IRS

We should not expect the courts to give the marijuana industry any tax relief -- that is going to have to come from Congress.

The vastly divergent fortunes of partners and solos.

As marijuana businesses seek to capture as many deductible expenses as they can, they run the real risk of the IRS disagreeing and finding themselves audited or hit with a penalty.

Year-end tax planning is especially challenging this year because Congress has yet to act on a host of tax breaks that expired at the end of 2013. Some of these tax breaks may be retroactively reinstated and extended, but Congress may not decide the fate of these tax breaks until the very end of this year (and, possibly, not until next year). These breaks include, for individuals: the option to deduct state and local sales and use taxes instead of state and local income taxes; the above-the-line-deduction for qualified higher education expenses; tax-free IRA distributions for charitable purposes by those age 70-1/2 or older; and the exclusion for up-to-$2 million of mortgage debt forgiveness on a principal residence. For businesses, tax breaks that expired at the end of last year and may be retroactively reinstated and extended include: 50% bonus first year depreciation for most new machinery, equipment, and software; the $500,000 annual expensing limitation; the research tax credit; and the 15-year write-off for qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property.

The Day After: There are still a few undecided races but we know that Republicans will control the House and the Senate in the next session of Congress. This may provide an opportunity for more bipartisan legislation in the financial services area. There is reason to hope that Congress will be able to pass legislation that President Obama will sign that could soften some of the hard edges of the Dodd-Frank Act, such as the effect of regulations intended for large banks on small and regional banks, the application of SIFI rules to insurance companies, the regulation of end-users of derivatives, the broad definition of municipal advisor and the required disclosure of the origin of conflict minerals. In addition, the SEC may now adopt, pare back or drop some proposals that have been on hold, like the crowdfunding rules, amendments to Rule 506 and Form D, and fiduciary standards for brokers. Whatever happens, we’ll be here to cover it.

On September 17, the U.S. Tax Court, in Dynamo Holdings LP v. Commissioner, 143 T.C. No. 9 (Sept. 17, 2014), held that a taxpayer could use predictive coding, over the objection of the Internal Revenue Service (IRS), to identify relevant electronically stored information (ESI) for production. This is the first Tax Court case to address the use of predictive coding in response to a discovery request.

The full tapestry of wacko tax fraud theories is a lovely thing to behold....

* Judge Emmet Sullivan (D.D.C.) wants the IRS to explain, in a sworn declaration, how exactly it lost Lois Lerner’s emails. [WSJ Law Blog]

* And the fun for the IRS continues today in the courtroom of Judge Reggie Walton (D.D.C.), as reported by Sidney Powell, author of Licensed To Lie (affiliate link). [New York Observer]

* Speaker John Boehner wants to take the Republicans’ crusade against Obamacare to the courts. [New York Times]

* Andrew Calder, the young M&A partner that Kirkland & Ellis snagged from Simpson Thacher for a reported $5 million a year, is already bringing in big deals. [American Lawyer]

How the cupcake crumbles: the once-successful venture of an NYLS grad and her husband needs a rescue.

* “Duke University is not and never has been in the business of producing, marketing, distributing, or selling alcohol.” Some bros down in Durham disagree. [ABA Journal]

* If you see something… sue someone? The ACLU and Asian American civil rights groups, together with some help from Bingham McCutchen, have filed a legal challenge to the Suspicious Activity Reporting database. [New York Times]

* Congrats to David Hashmall, the incoming chair of Goodwin Procter — and congrats to outgoing chair Regina Pisa, the first woman ever to lead an Am Law 100 firm, on her long and successful leadership. [American Lawyer]

* A group of investors might end up devouring Crumbs, the cupcake-store chain founded by New York Law School grad Mia Bauer that suddenly shut down this week amid talk of a bankruptcy filing. [Wall Street Journal (sub. req.)]

Wouldn't it be great if the government didn’t spoliate -- er, “recycle” -- any more evidence in the investigation of the IRS?

