Opinion
24786-18 24788-18
02-01-2024
KALEB J. PIERCE, ET AL., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Travis A. Greaves Judge
These cases are set for trial at the Court's Salt Lake City, Utah Special Session scheduled to commence on April 1, 2024. On January 11, 2024, petitioners filed a Motion to Depose Pursuant to Rule 74. Petitioners indicated that respondent objects to the motion.
The taking of a nonconsensual deposition is "an extraordinary method of discovery." Rule 74(c)(1)(B). It may be used only where: (1) the expert witness can give testimony or possesses documents that are discoverable within the meaning of Rule 70(b); and (2) the moving party cannot practicably obtain the desired testimony or documents through informal means under Rule 70, interrogatories under Rule 71, a request for documents under Rule 72, or a consensual deposition under Rule 74. Id. This Court has recognized three additional factors to weigh in making this determination: (1) whether the movant has established "a specific and compelling basis" for the deposition; (2) whether the movant intends for the deposition to serve as more than a substitute for cross-examination at trial; and (3) whether the movant has had a prior opportunity to obtain the desired information (or could have obtained it through other means or from another source). See K&M La Botica Pharmacy, Inc. v. Commissioner, T.C. Memo. 2001-33, slip op. at 7-11 (interpreting the predecessor to Rule 74). The moving party bears the burden of demonstrating that these conditions are present where the opposing party objects to the taking of the nonconsensual deposition. See Rule 74(c)(3)(B).
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
Recognizing that a nonconsensual deposition is an "extraordinary method of discovery," that should be used in only the rarest of circumstances during a Tax Court proceeding, we do not believe petitioners have met this burden. See DeLucia v. Commissioner, 87 T.C. 804, 810 (1986) (interpreting the predecessor to Rule 74); K&M La Botica Pharmacy, Inc., T.C. Memo. 2011-33, slip op. at 7- 11. Petitioners seek to depose respondent's expert witness, Mark Mitchell, regarding his valuation of Mother's Lounge. Mr. Mitchell's knowledge, including his expert report and valuation opinion, undoubtedly will provide information that is relevant to the determination of petitioners' gift tax liabilities, and thus, such information would be discoverable within the meaning of Rule 70(b).
However, petitioners have failed to demonstrate that the information sought from Mr. Mitchell cannot be obtained through other means of discovery, which are more convenient, less burdensome, or less expensive. See Rule 70(b). Petitioners predicate their request for a deposition on respondent's delay when asked for information related to the valuation of Mother's Lounge and respondent's refusal to submit any of Mr. Mitchell's workpapers until after his report is complete. Although petitioners note that respondent has not agreed to a consensual deposition, petitioners have not attempted to seek this information through other discovery methods, such as interrogatories under Rule 71 or a request for documents under Rule 72. Additionally, according to the pretrial schedule, respondent must exchange Mr. Mitchell's report and working papers on February 5, 2024, and February 12, 2024, respectively, if he intends to use Mr. Mitchell as an expert. Mr. Mitchell will also be subject to cross-examination at trial. Petitioners have failed to demonstrate the need for such an extraordinary method of discovery at this stage.
Upon due consideration, it is
ORDERED that petitioners' Motion to Depose Pursuant to Rule 74, filed January 11, 2024, is denied.