Faulty Grammar May Have Lost Tax Court Case

(Re-printed from Gibbon's and Kawash's Fall Newsletter.) Do the abbreviations "i.e." and "e.g." confuse you? Are you unsure of which one to use?

A recent tax case required the court to deliver a grammar lesson.

First, a little background on the tax issue involved in the case (Laura Seidel v. Commisioner, CA-9, 2009-1 USTC 50,370 April 28, 2009)

Compensation received from physical injury is generally excluded from income. However, emotional trauma is not considered a physical injury. So payments received for emotional distress are fully taxable.

In a settlement with her former employer, Laura Seidel received $157,000. The settlement agreement described the payments as being for "personal injury (i.e. emotional distress) damages only."

The case originally went before the Tax Court in 2007. All of the parties-the Court, Seidel and the IRS-focused attention on the "i.e.".

Seidel argued that emotional distress was an example of the type of injuries she had received. The IRS argued that "i.e." is a limiting phrase that should be read to mean that emotional distress was the only type of personal injury being compensated by the payment.

The tax court observed that "i.e." is an abbreviation for a Latin phrase id est, which roughly means "that is" or "that is to say". Accordingly, the court agreed with the IRS.

Now the Court of Appeals for the 9th Circuit has upheld the Tax Court. Interestingly, the higher court did not comment on the Tax Court's grammar skills. The appellate court simply upheld the Tax Court's decision in an unpublished opinion.

Note that Seidel might have fared better if the settlement agreement had used "e.g." instead of "i.e.". Both are abbreviations for Latin terms. However, "e.g." stands for exempli gratia which means "for example".

Spirit of the Valley

Last Wednesday was the YMCA’s Spirit of the Valley Luncheon. I was the chairman of this year’s event which honored my father-in-law Charlie Jones. This was a special personal opportunity for me and it stimulated a lot of reflection on my behalf about Charlie (who I’ve known quite well since 1970 and knew casually before that) and my experience with the YMCA. This BLOG entry is about reflections on the YMCA and more broadly, the concept of volunteerism.

In the very early 1980’s…I think basically when I turned 30, I decided I had best start spending a bit of attention on my personal fitness which one could argue has become a lifelong obsession. So, I signed up for a co-ed fitness class and would go to the Y a few times a week. During this matt class, John Wells Jr. and I became acquainted. At some point in time, he asked me if I would consider joining the Board of Directors. I really hadn’t done much community service work since high school and zero community leadership work. I was honored and flattered and accepted.

I was born in upstate New York and met my wife Laura at the Lawrenceville School (which is where I met Charlie), in New Jersey. I was an import to Charleston and I was amazed at how easy it was to get involved in the community. I recall telling friends…most of whom lived elsewhere…how cool Charleston was. Yeah…they just get you involved and welcome your involvement. Anyway….I was impressed. As I became more involved, Charlie offered me a warning…be careful…the non-profits can suck up all your time.

I listened to that advice and decided I would not spread myself too thin…but would attempt to work diligently at any position I accepted or task assigned. Along the way, I bumped into several folks that were on many boards. Many of these people that were simply adding to the curriculum vitae were undependable. A lot of these folks had been encouraged by their employers to seek board positions. One of the problems though was they forgot to tell them to work! Now…I know I set the bar high and my expectations for performance are perhaps a bit steep…but I bet you can relate to what I’m sharing.

Anyway…….I worked diligently at the YMCA and ran the facility (from a board perspective) while John Wells Jr. headed the pool campaign. We worked through many tough issues together and this was all a great experience. The point of all of this is that this work I did…while it did in fact benefit the Y and in turn the community…it was really self centered. I was the winner in all of this and continue to be.

Don’t miss the opportunity to get involved and do a good job. You’ll get it all back in spades.

Knife to a Gun Fight

I offer a service known as owner's representation. A friend/professional acquaintance of mine also offers this service albeit in another marketplace. He recently published a post that described this service in his newsletter and the title of the post was "Don't Bring a Knife to a Gun Fight". The implication to me is...of course...so...you are about to go into construction...huh? Well get ready for a battle.

Honestly, that has not been my experience. I'm not sure how many projects I've been somehow involved in...let's say 500.....or that value...easily $500,000,000 and sure...I've been in a few disputes.....but really an amazingly few.

As a contractor...I was always reasonably careful about who I worked for. Now....we can all make mistakes and I certainly made a few....can you spell APCO...but besides a few notables, Pray Construction had a great lineup of clients. PrayWorks too has a had a great list of people we have worked for...thanks to you!

If an offering seems to good to be true...well it probably is. One means of travel in this industry is basically to beat a project around until you get the price you are looking for and THEN GET THE CONTRACT SIGNED. OK...now you really need a gun slinger.

Assume the project is over once the contract is signed....WRONG...Really, the fun is just beginning...and it can and should be fun....but...as an owner...if you simply rely on your own forces or your architect...well get ready.

Understand the contract...or better...get someone around you (i.e. like me) that will understand the contract and its attachments (read plans and specs)....pay attention along the way....be knowledgeable....expect great work and fair treatment...and you'd be surprised.

Yes...it is good to be prepared...and if your are conflict averse (BTW...conflict has a bad name...good things can and do come from conflict)...be sure to get someone that is not.

The whole process can and should be fun.....Use that paradigm

but put a good plan B in place! How's that for wordsmithing?