* With the impossible body ideal of Barbie gracing the Sports Illustrated Swimsuit Cover, perhaps we should consider the positives that Barbie has contributed to women over the years. Missing is the rare, vacuous “math class is tough” Barbie. [The Careerist] * A five-year-old writes the cutest response to the IRS. [TaxProf Blog] * Professor busted for taking upskirt pics. His defense? How else was he going to prove the girls weren’t wearing underwear? Touché. Touché. [The Smoking Gun] * The reasons to quit your Biglaw job. Now in listicle form! [Buzzfeed] * The Supreme Court has a chance to take a stand against prosecutorial misconduct. Will they take it? [The Atlantic] * If you’re violating your probation, be sure to videotape it and post it on YouTube. There’s no way your probation officer will see it. [IT-Lex] * More insight into the world of contracting and America’s emerging economic model. [Law and More] * On April 11-12, 2014, the Marquette University Law School will hold a symposium entitled “Judicial Assistants or Junior Judges: the Hiring, Utilization and Influence of Law Clerks.” Our own David Lat will be there, along with such luminaries as Judge Posner, Judge Sykes, Joan Biskupic, and Tony Mauro. [Marquette University Law School]

* Johnny Football failed to defeat Alabama on Saturday (though he was gentlemanly enough to keep Bama from covering the spread), but now he has a tougher foe in the IRS. [TaxProf Blog] * Don’t be that guy who takes naked pictures of your girlfriend. And definitely don’t be that guy who takes naked pictures of his 16-year-old girlfriend while married to the girl’s older sister. In other words, don’t be this lawyer. [Legal Profession Blog] * Are you an attorney on LinkedIn? Have people been endorsing your legal skills? Congratulations, you’re probably violating an ethical obligation! [IT-Lex] * Another round-up of people with law degrees who decided to be famous for something other than lawyering. When the list kicks off with Geraldo Rivera and Jerry Springer, you know you’re in for a classy list. [Millington Star] * One year later, a look at how the Steubenville rape case has affected the town. [Jezebel] * The world of litigation finance suffers some setbacks as it turns out lawsuits might be the only investment less stable than the Twitter IPO. [Wall Street Journal] * Time for some more legally themed poetry! This time, let’s get all Edgar Allan Poe up in here. [Poetic Justice] * Following up on our event in Toronto last week, Bruce MacEwen recapped the evening’s discussion here. [Adam Smith, Esq.]

Charles Grassley wants documents from NYU. Charles Grassley is not getting documents from NYU.

* Oh, and by the way, it’s not just Verizon that the NSA is spying on. It’s every major phone and internet provider, too. They must see an amazing amount of foreign pornography on video chat. [Guardian]

* The IRS is under siege over its conservative targeting scandal, and now a training video parodying Mad Men has surfaced with a focus on “customer service.” How incredibly ironic. [DealBook / New York Times]

* Francine Griesing, the woman who sued Greenberg Traurig for $200M over the firm’s so-called “boys’ club” (and later quietly settled), has tips for women who want to succeed in the law. [Am Law Daily]

* This ruling has to do with collecting fees following a law school clinic victory, but the key takeaway is that law students’ “time and effort still has monetary value.” Hear that, ABA? [National Law Journal]

* Rutgers Law-Camden is trying to recover from “an existential threat” after its class size unexpectedly dropped by more than 50 percent. But… that’s a good thing these days. [Philadelphia Business Journal]

* A judge dismissed Pennsylvania Governor Tom Corbett’s lawsuit against the NCAA for “fail[ing] to advance the ball.” How kind of her to entertain us with some football references. [Legal Intelligencer]

* Let’s get ready to rumble! Some of the Supreme Court’s most controversial opinions yet are expected to be rolled out in the coming weeks — and maybe even today. Stay tuned for news. [CNN]

* Let’s see what happens when Obama nominates three judges at once to the D.C. Circuit. How many of them will be confirmed as quickly as Sri Srinivasan? Probably not many. [New York Times]

* White House counsel and leading litigatrix Kathryn Ruemmler is best known for her fabulous shoes, but this week, she’s taking some flak for her involvement in the IRS scandal. [New York Times]

* “I don’t know whether the Lord Himself could get confirmed at this point.” It looks like poor Attorney General Eric Holder doesn’t have very many people left to turn to thanks to executive and congressional inaction. [Bloomberg]

* When it comes to recent diversity efforts in Biglaw there’s an ebb, but not really a flow, and it’s all being blamed on the recession. Also, “diversity fatigue” is apparently a thing now. [New York Times]

