Saturday, May 25, 2024

Substantial § 6700 Promoter Penalty Case Involving Refund Suit and Counterclaim Settled for $5,200,000 (5/25/24)

In Clark v. United States (S.D. Fla. 9:21-CV-82056), CL docket entries here, the taxpayer, Celia R. Clark, an attorney active in the promotion of microcaptive insurance companies for certain claimed tax advantages, brought a suit for refund of § 6700 penalties in the amount of $1,745,544. That amount represented 15% of the aggregate § 6700 penalties of $11,636,919 required in order to meet the jurisdictional requirement (special rule to avoid the Flora full payment requirement) for refund suits for the § 6700 penalties. See Complaint, here, paragraphs 65-67). (Actually, the aggregate amount paid was slightly in excess of 15% of the aggregate penalties.)

The 6700 penalty here for false or fraudulent misstatements as to a material matter is 50% of the gross income derived or to be derived from the penalized conduct. The penalized conduct is the organization or participation in a plan or arrangement in which the person furnishes or causes to be furnished a statement that the person “knows or has reason to know is false or fraudulent as to any material matter.”  being the organization or participation in the sale of a plan or arrangement that claims false tax benefits. I discuss the  § 6700 penalty and the § 6703(c) relief from Flora full payment requirement in my Federal Tax Procedure Book (Practitioner Ed. 2023.2), here, at pp. 853-856.

In the Government’s Answer and Counterclaim, here, the Government responded to the allegations in the complaint and sought judgment for $10,095.359 (Answer pp. 26-27, which seems to be the net amount after application of Clark’s payments with some add-ons.) Among the allegations in the Answer and Counterclaim are (i) a mélange of facts implying or proving (if proved) that Clark knew or had reason to know of the falsity of the scheme and documents implementing the scheme (Answer pp. 16-25, ¶¶ 16-85) and (ii) “From 2008 through 2016, Clark, through her law firm, earned over $23 million in fees from the microcaptive insurance programs.” (Answer p. 25 ¶ 87.) I infer that the alleged aggregate fee amount was the basis for the penalties exceeding $11 million.

Thursday, May 23, 2024

Eaton Corp. Loses Summons Enforcement Summons Skirmish with IRS over Foreign Employee Valuations (5/23/24)

In United States v. Eaton Corp. (N.D. Oh Case No. 1:23-MC-00037 Doc 22 Opinion & Order dated 5/16/24), CL here, the Court rejected Eaton’s attempt to hide evidence in this long-running dispute with the IRS. (The CL docket entries are here.) The case was a summons enforcement proceeding to enforce an IRS summons seeking various information and documents.  The parties settled all of the disputed items except “whether Eaton needed to produce certain foreign employees’ performance evaluations.” Now, what was that about? The ultimate dispute is about Eaton’s transfer pricing with a foreign affiliate. Plainly, one line of inquiry is how much “value” the foreign affiliate’s employees contributed to the whole income-producing pie. Performance evaluations might be relevant to that issue.

The Court goes through the standard drill for summons enforcement and finds that, given the IRS’s broad investigatory powers to protect the revenue, the summons was appropriate. Further, the Court held, Eaton’s feint to avoid disclosure based on certain alleged foreign country prohibitions on disclosure prevented its compliance with the summons and the Court’s ability to avoid compliance. Consistent with prior cases, that does not work. Summons enforced.

Of course, this is just a skirmish in the battle. There is more to come.

Tuesday, May 21, 2024

The Golsen Rule and Parties' Ability to Stipulate Appellate Venue from Tax Court Decisions (5/21/24; 5/24/24)

Readers of this blog are (or should be) familiar with the Tax Court’s Golsen rule requiring the Tax Court to apply directly in point precedent of the Circuit to which an appeal may be taken in the case. See On the Tax Court's Golsen Rule (Federal Tax Procedure Blog 12/3/23; 12/5/23), here; for an interesting discussion of the Golsen this rule with respect to a Tax Court precedent which had been reversed by one Court of Appeals so that the Tax Court precedent would not apply to appeals to that Circuit but remained as Tax Court precedent for application in other Circuits that had not yet addressed the issue, see Tax Court Again Declines to Reconsider Its Holding that the Preparer's Fraud without the Taxpayer's Fraud Invokes Unlimited Statute of Limitations (Federal Tax Procedure Blog 1/25/24; 2/5/24), here.

