Power Company Argues District Court Erred in Jury Instructions in Refund Suit

Since 1926, Carolina Power has been engaged in the generation, transmission, and distribution of electric energy. By the end of 1971, Carolina Power had contracted for the manufacture and supply of key components for its Shearon Harris Nuclear Power Plant. Most of the physical construction of the Harris plant occurred between 1974 and 1983. Following rigorous testing, Carolina Power applied for and received its low power operating license in October 1986. In that month, Carolina Power entered the final stage of the start-up program, "power ascension testing." The government issued a second or "full power" operating license for the Harris plant in January 1987. That month the plant also achieved a sustained nuclear reaction in the core and commenced "low power" testing. The Harris plant then moved through various testing plateaus and reached 100 percent power in April 1987.

Carolina Power determined that the Harris plant was "ready and available" and therefore "placed in service" in 1986. The company maintained that everything that occurred after December 31, 1986 further confirmed that the Harris plant was "ready and available" in 1986 and therefore claimed a depreciation deduction for the plant on both its 1986 and 1987 returns. After an audit, the IRS disallowed all of the depreciation deduction claimed by Carolina Power for 1986 and a portion of that claimed for 1987. The utility paid the IRS the amounts allegedly due and filed for a refund. Following the Service's failure to allow or disallow the refund within six months, Carolina Power filed suit in district court. The case was tried before a jury for eight days, and on December 18, 1995, the jury returned a verdict in favor of the government. Pending mediation, Carolina Power filed a notice of appeal.

Carolina Power argues that an "outside the taxpayers control" instruction was legally and factually warranted in this case. Carolina Power further maintains that a "legal availability" instruction should have been given. Carolina Power also asserts that the revenue rulings do not merit deference and did not belong in the jury instructions. Carolina Power additionally insists that "weight and credibility" arguments do not warrant exclusion of relevant admissions and that the Jacobs "revenue ruling" testimony was erroneously permitted. Finally, Carolina Power contends that the standard of review for legal sufficiency of a jury charge is de novo, not the abuse of discretion standard urged by the government.

[1] The government's brief does little to overcome the points of error that require a new trial in this case -- points which were raised in Plaintiff-Appellant Carolina Power & Light's ("CP&L's") Opening Brief.

[2] FIRST, the standard of review for legal sufficiency of a jury charge is de novo, not the "abuse of discretion" standard urged by the government. Because relevant points of law were omitted from the instructions, reversal is warranted.

[3] SECOND, the government places overly restrictive readings on legal doctrines relating to the depreciation "in service" test that were omitted from the jury instructions. The government's effort to distinguish controlling cases from the facts of this case is not a basis for the district court's failure to instruct on points of law such as "outside the taxpayers control" and "legal v. physical readiness." The government is merely arguing the ultimate application of those points of law to the facts of the case -- arguments it could have made to the jury.

[4] Indeed, conflicting views about what the evidence shows highlight why the instructions should have been given. Had the district court fully and properly instructed the jury, the jurors would have been able to properly apply the law to THEIR view of the facts in order to arrive at a verdict. Also, that facts unrelated to the omitted legal doctrines MIGHT have lead the jury to reach the same result, even WITH the instructions, is not pertinent. The issue is whether the jury MIGHT have reached a DIFFERENT result had the correct instructions been given. Clearly, the jury could have rendered a verdict for CP&L if properly instructed, and therefore, a new trial with proper instructions is warranted.

[5] THIRD, the government repeatedly overstates the nature of the Revenue Rulings. Fourth Circuit authority is clear that such Rulings are merely the opinion of an IRS lawyer and do not merit "deference." Regardless of the legal significance of Revenue Rulings, the fundamental error is that the district court did not resolve the issue of what legal effect the Revenue Rulings should have on this case in the first place. Instead, the district court let the jury resolve this legal issue. At the same time, by listing the "Five Factors" from the Revenue Rulings and placing them at the conclusion of the instructions, the district court suggested that the Rulings were in fact the primary source of law regarding the concept of "in service." Inclusion of the Rulings in the instructions was reversible error.

[6] FINALLY, the evidentiary errors are similarly untouched by the government's arguments. The government's assertions as to the excluded documents merely go to their weight and credibility, not to relevance. These documents -- which amount to admissions by the government on hotly contested issues central to the determination of the case -- should have been admitted. Moreover, the government effectively concedes that the Revenue Ruling testimony of Dr. Jacobs' was outside his field of expertise, i.e., tax law as opposed to nuclear engineering.

