The 11th Circuit yesterday sided with the taxpayer in the long-running Ballard – Kanter – Lisle saga in a 61-page opnion in Ballard v. Commissioner (11th Cir. 4/7/08):
The question presented in this appeal is simply whether the Tax Court Judge reviewing the report of the Special Trial Judge gave due regard to the factfindings of the trial judge. That is the only thing simple about this case. …
[W]e conclude that Judge Couvillion’s findings of fact and credibility determinations were supported by the record and that his finding that Ballard was not responsible for a deficiency and had not committed fraud were not manifestly unreasonable. We conclude that, in finding otherwise, Judge Haines did not presume Judge Couvillion’s findings to be correct or give Judge Couvillion’s credibility determinations their due deference. See Tax Court Rule 183. Rather, Judge Haines conducted a nearly de novo review of the facts. This review violated Rule 183’s and our instructions. … It is clear that this case is a “close call.” Had Judge Haines been the original trial judge, his rulings would probably be entitled to an affirmance. However, he was not the trial judge and did not see or hear the witnesses. Judge Couvillion did and found them credible. It is no surprise that a knowledgeable tax attorney would use numerous legal entities to accomplish different objectives. This does not make them illegitimate. Unfortunately such “maneuvering” is apparently encouraged by our present tax laws and code. The Ballards were charged with fraud. Judge Couvillion heard the witnesses and reviewed the exhibits and concluded the government simply failed to prove such by clear and convincing evidence. The record fully supports his findings of fact and conclusions. Accordingly, we remand to the Tax Court with instructions tovacate Judge Haines’ opinion and enter an order approving and adopting Judge Couvillion’s original report as the opinion of the Tax Court.
For a detailed discussion of the case, see 11th Circuit Deals Blow to Marathon Tax-Evasion Case (WSJ Law Blog), by Amir Efrati. (Hat Tip: Steven Sholk.) For prior TaxProf Blog coverage, see