Section 7482(b) here, titled “Courts of Review,” prescribes venue for appeals. For individuals, under § 7482(b)(1), the default venue is in the Court of Appeals with jurisdiction over the “legal residence of the taxpayer.” For example, if A resides in Houston, TX, appeal venue is in the Fifth Circuit Court of Appeals. Under § 7482(b)(2), the parties may stipulate venue in another Circuit (including, of course, the Circuit in which the taxpayer resides, even though the stipulation is meaningless).

These rules are why the Tax Court is careful to note the residence of the individual taxpayer early in the findings of fact and, if the parties have stipulated to a different appellate venue, state the stipulation. (In most cases, there is no stipulation, so the Tax Court usually does not state that there is no stipulation, and addresses the issue in the opinion only if there is a stipulation.) Not only does the finding get the facts into the opinion as to appellate venue, it assists the Court in applying its Golsen rule.

In Anderson v. Commissioner, 2024 U.S. App. LEXIS 11966  (10th Cir. 5/17/24) (Nonprecedential), CA10 here and GS [to come], an opinion otherwise not noteworthy for this blog, the Court said (slip op. 6 n. 2) that “The parties stipulated to review in the Tenth Circuit. See 26 U.S.C. § 7482(b)(2).” That was a repeat of the same finding in the Tax Court. Anderson v. Commissioner, 2023 TC Memo 42, *2. (“The parties have stipulated that venue for any appeal in this case is the U.S. Court of Appeals for the Tenth Circuit. See § 7482(b)(2).”) Today’s blog is about the § 7482(b)(2) provision for stipulating appellate venue.

Tuesday, May 14, 2024

Further Lesson on Importance of Credibility for Clients and Expert Witnesses (5/14/24)

I recently blogged about credibility. Litigation is About Persuasion Which Requires Credibility (Federal Tax Procedure Blog 4/12/24; 4/23/24), here. The Tax Court yesterday issued an opinion, Schwarz v. Commissioner, T.C. Memo. 2024-55, TC Dkt 12347-20 at Doc 190, here and GS here, in which Senior Judge Goeke offers lessons on the same subject. Those lessons appear in about 17 pages of the 117 page opinion. I’ll discuss the pages, but first offer an introduction to the case via the Court summary or syllabus at the beginning. See Supreme Court Opinion Syllabus as Persuasive Authority? (Federal Tax Procedure Blog 2/8/21), here):

          Ps have a history of conducting real estate activities in South Texas, mostly involving ranch land. Through entities they controlled, Ps bought 15,070 acres of land in Zapata County in 2005 with the intent to improve and sell it. Ps later decided to conduct ecotourism operations consisting of hunting, fishing, and events on a portion of the land.

          In the years at issue, 2015–17, ecotourism in Zapata County was conducted by TI, a partnership owned by Ps. TI leased the Zapata County land from entities controlled by Ps. TI also conducted farming and construction operations on the Zapata County land and other properties owned by Ps, related entities, and third parties.

          TI filed Schedule F, Profit or Loss From Farming, with its return for each year 2005–20. TI reported income and expenses for both ecotourism and farming/construction operations on Schedule F. TI reported Schedule F gross income totaling over $14 million for years 2005–20. However, large expenses resulted in TI’s reporting a Schedule F net loss for each year. These net losses total over $15 million for years 2005–20. TI’s Schedule F losses flowed through to Ps, who used them to offset significant taxable income.

          R issued Ps a notice of deficiency for years 2015–17. R determined that TI’s Schedule F activity was not engaged in for profit pursuant to I.R.C. § 183. Multiple adjustments flowed from this determination, including the disallowance of deductions for TI’s Schedule F losses. R also determined that a 20% accuracy-related penalty applies for each year at issue.

          Ps filed a Petition challenging R’s determinations. Ps contend that TI’s Schedule F activity was engaged in for profit and that it and the real estate activities that Ps and related entities conducted are a single activity. Ps also contend they have a reasonable cause defense to penalties.

          Held: TI’s Schedule F activity and the real estate activities are separate activities.

          Held, further, TI’s Schedule F activity was not engaged in with the intent to make a profit.

          Held, further, accuracy-related penalties are not applicable. 