* * *

[7] This Court should reverse the jury verdict below and thereby honor the Congressional policy of permitting taxpayers like CP&L, who make huge investments undeniably benefiting the public, to recover costs through depreciation in as rapid a manner as possible. "[A] close question whether a particular Code provision authorizes the deduction of a certain item is best resolved by reference to the underlying Congressional purpose of the deduction provision in question." Goldstein v. Commissioner, 364 F.2d 734, 741 (2d Cir. 1966). ¹

ARGUMENT

I. THE STANDARD OF REVIEW ON THE JURY INSTRUCTIONS IS DE NOV0.

[8] The government miscasts CP&L's arguments as to the jury instructions and thereby erroneously identifies "abuse of discretion" as the standard of review. Gov't Br. at 12, 18. That in some cases the "formulation", or text, of jury instructions has been reviewed for "abuse of discretion" is inapposite. CP&L contends that the jury instructions failed to accurately STATE THE LAW as to when an asset is "placed in service." Such a contention is reviewed de novo. See, e.g., Emergency One, Inc. v. American FireEagle, Ltd., 228 F.3d 531, 538 (4th Cir. 2000) ("[w]e review de novo whether the district court's instructions to the jury were correct statements of law"); Al-Abood v. El-Shamari, 217 F.3d 225, 235 (4th Cir. 2000) (same).

[9] This Court has recognized the difference between: (1) the review of the "formulation" of instructions (or their content unrelated to substantive law) which are reviewed for "abuse of discretion" and (2) review of the legal sufficiency of the instructions which are reviewed de novo. See Emergency One, 228 F.3d at 538; Cantu v. John Hancock Mut. Life ins. Co., No. 92-1778, 1993 U.S. App. LEXIS 8620, at *10 (4th Cir. Apr. 16, 1993) (holding that "[a] district court's decision whether to use jury instructions submitted by a party is reviewed only for abuse of discretion; however, an attack on the legal correctness of the instructions as given is subject to de novo review"). ² This approach is consistent with the approach in other circuits.

[10] See, e.g., Hook v. Ernst & Young, 28 F.3d 366, 370 (3d Cir. 1994) (same).

[11] The jury instruction cases the government cites are thus irrelevant. In Nelson v. Green Ford, Inc., 788 F.2d 205, 209 (4th Cir. 1986), for example, where the Court declined to "pick myopic fault," the issue was the district court's commentary on the evidence. In Chaudhry v. Gallerizzo, 174 F.3d 394, 408 (4th Cir. 1999), it was not disputed that the law required a "least sophisticated debtor" instruction. Instead, the issue was whether the "language" of the instruction sufficiently described the legal doctrine. Hardin v. Ski Venture, Inc., 50 F.3d 1291 (4th Cir. 1995) dealt with whether the judge's summary of the parties' contentions was unfairly weighted toward the defendant.

[12] In contrast, the question here is not "formulation" of the instructions, but whether the instructions described the pertinent points of law AT ALL. The district court gave no instruction whatsoever on the "outside the taxpayer's control," "legal availability," and "less than full capacity" points. In addition, although Revenue Rulings do not have force of law, they were included in the instructions.

[13] CP&L is not quarrelling with the manner in which the district court described the law or other elements of the charge (such as commentary on evidence). Instead, CP&L argues that the instructions failed to describe specified points of law IN ANY FASHION. As cases such as Emergency One, Cantu, and those cited in CP&L's Opening Brief at 21 make clear, this Court has plenary power to determine whether these matters rendered the instructions legally incorrect and to reverse the judgment accordingly.

II. AN "OUTSIDE THE TAXPAYERS CONTROL" INSTRUCTION WAS LEGALLY AND

A. THE GOVERNMENT MISREADS THE SMC AND SEARS OIL CASES

[15] The government argues Sears Oil Co. v. Commissioner, 359 F.2d 191 (2d Cir. 1966) and SMC Corp. v. United States, 675 F.2d 113 (6th Cir. 1982) cannot be applied here because to do so would permit the Harris Plant to be deemed "in service" even though it was not "capable of operation." Gov't Br. at 19-23. But that is THE VERY POINT of those cases. Both deal with situations where an asset, although operable, was incapable of operation because of a factor outside the taxpayer's control. The government argues that Sears Oil and SMC are inapposite here because the assets in those cases were "fully operational" or "capable of operation," (Govt. Br. at 20), and the Harris Plant was not. Such gloss on those cases is, at best, circular. If something keeps an asset from operating, then it, in fact, renders that asset inoperable. In SMC, for example, the plant could not run because it had no electricity source, but the court still found the asset was "in service" because the lack of electricity was outside the taxpayer's control.

