Your Tax Matters Partner Original Content by Peter J, Reilly
Steve McRae’s lawsuit against Kyle Curtis over the youtube channel The NonSequitur Show has lit up a small section of the internet. I stumbled into it, because there seems to be some overlap between people excited about this litigation and what I might call the Hovindology community If you want information on the case that is tied to original court filings along with legal analysis, the place to go is Nate the Lawyer. I wish I had started there
The Case
Here is the case in a nutshell. Steve alleges that he and Kyle were 50/50 partners in The Non Sequitur Show under a verbal agreement, (We must here invoke the ghost of Samuel Goldwyn. The remark “A verbal contract is not worth the paper it is written on.” may be falsely attributed to him, although it seems like something he should have said.) Steve allowed Kyle to have administrative rights over the site and the accounts that controlled revenue streams (I’m a little hazy on that) and ended up being shut out and did not receive any of the revenue.
Steve is seeking half the estimated revenue of $60,000 and control of the channel along with damages and costs. Steve filed the complaint in a North Carolina court, as Kyle is a NC resident. Kyle did not respond and Steve got a default judgment, which might have been the end of things, but now Kyle is claiming that he was not properly served so the show goes on.
How I Got On This
I was really delighted when Cheshire Viq lavished attention on my posts about Kent Hovind’s half-billion-dollar lawsuit. She mentioned working with Steve McRae and alluded to the lawsuit. Steve’s name rang a bell for me. He and Robert Baty had been involved in what I considered a really dumb argument. You can get the essence of it from Bob’s point of view here.
Bob runs a site called Kent Hovind’s Worst Nightmare. It follows Kent’s misgegas with an incredible intensity. Baty also keeps an eye on PACER for new Hovind related filings. The site or perhaps an email from Bob is how I picked up the recent Hovind lawsuit.
At any rate, Steve belonged to the group. Somebody else on the group wrote that Steve had indicated that his graduation from the Navy Nuclear Power School was the equivalent of a Ph.D. Steve argues that he never said or wrote anything of the sort and asked Bob to delete the comment. Bob refused disclaiming knowledge of whether it was true or false. Steve quit the site.
It is not clear to me why this continues to be an argument. The Navy Nuclear Power School is one of the most intellectually demanding schools in the military (of which there are many). The statement that Steve denies making would at worst be a sort of “truthful hyperbole”.as our President refers to that sort of thing in Art of The Deal.
On the Baty side, it is a matter of somebody didn’t like the way you run your group, so he quit. Other than a snide “Don’t let the door hit you in the ass on the way out”, what is there to argue about? Instead, he has a page on his “Great Debates” site dedicated to it.
At any rate, I was intrigued by the lawsuit, because I thought it might give me some insight into the business aspects of being a youtuber. It also intrigued me because of my interest in partnership taxation. And also I was concerned that there was a dispute dividing one of my longest-term favorite blogging buddies Robert Baty and Cheshire Viq who could become my new BFF based on her video.
First Glance
I lost interest pretty quickly when I saw that not much money was involved. I should qualify that. I had a rule with my kids that the word “only” could not be used in connection with any amount greater than four dollars. So $60,000 is a lot of money. In the context of litigation though it is not that much and could be eaten up pretty quickly. In the context of there being a story, I totally don’t get it.
The tax aspects of the story which were alluded to in one of Steve’s videos interested me a bit but given the low stakes they seemed irrelevant. I will pick that up later.
Interest Revives
Then sometime YTMP contributor, bane of the basketball ministers and Kent Hovind’s worst nightmare – Robert Baty alerted me to a youtube video he appeared in, At well over three hours it is a significant lifespans investment. I got over an hour in before giving up.
Here is the discussion that Baty convinced me, possibly against my better judgment, to dive in.
There is a lengthy discussion of the service issue and a critique of another video in which the case is presented from Steve’s viewpoint. Nate hosted a debate by people who go by Roohiff and Agrippa.
I have barely scratched the surface and there is already way too much material. Nonetheless, it appears that at least hundreds, possibly thousands of people are following this drama and signing up for either Team Steve or Team Kyle.
I am very sad that Baty has chosen Team Kyle given that Cheshire Viq is a strong Steve supporter. Given that I feel compelled to remain neutral.
Shaking My Head
I have a really hard time figuring out how it is that this sort of dispute can energize so many people. I do remember what it was like being in the leadership of a Unitratian Universalist congregation that was perennialy plagued by content free conflict. One of the people who was a big player on the music committee which was like the Balkans producing more history than it could consume locallly told me that I my problem was that I was Aquarian and wanted everybody to get along.
Both Steve and Kyle get to continue to produce on youtube, which boils it down to an argument about sixty grand. It makes me wonder if they are engaging in this dispute so publicly in order to build traffic. Are Steve and Kyle frenemies?