Monday, May 13, 2024

President Biden Nominates 3 to the Tax Court (5/13/24)

President Biden nominated the following to the Tax Court (see announcement here):

  • Jeffrey Samuel Arbeit, Nominee to be a Judge on the United States Tax Court

Jeffrey S. Arbeit is a legislation counsel with the staff of the Joint Committee on Taxation. His work focuses primarily on international tax and issues related to financial assets, transactions, and markets. Before joining the staff in 2015, Arbeit was a tax associate at Sullivan & Cromwell LLP in New York and clerked for Judge James S. Halpern at the United States Tax Court. Arbeit received an LL.M. in Taxation from New York University School of Law, where he served on the Tax Law Review; a J.D. from Boston University School of Law, where he served on the Boston University Law Review; and a B.A. in History from Brown University, where he rowed on the crew team.

  • Cathy Fung, Nominee to be a Judge on the United States Tax Court

Cathy Fung is a Deputy Area Counsel at the Office of Chief Counsel (Large Business & International), Internal Revenue Service, where she has held multiple attorney positions since 2009. Previously, Fung worked as a tax controversy and litigation associate at Dewey Ballantine (later Dewey & LeBoeuf) from 2006 to 2009. She also served as an attorney-advisor for Judge Robert A. Wherry of the United States Tax Court from 2004 to 2006. Fung received her J.D. from the University of North Carolina at Chapel Hill School of Law in 2003. She received an LL.M. Taxation from New York University School of Law in 2004 and an LL.M. in Securities & Financial Regulation from Georgetown University Law Center in 2006. She received her B.A. from the University of California, Los Angeles in 1995. Fung is a California native and a resident of the District of Columbia.

Benjamin A. Guider III, Nominee to be a Judge on the United States Tax Court

  • Benjamin A. Guider III has over 15 years of experience as a lawyer advising clients with respect to federal low-income housing tax credits, federal and state historic rehabilitation tax credits, tax-exempt bonds, and a variety of other private and public financing sources. He is currently an affordable housing attorney at Longwell Riess, L.L.C. From 2008 to 2023 he was an attorney at Coats Rose Professional Corporation. Guider is a member of the American Bar Association’s Forum on Affordable Housing and Community Development Law, as well as a member of the Louisiana State Bar Association and the State Bar of California. He received his J.D. from Tulane University in 2004 and his B.A. from the University of Virginia in 2001.
Hat tip to TaxProf Blog here.


Sunday, May 12, 2024

On Burden of Production and Related Concepts and an Appellate War Story on Scope of Review (5/12/24)

In a recent revision to my working draft of the Federal Tax Procedure Book (with the 2024 version due in early August 2024), I added to the discussion of the Burden of Production. (The 2023.2 version of the Practitioner edition, here, has the Burden of Production discussion starting on p. 617.) As I note there, the burden of production concept is usually discussed in a jury trial setting where the party bearing the burden of persuasion will lose on motion for directed verdict without getting to the jury if there is not enough evidence on a key fact to be submitted to the jury. That is a production burden or, as some call it, the risk of nonproduction. This burden is addressed to the function of the judge rather than the jury.

In a recent article, I noted that “The burden of production could also come into play on a motion for summary judgment, motion for j.n.o.v., or even on appeal when the trial judge or appellate judges determine that the evidence was of such quality that a reasonable juror could not make a determination.” John A. Townsend, Burden of Proof in Tax Cases: Valuation and Ranges—An Update, 73 Tax Lawyer 389, 402 n. 42 & 404 n. 49 (2020). I decided to add that thought to the Burden of Production discussion in the working draft of the Federal Tax Procedure Book so that it will appear in the 2024 edition.

As I now have it in the working draft, the added paragraph is (footnote omitted):

          The burden of production is discussed above in its traditional jury-trial setting where it would be invoked in a motion for directed verdict. There is an analog in motions for summary judgment, motion for judgment notwithstanding verdict (j.n.o.v.), and appeals. In each of those settings, a proponent may succeed if the record has unrebutted persuasive evidence that a reasonable jury could not find for the opponent. In other words, the opponent on a motion for summary judgment has a burden of production (or risk of nonproduction) equivalent to show evidence that a reasonable jury could find for the opponent.

I thought I would elaborate in this blog by reference to a recent tax opinion. In Meyer, Borgman & Johnson, Inc. v. Commissioner, 100 F.4th 986 (8th Cir. 5/6/24), CA8 here and GS here, the Court affirmed the Tax Court’s grant of summary judgment holding that the taxpayer did not qualify for § 41’s credit for qualified research expenses” because the expenses were “funded” by another party (rather than at taxpayer risk) within the meaning of § 41(d)(4)(H). I will not go further into the law; the opinion is very short, so I encourage those interested to read it.