[16] Here, there was substantial record evidence that the Harris Plant was operable in 1986 -- i.e., capable of generating electricity -- but it was legally precluded from doing so in 1986 by the delay in receipt of its Full Power License. (JA 610-11, 629-30, 659.) And there was substantial evidence that this delay was outside CP&L's control. (JA 312, 339-340, 346-49, 484, 486-87, 600-02, 610- 11.) The district court should have followed the rule of Sears Oil and SMC, and instructed the jury accordingly, so that the jury could make the factual determination whether the Harris Plant was "in service," despite the absence of the Full Power License.

B. CONFLICTS IN EVIDENCE DO NOT EXCUSE FAILURE TO INSTRUCT THE

[18] The government argued below that a number of dates and events in 1986 proved that the Plant was not ready or capable of operation (e.g., pre-operational testing was not complete; criticality had not been achieved). As to each one of these points, CP&L presented evidence as to why the events or conditions did not disprove readiness (e.g., critical pre-operational testing completed before January 1, 1987; criticality rescheduled because of licensing delays). (JA 200-06, 251-52, 469-70, 478-79, 483-84.) In addition, the government highlighted the absence of the second (i.e., Full Power) license to bolster its case that the Harris Plant was incapable of operation. However, CP&L presented evidence that the Full Power License was not determinative as to plant operability and that the license delays were beyond CP&L's control. (JA 192, 367, 610-11, 629-30.) In fact, there was ample evidence from which the jury could have concluded that these factors were EITHER (1) not dispositive or (2) outside CP&L's control.

[19] As an example, in its brief, the government argues that, even without the Full Power License, CP&L could have gone "critical" in 1986 but did not do so because of alleged schedule slippage (thereby attempting to demonstrate that the Plant was not "operational"). But CP&L demonstrated that "initial criticality" is just one phase of normal operating procedure -- an event that happens roughly every 18 months during a plant's life like many other routine operating procedures that were conducted at the Harris Plant in 1986. The parties agree that actual operation is not required for a plant to be deemed "in service." Criticality is simply not determinative.

[20] Moreover, CP&L adduced evidence that, once the licensing process was delayed into January 1987 by the NRC, start-up activities (including criticality) were intentionally re-scheduled because of the holidays and because it would have been unwise to bring the Plant to criticality (under the prior schedule) only to wait around for weeks before being allowed under the licensing scheme to proceed above the 5% level:

Q: Now, Mr. Willis [Harris Plant Manager], when you heard that

[21] Similarly, the government makes the argument that even before the December 18th NRC meeting was postponed, CP&L had fallen off its schedule for reaching criticality and full power. The government argues that, as a result, CP&L itself was the cause of the delay in reaching full operability. Gov't Br. at 21-22. But the government bases this argument on the lofty and incorrect assumption that CP&L would have been unable to make up the lost days for reaching criticality by the end of the year. In fact though, Mr. Willis testified that, despite CP&L's slight scheduling readjustment, the Plant was still expected to reach criticality by the end of the year until the December 18th meeting further postponed the process:

Q: [Could you] have been at heat up and criticality before year

[22] The government's argument that no reasonable jury could have found the Plant was ready even if the licensing issue is ignored (Gov't Br. at 9) was properly rejected by the district court on summary judgment -- based on the very same facts. It was undisputed that the Plant had not obtained its [Full Power] License" [sic] in 1986. Nonetheless, the district court properly recognized that other facts tended to show that the Plant was ready for operation. (JA 38- 43.) Consequently, the few facts the government points to were not dispositive.

[23] In our court system, the jury makes the factual determinations and then applies the law described by the court. See, e.g., Adalman v. Baker, Watts & Co., 807 F.2d 359, 366 (4th Cir. 1986); Sanders v. City of Indianapolis, 837 F. Supp. 959, 969 (S.D. Ind. 1992). But the jury does not know which factual issues to resolve (nor the verdict those conclusions should dictate) unless the judge gives the jury the proper legal guidance. See Emergency One, 228 F.3d at 538 (reversing judgment because given conflicts in evidence, jury could have come out either way, but court failed to instruct on the issue).

