Fleck v. Commissioner ( 2014 )

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
December 18, 2014
TENTH CIRCUIT
Elisabeth A. Shumaker
Clerk of Court
DARRELL G. FLECK; KIMBERLY J.
FLECK,
Petitioners - Appellants, No. 13-9004
(Tax Ct. No. 6481-11)
v. (United States Tax Court)
COMMISSIONER OF INTERNAL
REVENUE,
Respondent - Appellee.
LAWRENCE F. PEEK; SARA L.
PEEK,
Petitioners - Appellants, No. 13-9005
(Tax Ct. No. 5951-11)
v. (United States Tax Court)
COMMISSIONER OF INTERNAL
REVENUE,
Respondent - Appellee.
ORDER AND JUDGMENT *
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
Before KELLY, LUCERO, and HARTZ, Circuit Judges. **
Petitioner-Appellants Darrell G. Fleck, Kimberly L. Fleck, Lawrence F.
Peek, and Sara L. Peek (collectively, Appellants) appeal from a decision of the
United States Tax Court (the Tax Court) concerning notices of deficiency related
to their 2006 and 2007 federal tax returns. Peek v. C.I.R., 140 T.C. 216 (2013).
Appellants ask us to find that the Tax Court erred in making supplemental factual
findings contrary to and unsupported by the stipulated facts and exhibits
submitted with their cases. Because we lack jurisdiction, the appeal must be
dismissed.
Background
In December 2010, the Commissioner mailed notices of deficiency to
Appellants, determining income tax deficiencies and penalties for the 2006 and
2007 taxable years. Appellants brought separate Tax Court petitions challenging
the deficiencies and penalties. The Tax Court consolidated Appellants’ cases for
trial, briefing, and opinion, and the parties submitted the cases based on a set of
stipulated facts and attached exhibits.
**
After examining the briefs and the appellate record, this three-judge
panel has determined unanimously that oral argument would not be of material
assistance in the determination of this appeal. See Fed. R. App. P. 34(a); 10th
Cir. R. 34.1(G). The cause is therefore ordered submitted without oral argument.
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In the Tax Court, the Commissioner asserted that individual retirement
accounts (IRAs) set up by Appellants had engaged in prohibited transactions,
including certain personal guaranties and home mortgages which resulted in
capital gains distributions not accurately reported on their returns. Appellants
argued that these guaranties and mortgages were not prohibited and that they did
not owe penalties because, among other reasons, they had relied in good faith on
the advice of their accountant, Mr. Blees.
The Tax Court issued an opinion holding that the transactions at issue were
indeed prohibited and that Appellants were liable for accuracy-related penalties.
The Tax Court rejected Appellants’ argument that they had reasonably relied on
Mr. Blees’ advice in failing to accurately report their gains and made several
supplemental factual findings, including that Mr. Blees was a “promoter” and not
“a disinterested professional” under these circumstances. Peek, 140 T.C. 229.
Additionally, there was “no indication that Mr. Fleck and Mr. Peek informed their
accountant” of their intended course of action “or that Mr. Blees gave them any
advice that their personal guaranties would not be a prohibited transaction.” Id.
at 230. The Tax Court concluded that Appellants “did not rely on their
accountant’s advice with regard to the prohibited transactions . . . and did not
have reasonable cause or act in good faith in failing to report the capital gains” at
issue. Id.
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Appellants unsuccessfully sought reconsideration, arguing that the Tax
Court assumed facts not in evidence. The Tax Court then entered decisions
determining the respective deficiencies and penalties. Appellants do not appeal
from the Tax Court’s decisions; instead, they appeal from only the portion of Part
IV of the Tax Court’s opinion titled “Accuracy-related penalties,” which includes
certain factual findings. Id. at 227–230. They concede that reversal of the
findings would not affect the Tax Court’s decisions, but they are nevertheless
concerned that the findings could be used against them in a pending state court
malpractice action they have brought against Mr. Blees.
Discussion
Under I.R.C. § 7482(a)(1), the courts of appeals have exclusive jurisdiction
to “review the decisions of the Tax Court . . . in the same manner and to the same
extent as decisions of the district courts in civil actions tried without a jury.”
There is “no grant of jurisdiction to review the findings and rulings of the Tax
Court apart from their effect upon the decision.” W.W. Windle Co. v. C.I.R., 550
F.2d 43, 45 (1st Cir. 1977); see also Katz v. C.I.R., 335 F.3d 1121, 1125 (10th
Cir. 2003). We may only review a Tax Court decision “if there is a controversy
between the taxpayer and the Government about the amount of taxes due.”
Windle, 550 F.2d at 45; see also De Amodio v. C.I.R., 299 F.2d 623, 625 (3d Cir.
1962).
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Appellants do not seek reversal of or otherwise challenge the Tax Court’s
decisions or determinations of deficiencies and penalties—but rather challenge
only factual findings regarding Mr. Blees’ knowledge of and alleged advice
regarding the improper transactions. For this reason, we do not have jurisdiction
to hear their appeal.
Additionally, Appellants lack Article III standing to seek review of
unfavorable factual findings where they do not seek reversal of the relevant
judgment or final decree. NRDC v. Gutierrez, 457 F.3d 904, 905–06 (9th Cir.
2006); see also Texas v. Hopwood, 116 S. Ct. 2581, 2582 (1996) (denying
petition for writ of certiorari where the petitioners challenged only the lower
courts’ analysis, rather than their judgments). Appellants assert that, as an
exception to this rule, a party has standing and a right to appeal a court’s rulings
if the party may be collaterally estopped by those rulings in a separate state court
action. Homestead Golf Club, Inc. v. Pride Stables, 224 F.3d 1195, 1197 n.1
(10th Cir. 2000). Indeed, in their motions for leave to file an amicus curiae brief
in this appeal, Mr. Blees and his firm have noted their plan to argue in Colorado
state court that collateral estoppel bars Appellants’ malpractice suit against them.
Yet, both parties in this action agree that a claim of collateral estoppel is
meritless because the Tax Court’s supplemental findings were not necessary to
the ultimate decisions. Aplt. Rep. Br. 4–5; see also Allen v. McCurry, 449 U.S.
90, 95 (1980) (“Under collateral estoppel, once a court has decided an issue of
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fact or law necessary to its judgment, that decision may preclude relitigation of
the issue . . . .”). Appellants’ argument thus fails on its own terms, and we need
not proceed further.
APPEAL DISMISSED. We DENY Chris Blees and Biggs Kofford & Co.’s
motion for reconsideration of our previous denial of their motion to file an amicus
curiae brief.
Entered for the Court
Paul J. Kelly, Jr.
Circuit Judge
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