Obviously, in granting summary judgment, the Tax Court had to make findings of fact and conclusions of law. Under my analysis above, the taxpayer bearing the burden of persuasion and thus the burden of production on summary judgment had to show that there were sufficient facts under the law to warrant the Court denying the summary judgment. In other words, in the face of an otherwise appropriate IRS motion for summary judgment, the taxpayer had to ensure that the facts on the motion for summary judgment were of sufficient quality to make the issue a triable issue. In the jury analog, the facts would have to be sufficient to get the issue to the jury if the facts were as presented in the motion for summary judgment.

I focus on the Court’s statement in Meyer, Borgman & Johnson, Inc. of the standard of review on appeal, because it seems to be less than precise about what it was doing in the context of reviewing the grant of a motion for summary judgment. I quote the relevant portion of the opinion (Slip Op. 2, cleaned up to strip out case citations and quotes to get to the reasoning and bold-face supplied by JAT):

On summary judgment, the Tax Court ruled that MBJ’s research was “funded” within the meaning of 26 U.S.C. § 41(d)(4)(H), meaning that MBJ did not qualify for the credits. This court reviews de novo a grant of summary judgment. Summary Judgment pursuant to Tax Court Rule 121 is derived from Rule 56 of the Federal Rules of Civil Procedure and is interpreted consistently with interpretations of Rule 56. Contract interpretation and the propriety of summary judgment are legal issues we review de novo.

This court reviews de novo the Tax Court’s legal conclusions; findings of fact are upheld unless clearly erroneous. An income tax deduction is a matter of legislative grace and* the burden of clearly showing the right to the claimed deduction is on the taxpayer.

Thursday, May 9, 2024

Notes on Dawson Available Documents and Tax Court Style Guide (5/9/24)

The purpose of this blog entry is to inform readers (some of whom may already know some of the items) of certain matters relating to Tax Court practice.

 MATTERS RELATED TO THE DAWSON SYSTEM:

1. Documents available Online in the DAWSON System. First, there is no permanent link for opinions. Those wanting opinions or orders have to do so in the following alternative manners:

a. the “Today’s Opinions” or “Today’s Orders” pages, here and here, respectively which are available only on day of publication);

b. through the Docket Entries for the specific Case, here.

c. through the Opinion Search here or Order Search here. In addition to specific opinion searches, the Opinion Search offers significant database search possibilities by types of opinions (T.C., Memorandum, Summary, and Bench), by Tax Court Judge, and by dates (this latter permitting a search for cases that are no longer on the Today’s Opinions discussed in paragraph 1.a.)

I am not sure precisely why there are no permanent links provided for opinions, although I understand it relates to the design of the DAWSON system.

As to search by Judge with no other limiting parameters, the pages display only “first 100 matches;” in theory, this might limit the usefulness for certain types of studies. But within those parameters, certain analyses may be made. For example, having too much time on my hand, I wanted to see how productive the Active Judges were in terms of their T.C. and Memorandum Opinions. I started with a  prolific generator of opinions, Judge Lauber who, although a Senior Judge since January 1, 2020, produced 100 T.C. and Memorandum Opinions from 7/26/21 (the earliest date that the search reached the maximum 100 opinions for Judge Lauber) to present (5/9/24). I then used the tool to determine the number of opinions rendered by the presently active Judges during the same period. Here are the results:

Those are the raw data; I draw no conclusions from these data because I am sure there is a lot of nuance behind them.

Tuesday, May 7, 2024

The Treasury Green Book Proposals for Tax Legislation on Procedure (including the NTA Blog Regarding the § 6751 Proposal) (5/7/24)

The National Taxpayer Advocate, currently Erin M. Collins, offers a blog that often contains information useful for tax procedure enthusiasts. The recent blogs are here. The most recent is Treasury FY 2025 Green Book Proposes to Essentially Eliminate Written Supervisory Approval for Penalties (NTA Blog 5/2/24), here.
 
The NTA laments that Treasury wishes to do away with § 6751(b)’s written supervisory approval requirement.  Section 6751(b) is a poorly drafted statute causing considerable confusion and requiring considerable administrative and judicial resources. From my perspective, the commotion around § 6751(b) has served little purpose other than rewarding tax abusers by avoiding penalties because of an IRS procedural foot-fault that really did not affect those taxpayers negatively. Nevertheless, being the NTA, the NTA must advocate for the taxpayers and finds some value in the written supervisor approval requirement. For Treasury’s view on the subject, readers might want to read the section of the Green Book General Explanations starting on p. 175, here.
 
