Opinion
24566-22 24567-22
05-14-2024
STEPHEN R. BRYANT & DEBBIE M. BRYANT ET AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Mary Ann Cohen, Judge
These cases are currently before the Court for ruling on respondent's Motion for Summary Judgment, with supporting Declarations, filed December 21, 2023. On February 2, 2024, petitioners filed an Opposition to Respondent's Motion for Summary Judgment along with a Declaration of Stephen R. Bryant in Support of Petitioner's Opposition. On March 8, 2024, respondent filed a Reply in Support of Motion for Summary Judgment. On March 28, 2024, petitioners filed a Response to Respondent's Reply to Petitioners' Opposition.
The dispute in these cases involves the effect and tax aspects of a so-called "micro captive insurance" entity and related companies organized by petitioner Stephen R. Bryant. Respondent's Motion characterizes the organization as a "scheme" resulting in disallowed deductions for insurance and failure of the entity to be taxed under provisions applicable to insurance companies. Because the parties are familiar with the record and this Order does not resolve any issue and is not precedent, we do not recount all of the facts or arguments contained in the moving and opposing papers.
The parties cite many authorities that allow or limit summary judgment. Simply stated, summary judgment is appropriate here if respondent establishes that there is no genuine issue of material fact, and a decision may be rendered as a matter of law. See Rule 121(b), Tax Court Rules of Practice and Procedure. The purpose of summary judgment is to save the time and expense of unnecessary trials. The Court does not weigh the evidence and construes all facts and views all inferences in a light most favorable to the nonmoving parties. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988).
Respondent seeks summary judgment with respect to penalties as well as several deficiencies. Respondent has not negated reasonable cause and good faith as defenses to the penalties. The circumstances under which the entity and related companies were organized, and Mr. Bryant's understanding of the effects and tax effects of the transactions, are inseparable from the transactions themselves. We cannot at this time reject petitioners' claims that the record does not contain all relevant documents and that summary judgment is at least premature. We cannot justify precluding petitioner's testimony as to his understanding and intent in relation to the transactions. We cannot accept respondent's assertions as to what petitioners have not proven in ruling on a Motion for Summary Judgment.
The parties are urged to minimize the time and expense of trial, if trial becomes necessary, by entering into one or more comprehensive stipulations, without disputed characterizations, that include all documents any party deems relevant and a narrative in chronological order of the organization and operation of the entity and relevant transactions. Further, the parties are urged to minimize time-consuming motions that can be avoided by negotiation between or among counsel. Upon due consideration and for cause, it is hereby
ORDERED that respondent's Motion for Summary Judgment filed December 21, 2023, is denied. It is further
ORDERED that on or before August 12, 2024, the parties shall report to the Court, preferably jointly, as to the status of petitioners' conference with the IRS Independent Office of Appeals and, if necessary, their proposed schedule for trial preparation and for trial. Their report shall also address the feasibility of trial in a place other than Atlanta, Georgia, where the Court maintains and controls its own courtroom.