Though I haven’t been in one in ten years and more, I’m sure every casino on land and sea still has a blackjack table and a couple rows slots (hi, Judge Holmes). And somewhere, every working day, Tax Court will have a syndicated conservation easement case and a microcaptive insurance case. So it is today.

A coupled entry, Kimberly Road Fulton 25, LLC, Kimberly Road Manager, LLC, Tax Matters Partner, and South Fulton Parkway 58, LLC, South Fulton 58 Manager, LC, Tax Matters Partner, T. C. Memo. 2026-36, filed 5/4/26, have Judge Mark V. (“Vittorio. Emanele”) Holmes reaching for his “IRS’ Dubious Arguments” checklist, as IRS has to win on an actual valuation trial with expert witnesses.

Forget business purpose, Congress wanted conservation. Donative intent doesn’t matter, as the only quid pro quo was tax breaks, and the 501(c)(3) that got the easement hadn’t any tax breaks to give. Unqualified appraisal? True, this was petitioners’ appraiser’s first rodeo, but he had credentials, and talking to his clients doesn’t mean collusion. And the 8283 checked the boxes. That one expert didn’t sign either the expert’s report or the 8283 doesn’t matter, as neither side called her as a witness, so whatever she did wasn’t at issue. And what petitioners gave was scenic enough, public enough, preservationist enough, and endangered or threatened species protective enough to make the Section 170 cut. That the Baseline Documentation Report was, in IRS’ expert’s opinion, “the worst BDR he had ever seen,” it did include, as the regulation suggests, a boundary survey, a map, photos of the property, its title and development histories, vantage points in which to view the property, descriptions of the hardwood forest, and a certification of accuracy, T. C. Memo. 2026-36, at p. 23, so it slides in under the tag. IRS’ buzzer-beater attempt to claim the property was inventory, because a promoter was a professional flipper, fails because new issue requiring fresh proof and the trial had already happened when IRS raises this. And the non-disclosure of a listed transaction chop enhancement went south with Green Valley.

Of course, the telephone-number appraisal gets shredded.

For the backstory on Curtis K. Kadau and Lori A. Kadau, Deceased, Curtis K. Kadau, Personal Representative, T. C. Memo. 2026-37, filed 5/4/26, see my blogpost “Microcaptivity  Enhanced,” 7/31/25. Now Judge Christian N. (“Speedy”) Weiler must deal with the 40% substantial overstatement chop and the Section 7701(o) codification (obfuscation) of economic substance.

To begin with, economic substance is relevant and this deal had none. It was the usual cash stash roundy-round. Unlike Kimberly and Fulton, supra, as my third well-brand-Gibson journalist colleagues would say, here the understatement is for nondisclosure, not listed transaction, so Green Valley plays no part.

“We have said that adequate disclosure can be made by a taxpayer providing sufficient information on the return to enable the Commissioner to identify the potential controversy involved. However, the ‘mere declaration of a deduction does not entitle taxpayer to a reduced penalty.’ 

“Considering the circumstances before us, we determine that petitioners failed to adequately disclose relevant facts or provide sufficient information on their individual returns, and likewise on [S Corp]’s corporate returns, to enable respondent to identify the fact that premiums paid and deducted were part of a microcaptive arrangement.” T. C. Memo. 2026-37, at p. 10. (Citations omitted but get them.)

Please pass the Worcestershire sauce; I’m about to eat my words. Not fewer than three (count ’em, three) times before now I have proclaimed that I won’t mourn TEFRA. But Judge Juan F. (“The Grist Miller”) Vasquez gives me what I would have sworn that neither oxen nor wain ropes would do…drag me to wanting a return to TEFRA.

4000 Investment Logistics, LLC, Chichukuya Investment Logistics, Inc., Tax Matters Partner, Docket No. 16211-22, filed 5/4/26, petitioned a FPAA for a pre-2018 year. Problem was, the TMP had been decorporatized by the CFTB (the CA corporate police) at the time they filed the petition, and were only been revived 503 (count ’em, 503) days after the FPAA issued, totally blowing all the TEFRA petitioning cutoffs.

Judge Vasquez, ever the obliging jurist in the Judge David Gustafson mould, “invited petitioner to file a supplement to its response addressing whether the Petition could be ratified by another partner and advising the Court of the partner qualified under the statute to be appointed and serve as tax matters partner of 4000 Investment ” Order, at p. 2.

But alas, there was no one, neither found he any, willing to take up the quarrel with IRS.

So the 4000’s petition gets tossed.

Now here’s where I get nostalgic for the old TEFRA method.

The post-BBA 2015 Section 6223(a) provides for a draft by IRS of any partner to serve as partnership rep, nolens volens with no input from the partners unless IRS feels like asking. If the draftee dodges the draft, game over, with no voluntary substitution method. Likewise, if IRS doesn’t designate the substitute partnership rep, theoretically, the partners could designate anyway, but there’s no statutory provision allowing it. And there is no provision for IRS to draft a nonpartner partnership rep, even though Section 6223(a) provides that an originally designated partnership rep needn’t be a partner. Note the statute doesn’t use the term”(or other person”) when speaking of an IRS draftee. Yes, I know, Reg. Section 301.6223-1(f)(5)(ii) says “the IRS may designate any person to be the partnership representative,” and should consult the partners, but the Reg doesn’t bind IRS to do either. In any case, would those provisions survive a Loper Bright challenge?

And finally, if neither the partnership designates a substitute, nor IRS drafts, a partnership rep, Tax Court is ousted of jurisdiction.

The old TEFRA provision, allowing partners other than the TMP to contest on their own, without having to risk being sued by the other partners if their contest isn’t to the liking of these others and binds the partnership, was fairer.

Judge Rose E. (“Cracklin'”) Jenkins is a fan of the Best Evidence Rule, a/k/a Requirement of the Original, FRE 1002. So she sets the following high hurdles for Objectors to subpoenas duces tecum who claim that documents sought may no longer be available in their original format in David J. Feingold, et al., Docket No. 19354-24, filed 5/1/26.

“…if there is a claim that a document is no longer available due to loss or destruction, an affidavit must be provided, signed under penalties of perjury, addressing what records once existed, what the retention policy was, what actions have been taken to search for the responsive documents, when the destruction occurred, who authorized the destruction, who destroyed the records, how the destruction occurred, and, if applicable, why only photocopies are retained but not the original electronic document in its native format.” Order, at p. 3.

What price litigation holds?