The Green Book catalogs Treasury’s proposals to Congress for changes in statutory law. The Treasury General Explanations of the Green Book are here. The Table of Contents for the General Explanations is here. The General Explanations make the proposals in a format discussing present law, reason for change, and the proposals for change.

I thought I would mention without detail some of the other Green Book proposals that might be of interest to tax procedure enthusiasts. These proposals are under headings titled Improve Tax Administration and Improve Tax Compliance (see Table of Contents pp. iii & iv which provide links for the items in the Table of Contents). All of the proposals are important, but the ones I thought worth mentioning are:
 
1. The modification of § 6751(b)’s written supervisor approval requirement discussed above, starting at p. 175 here. (JAT Note: One matter perhaps relevant here is that Treasury has Proposed Regulations that attempt to make some sense and order from the 6751(b)’s written supervisor approval requirement. See Musings on Proposed § 6751(b) Regulations and the Potential Demise of Chevron Deference (Federal Tax Procedure Blog 1/8/24; 1/15/24), here.)
 
2. Revision of § 6103 to clarify that Tax Return Information Disclosed on the Public Record in Judicial Proceedings or in Publicly Filed Notice of Federal Tax Lien Is Not Tax Return Information Prohibited From Disclosure (General Explanations starting at p. 187, here.)
 
3. Allow Admission in Innocent Spouse Cases of Relevant Evidence at Trial (Rather than Limited to Administrative Record) (General Explanations starting at p. 190, here.)

Sunday, May 5, 2024

Excellent Article on Practical Effects the Administrative Law World Awaits Supreme Court Opinion(s) on Chevron (5/5/24)

The flood of Chevron comments seems to have slowed down while the Supreme Court is considering Chevron for what further havoc it will wreak in pursuit of its conservative agenda. Readers will certainly know that Chevron is a favorite bogeyman (real or feigned) in the conservative community.

I write to point readers to an article that I found very good about what might happen with the much-anticipated opinion. The article is James Downing, Energy Lawyers Debate the Impact of Losing the Chevron Deference (RTO Insider 4/29/24), here. The article reports on a discussion among “energy lawyers” which are perhaps not as nerdy as tax lawyers because of energy’s long-standing reputation of being major risk-takers. One of my favorite memories from moving to Houston in 1977 was an ad from a local entrepreneur, Eddie Chiles, proclaiming “If you don't have an oil well, get one,” see Wikipedia entry here. Tax lawyers are not identified with any particular risk-taking community and have long been thought as so nerdy as to be risk-averse (that reputation was challenged as tax lawyers forayed into bullshit tax shelters in relatively recent memory).

At any rate, the article reports interesting comments from the lawyers serving in energy regulator roles. I quote excerpts from the article:

          Chevron makes sense as a legal doctrine and provides judges with an easy way of affirming an agency’s decision-making when there is ambiguity in the law, FERC General Counsel Matthew Christiansen said at the EBA’s Annual Meeting. But underlying those decisions is some basic common sense being applied by the judges.

          “Because I think that Chevron is largely deployed as a way of providing a compelling path to affirm an agency action, I’m not convinced that the loss of Chevron in many cases, if that is indeed what happens, is going to lead to wildly different outcomes,” Christiansen said. “I’m sure it’s going to lead to different outcomes on the margins. But at the end of the day, I’m a big believer in agencies’ ability to still put forth compelling justifications.”

          Chevron has provided a lot of value over the decades, but the politics have reversed completely since it was first decided, DOE General Counsel Samuel Walsh noted. The late Justice Antonin Scalia, a textualist, was a big fan of the doctrine, and Justice Clarence Thomas authored the Brand X decision in 2005 that extended deference to the Federal Communications Commission and kept internet service providers from being regulated as common carriers.

          “Some of the most important Chevron cases were cases where agencies were using the flexibility afforded by deference to regulate in a more light-handed way, or maybe not at all,” Walsh said.

          The biggest area where DOE might be affected by the change in precedent would be on its ability to set efficiency standards for electric appliances, he said.

          “But to my knowledge, we’ve only been upheld at Chevron Step 2 once,” Walsh said; Step 1 is deciding whether the law’s intent is clear from the text. “We’ve done hundreds of rules over the last four decades, and I think we’ve only benefited from it in a clear and explicit way once.”

          DOE has benefited from the law more in its other functions such as litigation around nuclear waste storage in the 1990s and in litigation against the federal power marketing administrations it oversees. The law that governs sales from federal dams specifically calls “municipalities” preferred customers, so in the early 1990s, some “clever” city governments asked the Western Area Power Administration to sell them cheap electricity, Walsh said. WAPA argued that the term “municipalities” meant municipal utilities, and Chevron helped it carry the day in court.