[24] Jury verdicts can turn on alternative applications of law to a number of subsidiary factual determinations, and the district court is not empowered to withhold such issues from the jury's consideration by failing to give them the law. In this case, it is very possible that the jurors concluded that the Plant was ready but for the factors outside CP&L's control. Al-Abood, 217 F.3d at 236 (vacating award because of lack of instruction and because appellate court "simply [had] no way of knowing what the jury intended"). Because the jurors did not know they could legally discount the factors outside CP&L's control, they may have felt compelled to reach a verdict for the government. That verdict must now be reversed.

III. A "LEGAL AVAILABILITY" INSTRUCTION SHOULD HAVE BEEN GIVEN.

[25] The government does not contest that the results in a series of cases stand for the proposition that legal restraint on "use" does not NECESSARILY preclude a finding of "in service." The government simply argues that the facts in those cases were different.

[26] The government's attempts to distinguish these cases are tenuous and unpersuasive. For example, characterizing the present case as relating to "public safety"-focused licensing does not distinguish it from Hellings v. Commissioner, 67 T.C.M. (CCH) 1988 (1994), in which a necessary Coast Guard certificate was absent. Surely, certification by the Coast Guard is also related to "public safety." Similarly, the absent license plates in Giles v. Commissioner, 50 T.C.M. (CCH) 1342 (1985) were a product of "public safety"-related regulation.

[27] In addition, the government argues that factors unrelated to the missing instruction permitted the jury to conclude that the Plant was not "in service." But as with the "outside the taxpayer's control" issue, the government bootstraps its legal positions by merely presenting its view of the facts. When combined with the contrary evidence supporting CP&L's view, the government's argument actually demonstrates why the instruction should have been allowed.

[28] Because there were substantial facts tending to show that the test for "in service" was met but for the licensing issue, the missing instruction was crucial. It is entirely plausible that the jury felt the Plant was operational but concluded that it could not be "in service" since CP&L did not have its Full Power License. Because the jury was not informed that the absence of the License alone was not controlling as a matter of law, the prejudice to CP&L is apparent.

[29] Nor did the generalized "in service" instructions allow the jury to "assign the appropriate weight" to this "legal availability" factor as the government asserts. Gov't Br. at 25. The district court elsewhere specifically instructed the jury to "give deference" to the very specific "Revenue Rulings factors" -- one of which was whether all licenses had been obtained.

IV. THE REVENUE RULINGS SHOULD NOT HAVE BEEN USED IN THIS CASE.

[30] The government overstates the role and deference due the Revenue Rulings and does nothing to rebut CP&L's demonstration that such Rulings are merely irrelevant safe harbors. CP&L Br. at 40-43.

A. THE REVENUE RULINGS DO NOT MERIT DEFERENCE

[31] The government's several-fold attempts to raise the legal force of these Revenue Rulings are without merit.

[32] FIRST, the government suggests that the Revenue Rulings are to be afforded what amounts to the deference required by Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Gov't Br. at 30. This is patently incorrect. Revenue Rulings are not regulations, and this Court has unequivocally held that Revenue Rulings are not entitled to the same deference as agency regulations. See Dominion Resources, Inc. v. United States, 219 F.3d 359, 365-66 (4th Cir. 2000); accord Mead Corp. v. United States, 185 F.3d 1304, 1307-08 (Fed. Cir. 1999) (revenue rulings are not binding on court and are not entitled to Chevron deference); First Chicago NBD Corp. v. Commissioner, 135 F.3d 457, 458-59 (7th Cir. 1998) (same).

[33] Even if Revenue Rulings that interpret a Treasury Regulation were due some deference, the government's principle would not apply here. These Rulings do not "interpret" anything. Less than a few pages each in length, they contain no legal analysis or reasoning. See CP&L Br. Addendum at 5-13. They simply recite the IRS' findings as to the facts of three similarly situated assets and report the IRS' conclusion that the assets were "in service" under the Regulation. For this reason, the instruction's description of the Rulings as "Interpretations by the Internal Revenue Service of the Treasury Regulations" was incorrect. (JA 1302.)

