Duffey v. Commissioner
United States Tax Court
91 T.C. 81 (1988)
- Written by Kate Luck, JD
Facts
William and Frieda Duffey (plaintiffs) were assessed a tax deficiency by the Internal Revenue Service (IRS) (defendant). The Duffeys challenged the assessment in the United States Tax Court. The IRS alleged that the Duffeys received unreported income from the distribution of illegal drugs and used trusts to hold title to assets purchased with the unreported income, and that the failure to report that income constituted fraud. The Duffeys were represented in the matter by G. Alohawiwoole Altman and had hired another attorney as cocounsel, who the Duffeys were paying an hourly fee. Altman had prepared the Duffeys’ tax returns in previous years and was the attorney for the Duffeys’ trusts. The IRS filed a motion to disqualify Altman. The IRS asserted that it intended to call Altman as a witness to testify as to whether the Duffeys concealed the unreported income from him, their tax-return preparer, which was related to the issue of fraud. The Duffeys argued that Altman’s disqualification would cause them substantial hardship because Altman had familiarity with their finances and because Altman was representing them pro bono and they could not afford to hire an attorney.
Rule of Law
Issue
Holding and Reasoning (Korner, J.)
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