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.