[34] SECOND, the government urges application of the "legislative reenactment" doctrine to the Revenue Rulings, reasoning that because Congress reenacted 26 U.S.C. section 167(a) in 1986, Congress "approved" the three 1970s Revenue Rulings at issue in this case. Gov't Br. at 31-32 n.7. However, none of the "legislative reenactment" cases cited by the government involved Revenue Rulings. Indeed, at least two circuit courts confronting the issue directly have held that the "legislative reenactment" doctrine is entirely inapplicable to Revenue Rulings because such rulings do not hold force of law. See United States v. Hall, 398 F.2d 383, 387 (8th Cir. 1968); Kaiser v. United States, 262 F.2d 367, 370 (7th Cir. 1958), aff'd, 363 U.S. 299 (1960). And even if this Court were to apply the "legislative reenactment" doctrine to Revenue Rulings, the doctrine is inapplicable based upon the present record. ³

[35] Third, the government attempts to distinguish the Fourth Circuit cases directly on point. The government argues that CP&L overstates Oxford Orphanage v. United States, 775 F.2d 570, 574 n.9 (4th Cir. 1985) for the proposition that Revenue Rulings are "merely the contention of one of the parties to the litigation" because in Oxford Orphanage, the Court disagreed with the Revenue Rulings. Gov't Br. at 29. The Oxford Orphanage Court's rejection of Revenue Rulings unambiguously showed the proper degree of "deference" due them. ⁴ And if there was any doubt, it was clarified by this Court's decision in Norfolk Southern Corp. v. Commissioner, 140 F.3d 240, 247 (4th Cir. 1998):

The resolution of this issue follows directly from the

[37] In addition, the government is notably silent on the factual inapplicability of these "safe harbor" Rulings. The government concedes the five factors in the Revenue Rulings merely indicate "that such a plant HAS BEEN PLACED IN SERVICE." Gov't Br. at 14 (emphasis added). They are not relevant, however, to the issue of whether a plant is NOT placed in service. Because CP&L did not invoke them, they should not have been used.

V. "WEIGHT AND CREDIBILITY" ARGUMENTS DO NOT WARRANT EXCLUSION OF

[39] The government's principal argument regarding admission of the Fourth Circuit brief is that, because the "AFW pump" issue discussed therein was not "discovered" until January 12, 1987, what the brief had to say about it was unimportant. The government contends that the brief would not have "shed any light" on whether the Plant was ready 12 days earlier. Gov't Br. at 35. But the point is not when the pump issue was DISCOVERED. Rather, the point, which the government forcefully and repeatedly argued below, is what the latent existence of the inoperable pump showed about the Plant's readiness before December 31. The excluded government admission identified this very equipment failure as having no impact on safe plant operation. (JA 1371 n.2, 1429.)

[40] Cumulativeness, waste of time, confusion, etc. are not bases for exclusion on this record. Contrary to the government's assertion, the "Verelli affidavit" DID contain facts that were not of record from other sources -- details as to the "anonymous alleger" telephone call. And it would have taken less time to enter the evidence than it took the parties arguing the point to the district court. These documents contained important proof from the mouth of the defendant on a hotly contested issue. To argue that it was "harmless" to exclude such evidence because CP&L also adduced additional, less direct evidence from which the jury could have drawn a similar conclusion is sophistry.

[41] Nor did the fact that there were different legal issues at play in the Fourth Circuit case present a danger of confusion, as the government argues. Gov't. Br. at 34. CP&L did not intend to focus on the legal issue in the licensing proceeding. Rather, CP&L sought to show the jury the government's sworn statements on the same FACTUAL issues that were directly contrary to its position in the present case.

[42] The government's arguments regarding the IRS publication are similarly unavailing. The government asserts that "administrative guidance contained in IRS publications is not binding on the government." Gov't Br. at 41. Even assuming arguendo, that the government is correct that it is not bound by its publications, ⁶ "[i]t does not follow that they are not relevant here." Transco Exploration v. Commissioner, 949 F.2d 837, 840 (5th Cir. 1992) (considering IRS private letter rulings in interpreting a statute). The point is not whether this publication was legally "binding." An admission is an admission -- binding or not. And this admission directly contradicted the position taken by the government at trial in this case. Simply put, the government's arguments merely go to weight and credibility -- not relevance or Rule 403 considerations. These documents should not have been excluded.