* The $200 million gender discrimination suit filed against Greenberg Traurig over the firm’s alleged “old boys club” has been settled for an undisclosed amount. You go girl! [Thomson Reuters News & Insight]

* According to Judge Murray Snow, Arizona’s most beloved sheriff, Joe Arpaio, has been violating the constitutional rights of all of the Latinos whom he supposedly “hadn’t” been racially profiling. [Reuters]

* My, how things change: David Blankenhorn, a man who once testified as an expert witness in support of Proposition 8 at trial, has come forward to condemn anti-marriage equality laws. [Los Angeles Times]

* Stewart Schwab, the dean of Cornell Law School, will step down in June 2014. Perhaps the next dean will crack down on the number of cam girls pleasuring themselves in the law library. [Cornell Chronicle]

* Law schools tend to be “bastions of liberalism,” which makes it hard for students to find intellectual diversity. It’s a good thing we’ve got the Federalist Society to balance things out. [Washington Times]

* People who think Washington needs another law school propose one for students “who can’t afford to … go into debt … to get their legal degree.” This won’t sit well with the legal academy. [News Tribune]

* With Lindsay Lohan stuck in rehab, Amanda Bynes decided it was her turn to go wild. The retired actress says she’s suing the NYPD for unlawful arrest and sexual harassment. [New York Daily News]

* Alton Lemon, the Supreme Court plaintiff behind the eponymous Lemon test, RIP. [New York Times]

* “Journalists should not be at legal risk for doing their jobs.” Thanks Obama, but AG Eric Holder was the one who kind of signed off on the James Rosen search warrant. [Open Channel / NBC News]

* The chief judge of the D.C. Circuit apologized for a lack of transparency in the James Rosen probe, and this is one of the least embarrassing things that happened this week. [Washington Post]

* Despite having “done nothing wrong,” embattled tax official Lois Lerner announced she’s been placed on administrative leave in light of recent events. I salute you, fellow WNE grad. [National Review]

* Watch out, patent trolls, because this proposed bill might actually be — gasp! — helpful. If enacted, the Patent Abuse Reduction Act’s goal is to help keep discovery costs down. [Hillicon Valley / The Hill]

* It’s a hell of a drug: for some lawyers, the sequester won’t be such a bad thing after all, because Coast Guard and Navy forces won’t be available to intercept 38 tons of cocaine. [Breaking Defense]

* Proskauer Rose’s ex-CFO, Elly Rosenthal, has cut down her $10 million suit against the firm to just one allegation. She claims the firm fired her solely for her diagnosis of breast cancer. [Am Law Daily]

* A third perpetrator emerged in the Berkeley bird beheading case, and he was just sentenced to two days in jail. Can you listen to BARBRI in a jail cell? I guess he’ll find out. [San Francisco Chronicle]

* The Boy Scouts of America will now admit openly gay youths into their ranks for the first time in the history of ever. You should probably “be prepared” for a flurry of litigation over this. [New York Times]

* A mistrial was declared in the penalty phase of the Jodi Arias murder trial. Ugh, come on with this, the Lifetime movie is already in post-production! How on earth are they going to work this in? [CNN]

* Online gambling wants to come back to the U.S. after the government cracked down last year. Anybody want odds on whether this works? [Wall Street Journal]

* In news that only affects those who want to dress like whores, Abercrombie & Fitch and Hollister may systematically mistreat the disabled. [Fox News]

* Post-disaster price gouging is sad, but inevitable. Oklahoma’s Attorney General E. Scott Pruitt is having none of it. [The National Law Journal]

* Obama will address drone policy and Gitmo in a security speech today because, after the last couple weeks of scandal, he’s hoping to introduce fodder for another round of withering criticism. [Huffington Post]

* The Daily Caller is all over the idea that Michelle Obama may have dated the Inspector General of the IRS at Harvard Law. Which proves… actually I have no idea if the Daily Caller even knows why this might be significant. [Daily Caller]

* U.S. and Chinese law schools are collaborating more. American law schools are really desperate to open themselves to more students, aren’t they? [China Daily]

* The Jodi Arias jury may not be able to make a decision on sentencing. If you cared about this story at all, you’ve already heard Nancy Grace’s opinion. [NBC News]

