Opinion
8792-20
04-12-2023
DONALD W. THOMPSON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Albert G. Lauber, Judge.
This case, calendared for a special trial session in Atlanta, Georgia, beginning August 28, 2023, involves a charitable contribution deduction claimed by petitioner for a conservation easement in 2013, which generated carryover deductions on his 2016-2018 tax returns. The primary issues are whether petitioner satisfied the requirements for a charitable contribution deduction, including proper valuation of the easement, and whether penalties apply.
On February 1, 2023, respondent filed a motion to compel production of documents and a motion to compel responses to interrogatories, representing that petitioner had failed to produce documents in petitioner's possession, custody, or control and had failed to "fully and meaningfully" answer Respondent's Interrogatories. In his discovery requests respondent sought "to establish the facts for the entire transaction-from the transaction's inception through 2019, when the petitioner exchanged the subject property. . . ."
By Order served February 10, 2023, we granted respondent's motions and directed petitioner to comply with our Order by March 6, 2023. We warned petitioner that we would be inclined to impose sanctions pursuant to Tax Court Rule 104 if he failed to comply adequately. If respondent reasonably concluded that petitioner did not fully comply with the Order, we noted that "respondent may file, within 30 days of receiving petitioner's production, a Motion for Sanctions requesting specific and targeted sanctions for petitioner's noncompliance."
On March 21, 2023, respondent filed a Motion to Impose Sanctions, representing that petitioner's supplemental response is "insufficient and noncommittal" and that petitioner's supplemental production is inadequate because he "is still producing documents" after the March 6 deadline set by the Court. In his Motion respondent represents (among other things) that petitioner made an incomplete supplemental production of documents on March 2, 2023, to which petitioner later followed up by email on March 13, 2023, indicating the existence of more documents, which were later provided.
On April 4, 2023, petitioner filed an Objection to respondent's Motion, representing that he "diligently searched for, obtained, and produced documents and communications responsive to [r]espondent's discovery requests" before March 6, 2023, and had made "reasonable inquiry of his agents, accountants, and affiliates" when forming his responses. Petitioner indicates that the sole exception to his otherwise timely compliance with the Court's Order concerned "a document produced by the City of North Augusta," which was produced to him for the first time on March 8, 2023, and referenced in his March 13, 2023, email to respondent.
In his Motion respondent requests more than a dozen sanctions. These include precluding petitioner from offering any expert testimony at trial, precluding petitioner from calling as witnesses at trial any persons not yet identified, deeming certain facts established regarding petitioner's "intent," precluding petitioner from "seeking to introduce into evidence any document not produced by March 6, 2023," and drawing the inference that "that any document not produced, including any attachment that was not produced with a produced document, is against petitioner's contentions in this case." The Court understands the concerns that prompted respondent to file his Motion. However, we think the sanctions respondent requests are overly severe and too wide-ranging, and we conclude, on the basis of petitioner's response, that the Motion should be denied at this time.
A related problem is the parties' apparent difficulty in reaching agreement on stipulations of facts. As directed by the pre-trial Order, the parties filed a First Stipulation of Facts on April 7, 2023. This was something of a "barebones" stipulation, including only 13 Exhibits. Trial of this case is to begin in August 2023, and we expect comprehensive stipulations of fact to be filed before trial commences. These stipulations shall include as exhibits all documents agreed to be authentic. To the extent the parties cannot agree on a textual paragraph to accompany a particular documentary exhibit, they shall simply include the exhibit with minimal accompanying text.
Upon due consideration, it is
ORDERED that respondent's Motion to Impose Sanctions, filed March 21, 2023, is denied without prejudice at this time.