Opinion
13533-20
02-14-2024
ESTATE OF RANDY GLASSMAN, DECEASED, STEVEN GLASSMAN, PERSONAL REPRESENTATIVE, AND STEVEN GLASSMAN, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Albert G. Lauber Judge.
This case is calendared for trial at a two-day remote special session beginning May 28, 2024. With respect to petitioners' 2015 Federal income tax return, respondent determined a deficiency of $494,015 and an accuracy-related penalty of $98,803. The bulk of the deficiency stems from a $1,416,319 downward adjustment to a $1,470,018 net operating loss (NOL) that petitioners carried forward from their 2013 joint return. This NOL carryforward is attributable to a theft loss deduction in excess of $3 million that petitioners claimed in 2013 on account of jewelry allegedly stolen from them in that year.
Petitioners timely petitioned this Court for redetermination. On January 8, 2024, respondent served on petitioners, pursuant to Rules 71 and 72, Respondent's Interrogatories and Respondent's Request for Production of Documents, enumerating specific requests relating to information and documentation substantiating petitioners' claimed theft loss and NOL deductions.
Unless otherwise indicated, rule references are to the Tax Court Rules of Practice and Procedure.
Petitioners did not respond to the discovery requests and respondent represents that he has been unable to have meaningful contact with their counsel. On February 12, 2024, respondent accordingly filed a Motion to Compel Production of Documents and a Motion to Compel Responses to Interrogatories. In that Motion, he states that the requested documents and information are "necessary for respondent both to properly and timely prepare a defense against the contentions of petitioners."
A party opposing discovery has the burden of establishing that the information sought is not relevant or is otherwise not discoverable, e.g., because it is protected by privilege. See Rutter v. Commissioner, 81 T.C. 937, 948 (1983); Branerton Corp. v. Commissioner, 64 T.C. 191, 193 (1975). For purposes of discovery the standard of relevance is liberal: our Rules permit discovery of any material relevant "to the entire 'subject matter' of the case." Zaentz v. Commissioner, 73 T.C. 469, 471 (1979) (quoting Rule 70(b)).
The information respondent seeks appears relevant to the primary adjustments in the notice of deficiency. A full and meaningful response from petitioners is necessary to enable respondent to address the allegations petitioners have advanced. See Zaentz, 73 T.C. at 478 ("[T]o prepare properly for trial, it is necessary for each party to know the position of the other party, and discovery may be used to clarify that position.") Accordingly, we will grant both Motions.
Upon due consideration, it is
ORDERED that respondent's Motion to Compel Production of Documents, filed February 12, 2024, is granted in that petitioners shall produce to respondent's counsel, on or before March 14, 2024, for inspection and copying, the documents set forth in respondent's Request for Production of Documents served on petitioners on January 8, 2024. If petitioners object to any particular document request, they shall file a Response to this Order by March 14, 2024, stating their specific objections and the legal and factual support for their objections. It is further
ORDERED that respondent's Motion to Compel Responses to Interrogatories, filed February 12, 2024, is granted in that petitioners shall complete and serve upon respondent's counsel, on or before March 14, 2024, forthright and comprehensive responses to those interrogatories served on petitioners on January 8, 2024. If petitioners object to any particular interrogatory, they shall file a Response to this Order by March 14, 2024, stating their specific objections and the legal and factual support for their objections.
In the event that petitioners do not fully comply with the provisions of this Order, the Court will be strongly inclined to impose sanctions pursuant to Rule 104, which may include deeming certain facts to be established for purposes of trial and prohibiting petitioners from introducing designated matters into evidence. If respondent reasonably believes that petitioners have not fully complied with this Order, respondent may file, within 14 days of receiving petitioners' production, but in any event by March 28, 2024, a Motion for Sanctions requesting specific and targeted sanctions for noncompliance.