So the only thing I can think of is that we are naturally tribal. This particular youtube community has reached a point where it needs to divide about something, Maybe someone could analyze this from the viewpoint of evolutionary biology. Unfortrunately I am not qualified for that.
The Tax Angle
The tax part of the story comes from one of Steve’s videos which I can’t track back down. He mentions that some people have been accusing him of running some sort of tax scam which he adamantly denies. He then indicates that the incidence of taxation will fall on him when he is finally paid by Kyle. That is not how it works.technically.
Given the low stakes it will probably work out that way and he won’t have any problem with that position. But if, God forbid, these transactions were to be audited by the agent from hell (very unlikely), there is a technical error in that analysis and it makes a sort of cautionary tale for others who might team up in this sort of venture.
A partnership is an arrangement in which people agree to carry on business and divide profits. Whether something is a partnership is a facts and circumstances question, A partnership is referred to as a taxpayer because it has a filing requirement, but it is pretty much a pure flow-through. Partners are taxed on their share of the income regardless of when it is distributed.
Given that it appears no partnership return was filed (which can produce nasty penalties) the overall situation is a tax clusterfuck if someone tried to sort it all out.
Blogger Nik Ritchie who is at least moderately famous ran into this problem when his career was taking off. I covered the Tax Court decision that resulted. It is a cautionary tale. If I were advising Steve I would encourage him to refer to his arrangement with Kyle as being a revenue-sharing agreement.
The Parallels
Given how many Hovindologists are involved in this some of the Parallels with Hovind are interesting. Steve’s notion that taxable income can kind of be suspended is a little reminiscent of Kent’s non-statutory trusts. That one is pretty tenuous. More to the point is the way in which control over the channel compares to Theo’s stealing Kent’s URL and Kent’s fight with Eric over the Creation Science website. I think I recall Kent having trouble with another renegade webmaster earlier.
And then there is the matter of service, now the key legal issue in the McRae v Curtis suit. That is what also threatens to kill Hovind’s half-billion-dollar lawsuit. I noted in my first post on that that they might have a problem doing that properly and it seems that is playing out.
News To Kent
Many of the people involved in this seem to be at least marginally what I call Hovindologists. A Hovindologist is someone who has some fascination with the Young Earth Creation mishegas put out by Kent Hovind, an independent Baptist minister who has never seen a right-oriented conspiracy theory he didn’t like just a little bit. He also focuses a lot of energy on trying to undo his 2006 conviction on tax-related crimes.
I picked up the Kent Hovind story in 2012 from a Tax Court decision in the case of his long-suffering first wife Jo. They were virgins when they got married and when Kent finished his long sentence (over eight years) he was shown to a separate bedroom when he got home. I took that as a euphemism for no nookie. That is just a sample of the TMI contained in Kent Hovind videos.
I asked Kent Hovind whether he heard about the dispute between Steve and Kyle. He had not, but he may be looking into it. Those of you who follow him will not be surprised to learn that he brought up Gideon who ended up having his adversaries fighting among themselves.
One does not simply dip their toes in the Non Seq case. There’s a year’s worth of lies, deceptions, and false narratives spun by Cheshire and Steve that have led to this point (thousands following the case). It’s quite the gong show. It’s surpassed the concept of two parties having due process and settling a disagreement via the courts at this point.
An excellent article, Peter.
I would not say so much that I am on “Team Kyle”, but his “team” has been more cordial to me than Steve’s, and Steve in particular has be unwilling to face me and deal with his earlier problems you reference or the case he has with Curtis.
I think my position may have mellowed a bit since the most recent Twitter exchange I had with Steve’s financier, “Roohif”. In that exchange, after my insistence, he made it clear to me that Steve’s position was squarely set based on what is referred to as North Carolina Rule 4(f)(1)(c). Some might understand my failure to recognize that with all the social media bantering that has taken place.
I have stated a number of times over the last few weeks that folks should just sit back, enjoy the ride, and wait for the judge to decide.
I think your comments, Peter, about the financial rewards to be reaped by keeping the social media accounts active, may have merit.
I still think the judge will make a discretionary call, in a very few pages, and may surprise us all as to his call and his reasoning. If there is any substantive analysis as to whether he “abused his discretion”, then an appeals court might take 50 pages to explain it and decide the “abuse” issue one way or another.
I offer no opinion as to the merits of the case otherwise. I suspect, on the merits, Steve cannot prove up that Kyle owes him much of anything; a long way from a 50-50 split of what appears to be the gross of $60,000.00.
As always, Peter, you seem to bring a special something to such cases as you cover, and I appreciate that.
Steve is an asshole, he’s an asshole when he’s right, he’s an asshole when he’s wrong, you gotta go with it, especially if you wanna learn from him, just get past the assholery .
Thanks for adding my video (i know its long but its meant to be watched live type of thing). The case may seem to be a sided issue, and maybe it is for some… But having talked with most of the influencial opinionators involved i can tell you the ‘sidedness’ of this comes from Steve. If you criticize him (or say something he doesnt like) he will block you and attack you. This causes most people… Even if they agree steve needs paid, to group with most who support kyle.