* Elie argues with folks about Greece v. Galloway and legislative prayer. Video after the jump… [Huff Post Live]

* A bipartisan immigration reform bill made its way through the Senate Judiciary Committee and will head to the Senate floor. Of course, the amendments in support of gay marriage didn’t make it in, but that may be moot soon anyway. [CNN]

* IRS official Lois Lerner may not be very “good at math,” but at least she seems to know the basic principles of constitutional law. She’ll invoke her Fifth Amendment rights before the House Oversight Committee today. [Politico]

* The D.C. Circuit ruled that the top secret Osama bin Laden death photos will remain top secret, but the internet’s desperate cries of “pics or it didn’t happen” will live on in our hearts. [Thomson Reuters News & Insight]

* Attention naysayers: it may be time to face the music. According to the latest Altman Weil survey, most law firm leaders think all of these fun recession-driven changes are here to stay. [Am Law Daily]

* Twenty-two law firms are banding together to fight against fraudulent financial products on a worldwide scale. It’s too bad this legal alliance didn’t exist before the Bernie Madoff scandal. [New York Times]

* It looks like New Jersey may soon be hopping aboard the pro bono work before bar admission train. You better hope you get your clinic placements in order, people. [New Jersey Law Journal (sub. req.)]

* The results for the February 2013 bar exam in California are out, and they’re frightening. It’s time to try that acting thing again, because only 41 percent of all test takers passed the exam. [The Recorder]

* Jodi Arias is now begging jurors to allow her to live out the rest of her days in prison. She wants to contribute to society by painting, recycling, and… not slashing additional throats. Lovely. [Fox News]

* Our thoughts and prayers go out to the people of Oklahoma. [CNN]

* The IRS and the Treasury Department better watch out, because it seems that the “next logical step” for the tea party victims of heightened scrutiny leads right up the courthouse stairs. [ABC News]

* #Whatshouldwecallme after advising on the $1.1 billion Yahoo/Tumblr deal? Kind of a big deal. The Biglaw firms doing the underlying legal work are Simpson Thatcher and Gunderson Dettmer. [Am Law Daily]

* The Mirena MDL judge thinks female attorneys should be on the all-male executive committee. If this is “strategic gender placement,” the strategy is to look bad publicly. [Thomson Reuters News & Insight]

* The Travers Smith trainee who was fired for getting pregnant is due in court this June to find out what type of compensation she’ll receive for being discriminated against by the firm. You go girl! [Daily Mail]

* Wherein the parents of a 0L who’s got doubts about her employment prospects are counseled that she can “work not just in law.” ::facepalm:: [Law Admissions Lowdown / U.S. News & World Report]

* There’s trouble in paradise: lawyers in the Jodi Arias case unsuccessfully attempted to get a mistrial and withdraw from representation — for the second time — during its punishment phase. [Fox News]

The IRS scandal sheds light on what it means to be a lawyer -- what it means to others, and what it means to us.

* Obama might have found out about the IRS scandal “when it came out in the news,” but the Office of White House Counsel knew what was going on weeks ago. Hooray, a new reason for people to lose their sh*t. [Wall Street Journal (sub. req.)]

* Life, liberty, and the pursuit of happiness through ridiculously expensive litigation: making up almost two percent of our GDP, our legal system is the most costly on earth, which isn’t exactly something we should be bragging about. [Corporate Counsel]

* “It’s no surprise these lawyers would want to get off this sinking ship.” It looks like things are going just swimmingly for Steven Donziger now that John Keker’s out as his defense attorney in the Chevron fraud case. [Thomson Reuters News & Insight]

* “Fantasy sports is usually the first and last thing I’ll do each day.” Here’s some proof that there’s such a thing as work/life balance in Biglaw… which is only applicable if you’re a partner. [Am Law Daily]

* Law school enrollment is down, and so is tuition revenue, so the legal academy is now selling new degrees. It’s only a matter of time before they market employment timeshares. [National Law Journal]

* On the bright side, if you’re still looking for a job, our own David Lat has some advice on how to get one (and how NOT to get one). We miss summer associates’ misbehavior. [U.S. News & World Report]

* Congrats are in order for this weekend’s graduates, including the first graduates of LMU’s embattled law school — they won’t let a lack of ABA accreditation rain on their parade. [Knoxville News Sentinel]