*  * * *

Friday, May 3, 2024

DC Circuit Holds IRS Has Assessment Authority for § 6038(b) Penalty, Reversing Tax Court (5/3/24; 5/4/24)

In Farhy v. Commissioner, ___ F.4th ___, 2024 U.S. App. LEXIS 10843 (D.C. Cir. 5/3/24), CADC here, TN here, and GS here, the Court of Appeals (Judge Pillard author) held that the IRS has assessment authority for the § 6038(b) penalty. In so holding, the Court rejected the Tax Court holding that the IRS did not have assessment authority. Judge Pillard’s opinion is well-reasoned and presented. Although it is not a short opinion, I highly recommend reading the whole thing.

I will say that the opinion talks in terms of Congress’ intent. Thus, for example, summarizing the reasoning (Slip op. 13-14, emphasis supplied by JAT):

We need not embrace either party’s tax code-wide default rule to resolve this case. We accordingly do not pass on those broader theories beyond explaining why Farhy’s does not preclude assessment of section 6038(b) penalties. Instead, we conclude that a narrower set of inferences suffices to show that Congress intended to render those penalties assessable. Read in light of its text, structure, and function, section 6038 itself is best interpreted to render assessable the fixed-dollar monetary [*14] penalties subsection (b) authorizes. As a result, the Commissioner’s authority to assess all “assessable penalties” encompasses the authority to assess penalties imposed under section 6038(b).

My analysis is that there was no congressional intent on assessment authority issue. But given the schema, one can fairly infer that, had Congress had an intent on the assessment authority issue, it would have been to confer assessment authority on the IRS. That is simply filling in the gaps as a matter of statutory interpretation.

For my thoughts on the issue (noting particularly my skepticism on the Tax Court’s now reversed decision, see my prior blog posts (chronological order)):

  • Tax Court Holds that IRS Has No Authority to Assess § 6038(b) Penalties for Form 5471 Delinquencies (Federal Tax Procedure Blog 4/3/23; 4/23/23), here.
  • Regulations Interpreting Pre-1996 Code Provisions; Fixing Farhy (Federal Tax Procedure Blog 5/11/23; 5/12/23), here.
Added 5/3/35 9:00 pm:

JAT Comments:

Thursday, May 2, 2024

7th Circuit Affirms Tax Court Determinations on Mixed Questions for Clear Error (5/2/24)

In Moore v. Commissioner, ___ F.4th ___ (7th Cir. 4/30/24), CA7 here and GS here, in a brief opinion, the Court affirmed the Tax Court’s holding/finding that the taxpayer had failed to prove key factual elements for the §41 tax credit for “qualified” research expenses. The Court holds (Slip op. 2-3): 

           The Tax Court found it impossible to answer the “was it qualified?” and “how much?” questions. The Moores call this a legal error, but it was a finding of fact under the approach used to differentiate fact from law in U.S. Bank, N.A. v. Village at Lakeridge, LLC, 583 U.S. 387, 395–96 (2018). (That is to say, the finding is case-specific rather than based on resolving a dispute about what a legal rule provides.) As a factual finding, it is reviewed for clear error, and we do not see any error at all, let alone a clear one.

The case is unexceptional but I thought readers might want more on the Supreme Court case cited, U.S. Bank, N.A. v. Village at Lakeridge, LLC, 583 U.S. 387, 138 S.Ct. 960 (2018) (SC here, SC U.S. Report Preliminary Print here, and GS here ), the Court determined the scope of review (de novo or clear error) for bankruptcy court determinations of nonstatutory insiders (i.e., person not in the “includes” (non-exclusive) specific definition in the statute). "Insider" is a legal definition that applies to specific facts. Was the bankruptcy court’s determination of insider status reviewable under the clear-error standard (for factual determinations) or the de novo standard (for legal conclusions)?

I provide here the Court’s Syllabus because I think is a pretty good summary:

          Held: The Ninth Circuit was right to review the Bankruptcy Court's determination for clear error (rather than de novo). At the heart of this case is a so-called “mixed question” of law and fact—whether the Bankruptcy Court's fndings of fact satisfy the legal test chosen for conferring nonstatutory insider status. U. S. Bank contends that the Bankruptcy Court's resolution of this mixed question must be reviewed de novo, while Lakeridge (joined by the Federal Government) argues for a clear-error standard.