Great article, keep it up, will eventually share when I get into the office.
Unirockalot
Yeah, I said some things Steve didn’t like in my FaceBook group, he went to whining, ran off, went to whining elsewhere and has maintained his refusal to face me and deal with his related problems.
And I just wrapped up a few more rounds with those that would, effectively, cover for him on Twitter (i.e., Cheshire and the feline character)
See:
http://kehvrlb.com/steve-mcrae-v-robert-baty
Steve and Chesh are morons, thats enough to know about the case
I just again went a few more rounds with some of Steve’s minions who were, in effect, covering for him on Twitter (i.e., Cheshire and that feline character).
Meanwhile, Steve remains in hiding from the invitation that he face me and deal with his problems reflected in his behavior in my FaceBook group where he went to whining, ran off, and then went to whining about me and the group elsewhere.
My article on my personal experience with Steve is at:
http://kehvrlb.com/steve-mcrae-v-robert-baty
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You should really let that one go
While i agree it’s a pretty minor thing that should just be let go, I think one thing missing when you look back at this is how Robert was treated by Steve and his following, which can make things very personal. I stepped in at one point while they were trying to crucify him and just said that I didn’t see a problem with Robert staying neutral until things play out, which caused a shitstorm of them attacking me and constantly trying to prove there point by accusing me of being a pedophile over and over.
Thanks for that feedback, Lono.
I have gotten accused a lot of being a pedophile, by Kent Hovind’s people and people in the anti-government, anti-child welfare movement; for daring to challenge their claims.
It seems to be a go to accusation in some loser groups.
To be clear this is Pete Reilly here logged in as admin. I followed the argument on twitter and it is the sort that reminds me of the church I was in that was a hotbed of content free conflict where lines are drawn and everything is a matter of high principle. Bob is in a better position to end it. However his superpower is his tragic flaw. Once he latches on to something he won’t let go. He managed to shake the entire religious establishment of the United States on the parsonage issue and probably has made himself Kent’s Hovind’s worse nightmare
Even with my superpowers, Peter, I am not in a position to “end it”.
Also, I certainly have no obligation to patronize the bad acting (I think some call it LARPing) in the persons of Steve McRae and his girl that uses the name Cheshire.
I am a bit player, and the stars of the show think this is a big deal, and I am willing to let them sort it out and provide instructive insight, further insight, into who and what they are.
Menace2Sobriety has provided an important analysis to what is going on with that, in his latest video at:
https://www.youtube.com/watch?v=_vBIsndI6So
Let it be known that his analysis was unsolicited as was that of UniRock on Twitter at:
https://twitter.com/UNIRockTV/status/1296879197483347976
I think I know the score on this, and will be looking forward to seeing further how the 2 camps deal with it; “ending it” does not appear to be an option for the time being.
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The thing is though, Robert Baty is just playing McRaes game. Just better. Steve McRae is known for “not letting things go”. Evidence required? Just look up McRae’s LAST direct conversations with big names like Matt Dillahunty and Aron Ra on Twitter. BOTH these men decided to block McRae because he ultimately couldnt let go when they had disagreements.
McRae STILL TO THIS DAY (his last convos with any of those two was at least 1 year ago) makes videos about them, attacks them directly and their position, misrepresents their position etc just hoping to get them to respond so he stays relevant.
Mr Baty however had done nothing but:
Provide his side, provide Steve’s side and backup every claim he made. (and Steve et. al. still find a way to misrepresent his positions).
Could Mr Baty let go? Of course he could, but in the case of McRae, he’s just fighting fire with fire. Or fire with fire + extinguisher rather.
P. S. Your “friend” Cheshire Viq accused Mr Baty of implying sexual innuendo on Twitter. He and a lot of people really got disturbed, disgusted and btw showed her to be wrong to interpret his words in such a sick way. She never apologized (like she literally never does anyway, so no wonder).
Just saying.
This all said, well written article. I don’t support Kyle nor Steve, both are POS in my book. However, IMO, since I am an OG non seq fan, I used to support BOTH of them and it was a 50/50 in my eyes back then (thank god I’m not an idiot and never supported these guys with real money)… Legally? I don’t know. But as much as Steve McRae makes me sick, I’d rather want him to win back the channel since Kyle just ran away with the money after all, and I don’t support thieves.
That said: F U Steve McBoomer.
A hearing on the default judgment has now been scheduled for September 11, 2020.
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Information coming in today, from McRae, filed with the Court, suggests Curtis has, indeed, founded his case upon fraudulent, forged documents.
Even some of his sympathizers are indicating “he’s done for”.
It won’t be long, maybe, till we find out.
I’ve added the information to my article on “service” at:
http://kehvrlb.com/steve-mcrae-v-kyle-curtis-service
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