and not Monk) has the bar's logo tattooed on his chest. Though the Court did not undertake a visual inspection, we found him credible on this point. His numerous expressions of pride in the bar and its role in the neighborhood -- and the fact that it is named "Chuck's Place" and not, say, "Famous Ray's" -- are additional, albeit minor, factors supporting our conclusion that the bar is his.

The result: A taxpayer victory. Mr. Monk was judged a landloard, saving self-employment taxes that would otherwise have been due.

The Moral: If you have a tax case pending before Judge Holmes, a strategic tattoo may not hurt.

Mark Holmes Trivia: He is, as far as I know, the only Tax Court judge to have appeared on Jeopardy.

Link: Russ Fox has more.

Cite: Monk, T.C. Memo 2008-64

UPDATE: The TaxProf has more.

Tags: Russ Fox.tax court.