If you can’t trust your own brother, whom can you trust? Kevan Shaban, T. C. Memo. 2026-24, filed 3/3/26, couldn’t trust brother Shevan, whom he appointed as business manager including running payroll operations. Brother Shevan repaid Kevan’s trust by ripping him off and not paying FICA/FUTA/ITW. IRS hit Kevan with lien and levy notices, neither of which Kevan CDPed. IRS then whanged him with a Section 7345 seriously delinquent tax debt notice to State. Kevan then sought an OIC, for which IRS withdrew the whang until COIC rejected the OIC, so IRS certified again. Kevan was short $147K on the TFRPs. 

Judge Adam B. (“Sport”) Landy doesn’t need to decide scope of review; this is a record ruler and there are no factual disputes about the administrative record. Although both sides move for summary J, Van Bemmelen teaches us that summary J doesn’t fit; we’re not finding issues of fact. 

Kevan’s trusty attorneys object that the seriously delinquent debt came from a computer-generated list, but Judge Sport Landy says the head of SB/SE reviewed the list and that’s sufficient. Ruesch stands for the proposition that a Section 7345 passport grab isn’t a backdoor to a CDP. IRS assessed a seriously delinquent tax debt; the time to contest is when the notice tells you to file a Form 12153 for a CDP.

Trusty attorneys claim Bro Shevan committed identity theft, thus “…one of the discretionary exceptions found in the IRM applies because he was a victim of identity theft and Shevan’s embezzlement. However, for that IRM provision to apply, Mr. Shaban had to file an identity theft claim administratively with the IRS and have that claim approved. See IRM 5.19.25.5(1)(b) (indicating that a taxpayer’s account transcript must show unreversed codes TC 971 AC 522, 523, and 525); see also IRM 5.1.28.8.6 (July 14, 2021) (explaining that code TC 972 AC 522 is used to close identity theft allegations when the IRS determines that identity theft has not occurred or in situations where the taxpayer fails to provide an identity theft claim). The Forms 4340 submitted by the Commissioner do not reflect that such a claim was filed or approved, and Mr. Shaban has not represented to the Court that he filed such a claim or that it subsequently was approved. The Commissioner’s employees do not have discretion to apply the requested exclusion. See IRM 5.19.25.5(2). Similarly, because a claim for identity theft goes towards the underlying liability, neither may this Court apply the exclusion. As a result, the discretionary exclusion does not apply.” T. C. Memo. 2026-24, at pp. 8-9.

That Kevan still has pay-and-sue remedies doesn’t stay Section 7345 certification. Section 7345(g) only stays certification during lien or levy contests (CDPs), not pay-and-sue.

That Bro Shevan settled with Kevan and agreed to pick up the tab for his defalcations would be useful if Kevan had sought a CDP to contest liability. An eleventh-hour collateral attack on liability is foreclosed in a passport grab.

So Judge Sport Landy slams another back door Section 7345 attempt.

That’s Judge Emin (“Eminent”) Toro’s scorecard at close of play in Continental Grand Limited Partnership, Century Subsidiary Corporation, Tax Matters Partner, 166 T. C. 3, filed 3/2/26.

It’s the usual daisy chain among offshore indifferents and an onshore heavy. US parent of an offshore holding company and the latter’s offshore sub set up a boxchecked onshore LLC, wherein both onshore overparent and offshore sub are partners. Offshore sub elects per Reg Section 301.7701-3(c) to be disregarded from offshore holding company. Then offshore holding company issues promissory note, guaranteed by onshore overparent, for $610 million to offshore sub, which in turn assigns note to onshore LLC. Election was retroactively made effective to a time before offshore sub contributed the note to the onshore LLC, which is OK here. Then offshore holding company pays it off seven (count ’em, seven) years later for $1 billion-with-a-b, including principal and accrued interest. Then offshore sub bails from partnership, taking $1 billion-with-a-b along.

Offshore sub claims substantial basis in note. IRS says zero basis in offshore holding company in its own note, zero basis in note in onshore overparent guarantor, and zero basis in note for partnership. Hence onshore overparent had no tax benefit on dissolution of partnership.

See my blogpost “A Sour Note,” 9/3/14 for how this attempted guarantee basis-builder fails.

Yes, in this case the note was valid, legal and binding when and where issued. And yes, it was worth the face value then and there. 

Per Treas. Reg. 301.7701-3(g)(1)(iii), as no exceptions apply here, when offshore sub elected disregarded, it’s deemed to have transferred all of its assets and liabilities to offshore holding company. Hence when offshore holding company issued the note ostensibly to offshore sub, it issued the note to itself, and then itself contributed to note to the partnership. Arguments that this cuts off offshore law as to separation of parent and sub has nothing to do with how the USA taxes the deal. Sub and offshore holding company may be separate under local law, and taxed offshore however local law provides.

A note is a chose in action, the right to press a legal claim to receive money. It may be property (Judge Toro says he isn’t going metaphysical on whether a note is “property”, Opinion, at p. 10), but in the hands of its maker a note has no basis; it cost nothing. And by electing disregarded status, offshore sub became offshore holding company, hence offshore holding company was holding its own note payable to itself. The issue is not that the note was contributed to the partnership; Section 722 requires examination of the value of the note in offshore holding company’s hands. All the note does is evidence offshore holding company’s obligation to pay itself. 

The negative currency fluctuations that hurt the offshore sub when it took the payout is nothing to the point. Offshore sub elected a year after it got and contributed the note to go disregarded back to pre-note days.  National Alfalfa says you can choose your system, but once chosen, you’re stuck.

Petition asserts two cases, but they’re C Corp cases, and here we have Sub K issues. Offshore holding company had zero basis in its own note, and its electing offshore sub is disregarded. Section 723 says contribution by partner to partnership gives partnership partner’s basis in the contribution, and here it’s zero.

Judge Christian N. (“Speedy”) Weiler once again has the granite grabbing, discounted cash flow,  Dixieland Boondockery dodge on the menu in Harman Road Property, LLC, Capital Conservation Partners II, LLC, Tax Matters Partner, et al., T. C. Memo. 2026-23, filed 3/2/26. IRS, magnanimously or otherwise, folds its claim for the penalties asserted under section 6662A resulting from the identification of syndicated conservation easement transactions pursuant to I.R.S. Notice 2017-10, 2017-4 I.R.B. 544, Opinion, at p. 2, footnote 4.

It’s the usual market-rate purchase of granite-bearing land followed by selling fractional LLC interests at a 300% – 400% markup to writeoff-seeking highrollers, and claiming a conservation easement of telephone numbers featuring an appraisal by Fifth Amendment specialist CW (name omitted) and input from a bunch uomini qualificati (hi, Judge Holmes). like Qualified Persons (as defined by the SEC, the stock market guys, not the GA athletes) and Six Sigma Competent Person types.

IRS has a bunch locals from the county and a couple of taxpayer-funded qualificati of their own, including but without in any way limiting the generality of the foregoing (as my expensive former colleagues would say) their in-house appraiser Everybody Loves Raymond.

Once again its comps-vs-cash. Nobody pays the worth of the whole operation upfront, and nobody buys anything in one place when they can get it cheaper somewhere else. No need to drill and explore the comps, as everybody knows they’re in the Piedmont Fall Line where the granite is found. Comps beat cash again.

Microscopic deductions allowed. 40% gross overvaluation chops rain down.