VI. THE JACOBS "REVENUE RULING" TESTIMONY WAS ERRONEOUSLY PERMITTED.

[43] The government concedes that taxation is not Dr. Jacobs, area of expertise -- he is a nuclear engineer. Gov't Br. at 37. The government also concedes that Dr. Jacobs opined on the "reasonableness and appropriateness" of the Revenue Rulings and their applicability to an analysis under the Treasury Regulation. Id. The government does not even attempt to argue that experts like Dr. Jacobs reasonably rely on Revenue Rulings as "facts or data" in forming their opinions, as required by Rule 703. Instead, the government asserts that the Revenue Rulings are legal authority. For the reasons discussed supra, the government is incorrect that Revenue Rulings hold the force of law. But setting aside that assertion for the moment, the argument proves the point.

[44] If these are "legal" matters, they are outside Dr. Jacobs' expertise. Indeed, as a case only partially quoted by the government makes clear, there is a line between proper

opinions of the expert, on the one hand, and testimony as to the

[45] CP&L agrees that "what was called for was not an expert in tax law but an expert on the complex facts concerning the construction, operation, and licensing of nuclear power plants." Gov't Br. at 38. But Dr. Jacobs' testimony went far beyond that subject and delved into matters outside his expertise. The prejudice to CP&L, of course, is that by permitting him to so testify as an "expert," the district court (again) elevated and improperly highlighted the significance of the Revenue Rulings.

CONCLUSION

[46] For the reasons stated herein and in CP&L's Opening Brief, the jury's verdict should be reversed and the case remanded for a new trial.

Dated: April 2, 2001

² All unpublished decisions are included in an addendum to this Brief.

³ The "legislative reenactment" doctrine is only applicable if there is evidence that Congress was aware of the rulings at the time of the reenactment of the statute. See, e.g., Ashland Oil, Inc. v. Commissioner, 95 T.C. 348, 363 (1990) ("Without affirmative indications of congressional awareness and consideration, we decline to cloak this revenue ruling with the aura of legislative approval.") (citing Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955)); cf. Sims v. United States, 252 F.2d 434, 438-39 (4th Cir. 1958) ("It does not appear that Congress was, at any time, cognizant of the 1928 ruling [cit.], and for this additional reason, it cannot be said that it received legislative ratification."), aff'd, 359 U.S. 108 (1959). The government has made absolutely no showing that Congress was aware in 1986 or any subsequent time of the Revenue Rulings at issue in this case.

⁴ Contrary to the government's insinuations, many other courts are in full accord with this Court's position that Revenue Rulings represent merely the opinion of an IRS lawyer. For example, one court stated that

it is common doctrine that Revenue Rulings and other memoranda

⁵ All of the government's authorities on this point are outside of the Fourth Circuit.

⁶ The cases cited by the government involved situations in which the position asserted in the IRS publication was inconsistent with the statute. See Johnson v. Commissioner, 620 F.2d 153, 155 (7th Cir. 1980) (statute clearly did not allow deduction); Carpenter v. United States, 495 F.2d 175, 177-84 (5th Cir. 1974) (same) ; Alder v. Commissioner, 330 F.2d 91, 93 (9th Cir. 1964) (taxpayer's reliance on publication was untenable in light of statute). Much to the contrary of the government's argument, it is well-accepted that IRS publications provide "evidence" that the IRS' interpretation of a statute "is compelled by the language of the statute." See, e.g., Centex Corp. v. United States, No. 96-494C, 2001 U.S. Claims LEXIS 13, at *27 n.18 (Fed. Cl. Feb. 7, 2001) (citing Hanover Bank v. Commissioner, 369 U.S. 672, 686-87 (1962); Woods Inv. Corp. v. Commissioner, 85 T.C. 274, 281 n.15 (1985)(en banc)).

⁷ In addition to the authorities cited in CP&L's Opening Brief at 52-53, see also Hospital Corp. of Am. v. Commissioner, 109 T.C. 21, 59 (1997) (excluding expert's report that "appl[ied] law to [the] facts"); Malone v. Commissioner, 72 T.C.M. (CCH) 594, 597-98 n.3 (1996) (excluding expert testimony applying legal standards); Laureys v. Commissioner, 92 T.C. 101, 129 (1989) (excluding expert report when witness opined on the "legitimacy" of transactions before court).