TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, April 4, 2008

Court Excludes Tax Prof's Expert Testimony in Tax Shelter Case

The Court of Federal Claims on Tuesday refused to allow the expert testimony of Tax Prof Ira B. Shepard (Houston) and tax lawyer Stuart A. Smith in Stobie Creek Investments, LLC v. United States, Nos. 05-748T & 07-520T (Ct. Fed. Cl. Apr. 1, 2008):

Defendant objects to plaintiffs’ offer of the expert reports and testimony of Professor Ira B. Shepard and Stuart A. Smith, Esq. ... Defendant seeks exclusion of the reports and testimony of Professor Shepard and Mr. Smith because they intend “to testify about the law they want the Court to apply in this case, and how the Court should treat the plaintiffs’ tax shelter under that law.” ...

Defendant characterizes Professor Shepard’s report as “nothing but legal analysis and application of his view of the law to his view of the facts of this case.” According to defendant, the report “contains lengthy descriptions of numerous cases and sets forth in detail the manner in which [Professor] Shepard would decide this case if he were the judge.” ...

It is unfortunate that the question of the admissibility of this expert testimony comes so late in the pre-trial process. Plaintiffs undoubtedly have expended substantial monetary resources in retaining Professor Shepard and Mr. Smith to produce their reports. ...

Plaintiffs’ legal experts are applying the law to the facts, rather than permissibly explaining law in a manner that could inform or assist the finder of fact. Their testimony therefore cannot be admitted under Fed. R. Evid. 702.

(Hat Tip: Bill Drew.)

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