Taxman in the Mirror: Judge Gets His Moment in Michael Jackson Case
How much was the pop legend worth when he died? A jurist known for his quirky writings will be there
https://www.wsj.com/articles/just-m...tax-court-judge-readies-his-ruling-1527869605
WASHINGTON— Mark Holmes writes pithy tales of failed marriages and booming businesses, weaving in F. Scott Fitzgerald, historical digressions and groan-aloud puns.
Now he’s working on a much-anticipated thriller (get it?) about the late pop superstar Michael Jackson.
Mr. Holmes is no best-selling author. In fact, his work is free. Mr. Holmes is a federal judge known for the clear, colloquial writing style he brings to arcane rulings on the U.S. Tax Court.
He’s handling the final phases of the hugely complicated court case stemming from Mr. Jackson’s estate-tax return. An unusual combination of music fans and tax nerds is anticipating the end of the five-year court battle, and Mr. Holmes is poised to apply his distinctive voice to one of the most recognizable voices of the 20th century.
“The Jackson opinion could be his magnum opus,” says Randy Herndon, a former clerk.
To close watchers of the Tax Court, a Holmes opinion is instantly recognizable, opening not with a recitation of relevant statutes and precedents but with a simple story.
“The tax law is so complex that anyone who tries to make it accessible should be lauded,” said Andy Grewal, a University of Iowa law professor.
Here’s how Judge Holmes began a 2016 opinion in a case revolving around the dwindling fortune of a man in his dotage:
“ Arthur Marsh worked hard and lived simply for decades, but when he became old and infirm he met Angelina Alhadi. In the two last years of his life, she somehow came to receive more than a million dollars from him.”
Because Americans can challenge the Internal Revenue Service in Tax Court without paying taxes first, the docket is filled with ordinary, down-on-their-luck Americans pressing small claims against the bureaucracy. It’s also packed with aggressive deals pitched by shady advisers to successful business owners and messy multiyear disputes between large corporations and the government.
That diversity of subjects gives Judge Holmes his raw material and it occasionally yields extraordinary cases such as Mr. Jackson’s.
The IRS and Mr. Jackson’s estate have settled some differences, but they’re still about $400 million apart on the value of what he left behind, according to a recent filing. They are disputing the worth of song rights Mr. Jackson owned—his own writings and his interest in pieces like “Runaround Sue.” They’re also fighting over the extent of his posthumous right to publicity, or his estate’s ability to profit from his image.
The IRS argues that Mr. Jackson was, in fact, wealthy, despite his myriad financial problems. Mr. Jackson’s lawyers say the post-death rehabilitation of his image was no sure thing. Their point is that the estate’s marketing successes, including a movie and a Cirque du Soleil show, weren’t obvious and inevitable when Mr. Jackson died in June 2009, and that his net worth at the moment of death is what counts.
They’re arguing before a judge with a greater depth of non-tax experience than most.
udge Holmes, a 57-year-old native of Buffalo, N.Y., learned legal writing as a clerk for 9th Circuit Judge Alex Kozinski, then worked as a private litigator and a staff member at the International Trade Commission before turning to tax law in the late 1990s.
“Mark’s approach is probably less formulaic than many,” says Eileen O’Connor, his boss at the Department of Justice Tax Division in the early 2000s. “Many tax lawyers, I think, are too limited in their overall experience, and have difficulty explaining tax concepts to other people because they don’t have a non-tax concept to use to explain.”
Judge Holmes has plenty of non-tax concepts—and jokes.
Give him a case about a scuba-diving business, and he’ll note how the owner dove in. Give him a riverboat-casino case, and he’ll describe the IRS trying to sink the taxpayer’s shelter.
In the case of a used-car businessman who had trouble supporting his claims with paper, he wrote: “Tax records are the ancient Egyptians of the modern age--plagued not by boils, frogs, flies, and lice but by fire, flood, mold, and theft.”
Faced with an apartment-building owner seeking depreciation deductions, he wrote: “We are tempted to say this is why AmeriSouth throws in everything but the kitchen sink to support its argument—except it actually throws in a few hundred kitchen sinks, urging us to classify them as ‘special plumbing,’ depreciable over a much shorter period than apartment buildings.”
When a chiropractor tried to claim dubious deductions, Judge Holmes responded:
“The Commissioner thought this was a stretch and urges us to support his adjustment,” he wrote. “We particularly disbelieve his claim that the Xbox, Wii, big-screen TVs, and other electronics in his basement were used exclusively for chiropractic purposes since this claim conflicts with his much more plausible admission to the IRS examiner during audit that his daughter and his girlfriend’s son would play these video games while he was on the phone.”
Judge Holmes, nominated by George W. Bush in 2003, is up for a second 15-year term on the court. He declined an interview, saying only that he was grateful for President Donald Trump’s nomination and looking forward to working with the Senate as it considers his confirmation.
Judge Holmes plays most freely in his writing when the stakes are lowest, in relatively narrow cases that aren’t setting precedents or dividing the court.
One of his earliest opinions, from 2004, involved a playwright’s business expenses, some of which the judge allowed and some which he denied, requiring him to invoke the court’s rule for computing the final outcome:
“Dramatists used to finish with some rhymes,
Mostly iambs with a pinch of dactyly,
But in these more prosaic times
Works usually end more matter-of-factily.
In our Court, though, the oldest ways seem somehow to survive—
A decision will be entered under Rule 155.”
There’s also a biting side to his work. This year, in a dissent, he compared his colleagues on the Tax Court to the tyrannical Roman emperor Caligula and his practice of posting tax laws “in fine print and so high that Romans could not read them.”
“It is our custom to reconsider an issue when a circuit court reverses us. And today we have to choose either a well-reasoned opinion by a highly respected judge in America’s heartland, or Caligula,” Judge Holmes wrote. “We pick Caligula. I gingerly dissent.”
Judge Holmes then added a footnote, noting that “Caligula didn’t care if dissents were respectful” and mentioning a historical punishment of “burning author alive for using double entendre.”
For Judge Holmes, the legal and factual decisions in the Jackson case may be tough.
He has to determine what Mr. Jackson was worth at the moment of his death in June 2009, using a detailed factual analysis about the music business and potentially considering the legal woes and abuse accusations that put the star on the brink of ruin in his final years.
The writing and the song references, however, will be as easy as 1-2-3.
