Opinion
1285-20
12-28-2021
Estate of Anne Milner Fields, Deceased, v. Commissioner of Internal Revenue Respondent Bryan K. Milner, Executor Petitioners
ORDER
Elizabeth A. Copeland, Judge.
This case is calendared for trial on February 7, 2022, at the Dallas, Texas Trial Session of the Court. On November 29, 2021, respondent filed with the Court a Motion to Compel Responses to Interrogatories, and a Motion to Compel Production of Documents.
We will take the Motions in order.
Motion to Compel Responses to Interrogatories
Respondent's Motion to Compel Responses to Interrogatories requests pursuant to Tax Court Rules 71(c) and 104(b), that the Court enter an order compelling petitioner to answer Interrogatories Nos. 2, 6, 12, 13, and 14 served on petitioner on October 20, 2021; and pursuant to Tax Court Rule 104 order that, if petitioner fails to completely comply, the following facts be deemed admitted: (1) AM Fields, LP did not operate any active trade or business since inception through December 31, 2020; (2) distributions from AM Fields, LP were used to pay the estate tax liability (Form 706) reported by petitioner; and (3) distributions from AM Fields, LP were used to pay some of the bequests of Anne Milner Fields ("Decedent") contained in her will. We will discuss the interrogatories and petitioner's previous responses in numerical order.
Interrogatory No. 2 involves verification of the business activities of AM Fields, LP. Petitioner has responded to this interrogatory except omitted answering the portion of the interrogatory regarding the income earned and reported by that partnership in the tax years since inception (2016). Instead, petitioner made a vague reference to roughly 5, 000 pages of Bates labeled documents when it should have directed its response to relevant pages and documents produced, such as AM Fields, LP's tax returns and profit and loss statements. As such, the Court requests a more direct response to this interrogatory with regard to income. The Court also notes that respondent did not specify or limit the years of inquiry; and thus, the Court limits the response to tax years 2016, 2017 and 2018.
Interrogatory No. 6 involves verifying the investments made by AM Fields, LP following its formation. Petitioner responded but did not provide the name and contact information of the person who managed the partnership's investments and was not specific as to where, in the roughly 5, 000 pages of Bates labeled documents, the investments are delineated. The Court requests a more direct response to this interrogatory with regard to the investment manager and investment listing. The Court again notes that respondent did not specify the years of inquiry and the Court will thereby limit the response to tax years 2016, 2017 and 2018.
Interrogatory No. 12 involves a simple yes or no answer as to whether any of the distributions from AM Fields, LP were used to satisfy the Estate of Anne Milner Field's estate tax liability; and while we agree that such liability could be satisfied using any asset of the estate, we grant respondent's motion for a more direct answer to this interrogatory.
Interrogatory No. 13 involves identifying which specific bequests of the decedent were satisfied with distributions from AM Fields, LP. Petitioner's response to this interrogatory was more detailed; however more importantly, the Court notes that due to the fungible nature of the monetary distributions from any partnership and the subsequent payment of a bequest, this interrogatory is overly broad, a bit ambiguous and would be burdensome to answer. We will not grant respondent's request as to this interrogatory.
Interrogatory No. 14 involves identifying all "distributions" from AM Fields, LP from inception through December 31, 2020, without defining what is meant by a "distribution," so it is unclear to the Court if respondent is asking for every monetary outlay of the partnership since inception whether for partnership expenses or for partnership distributions to a partner as the term might ordinarily be construed. As this interrogatory is overly broad and vague, we will not grant respondent's request as to this interrogatory.
Motion to Compel Production of Documents
Respondent's Motion to Compel Production of Documents requests pursuant to Tax Court Rules 72(b) and 104(b), that the Court enter an order compelling petitioner to produce at 4050 Alpha Road, MC 2000NDAL, 13th Floor, Dallas, Texas 75244, for inspection and copying and to continue from day to day for so long as is reasonably necessary to examine and copy, all documents that are responsive to Respondent's Request for Production of Documents, Requests Nos. 2 through 8, inclusive, served on petitioner on October 20, 2021; and pursuant to Tax Court Rule 104, that the Court order, upon failure of petitioner to completely comply with any order issued by it in respect to this motion to compel, that petitioner be precluded from introducing any documentary or testimonial evidence regarding (1) Anne Milner Fields' alleged reliance on any professionals relating to the formation of AM Fields, LP and (2) the role that Anne Milner Fields allegedly played in the management of the securities accounts with Wells Fargo (account number ending 2420) and UBS Financial Services, Inc. (account number ending 05VM) both before and after formation of AM Fields, LP. We will address the document production requests in order.
Document Production Requests Nos. 2 and 3 involve requests for accounting books and records for AM Fields, LP for tax years 2019 and 2020. While petitioner did produce some documents in this category, petitioner's objections do not justify holding back any responsive documents to the extent those documents exist and can be produced.
Document Production Requests Nos. 4, 5 and 6 involve requests for tax opinions, legal advice and other documents related to the formation of AM Fields, LP if that advice was relied on to avoid application of an accuracy related penalty under section 6662 of the Internal Revenue Code. Petitioner did produce some documents related to this request but held back some claiming that the request was not limited to non-privileged matters. Where petitioner claims privilege, it needed to produce a privilege log so as to enable in camera review or a "quick peek" order under Federal Rule of Evidence 502. We will grant these requests and ask that petitioner produce a privilege log for any documents withheld under claims of privilege.
Document Production Requests Nos. 7 and 8 involve requests for any agreements signed by the decedent with two financial institutions, Wells Fargo and UBS, from January 1, 2016 until Anne Milner Field's date of death and by the Estate after her death until December 31, 2020. Petitioner did produce some documents related to this request but held back some claiming, among other objections, that the request was not limited to non-privileged matters. Where petitioner claims privilege, the estate needed to produce a privilege log so as to enable in camera review or a "quick peek" order under Federal Rule of Evidence 502. We will grant these requests and ask that petitioner produce a privilege log for any documents withheld under claims of privilege.
After due consideration, and for cause, it is
ORDERED that respondent's Motion to Compel Responses to Interrogatories filed on November 29, 2021, is granted only as to interrogatories nos. 2, 6, and 12 limited by the paragraph descriptions above setting forth the unanswered portions of the interrogatory responses and limitations on the dates covered. Petitioners shall on or before January 12, 2022, serve on counsel for respondent more complete and responsive answers to interrogatories nos. 2, 6, and 12, served on petitioner on October 20, 2021. It is further
ORDERED that respondent's Motion to Compel Production of Documents filed on November 29, 2021, is granted, and that petitioner shall, on or before January 18, 2022, produce to counsel for respondent the documents requested in respondent's request for production of documents nos. 2 through 8, served on petitioner on October 20, 2021, which are in its possession, custody or control. It is further
ORDERED that, in the event petitioner does not fully comply with the provisions of this Order, certain testimonial evidence may not be allowed at trial and certain documents may be excluded from trial.