Maurice Butler, T. C. Memo. 2026-116, filed 11/5/26, has a basic problem that is endemic in the Section 152 cases. I’ve chronicled again and again the Section 152(c)(1)(B) “same principal place of abode as the taxpayer for more than one-half of such taxable year” stumbling block.

Ordinarily, Maurice’s inability to clear this bar would be understandable. Shared parenting agreements rarely require documentation. But in this case, there was a court order and testimony about a logbook kept. Maurice testified on the trial about dates but produced neither.

I won’t quote footnotes 3 and 4 at p. 5 of Judge Alina I. (“AIM”) Marshall’s opinion. Maurice was represented by counsel; you may judge for yourselves the quality of that representation.

Ch J Patrick J. (“Scholar Pat”) Urda gets into the nitty-gritty (see p. 36) of a “shameless approach oft seen in the conservation easement oeuvre, i.e., dream up a lucrative, wholly fanciful, highest-and-best use for a property, hire a friendly appraiser willing to check his integrity at the door to provide palpably outlandish values, and entice tax-motivated investors to put money into the scheme to reap tax deductions. It does not take x-ray vision to see through this gossamer-thin stratagem.” See p. 2.

The case is Murphy Hollow, LLC, Piedmont Private Equity Manager, LLC, Tax Matters Partner, T. C. Memo. 2026-115, filed 11/5/26.

Those old, familiar faces show up yet again. The appraisers and consultants, the dodgefloggers straight from helping banks dispose of the junk they took back at foreclosures, and IRS’ experts throwing cold something-or-other on their imaginary numbers, all appear.

These boondocks are where TN meets GA, and they are real boondocks. The highest-and-best use is claimed to be high-priced residential because you can see a lake across the valley. Unfortunately, the only road to this paradise collapsed, “leading to erosion, pollution, a lawsuit by the State of Tennessee, and ultimately a court order closing the road until such time as it could be brought up to proper standards.” T. C. Memo. 2026-115, at p. 35.

The dodgefloggers, of course, claim the three-for-one writeoffs are a cinch. “Mr. Hall informed one potential client that ‘[w]e are diligent in exposing our clients to as little risk as is possible while making a meaningful difference in their tax planning,’ while telling another that ‘[g]iven all the business risks that you’ve taken in your professional life, this investment pales by comparison.’” T. C. Memo. 2026-115, at p. 17.

There so much more, but I’ll spare you.

Cain’t hardly wait for the investor class actions to begin.

Robert E. Braun, Docket No. 25467-21S, filed 11/5/26, thought his Northwestern Mutual policies became annuities at age 65. So when he started writing for a living and discovered it didn’t cover his living expenses (welcome to the club, Bob), he borrowed against cash surrender value and finally stopped paying.

So The Quiet Company quietly converted his whole life to term life, used some of what was left of the cash surrender to pay those premiums to pay off the loans he had taken. The loan payoff was taxable, of course, and Bob got a 1099-R showing a $115K distribution to him.

Bob says he never got penny one.

STJ Diana L. (“Sidewalks of New York”) Leyden deloivers the bad news.

” If a taxpayer’s cash value of his life insurance is greater than the amount of the taxpayer’s net investment in the policy (premiums paid), the taxpayer constructively received ordinary income that is taxable under section 72(e) on the amount of the cash value minus the premiums paid.

“The record in this case is clear that after petitioner stopped paying the premiums, Northwestern Mutual used to the cash value of the two original insurance policies to purchase term life insurance. Further, there was excess cash value (greater than the amount of the petitioner’s premium paid) when this occurred. The upshot of this was that petitioner was enriched because of the cash value of the original policies was greater than the amount of premiums he had paid. Petitioner has not demonstrated that an exception to the rules stated above apply.” Transcript, at p. 11. (Citations omitted).

Bob claims Northwestern Mutual did him wrong.

“Petitioner asserted in his testimony that Northwestern committed ‘fraud’ when it sold him his policies and when it converted the policies into term life insurance, but petitioner acknowledged that he did not take any affirmative steps to reverse the conversion or to bring an administrative or legal action against Northwestern Mutual to assert fraud.” Transcript, at p. 12.

IRS’ counsel failed to provide proof of Boss Hossery at trial, so Bob isn’t liable for chops.