That’s the plight of Aladar Deutsch and Sylvia G. Deutsch, T. C. Memo. 2026-66, filed 8/12/26. Al’s buddy Mr. Visel, who had previously put Al into losing investments, had a Mexican deal with some alleged Dubai heavy-hitters. Al bit to the tune north of $1.25 million.

Of course this was a classic advance-fee scheme of the kind you get at least five (count ’em, five) e-mails every day (weekends included) from Krystalina Georgieva at the World Bank, cancerous millionaire widows, Qaddafi’s relatives, Chinese moguls on the run, et hoc genus omne. They’ll all give you millions if you send them a couple grand “for fees.” Ya, right, ya betcha.

I won’t go through the details here; Al and Syl have suffered enough. Judge Tamara Ashford has to do it, so you can read the details in her opinion.

Why IRS didn’t fold eludes me. Judge Ashford’s extensive review of State (TX) law (larceny by trick or device) is overkill. Identifying the thief, charging him/her/them criminally, and pursuing such as are identifiable, are essential elements of establishing Section 165 theft loss. But here the thief is offshore and smart; Al’s and Syl’s trusty attorneys (both onshore and offshore) and their investigative team cannot nail him, nor can they establish to Judge Ashford’s satisfaction that buddy Visel was in on the fraud. He might have been just another one deceived.

Hence, what Al paid the pseudonymous thief is deductible, but the money he fronted buddy Visel to hang out in London pursuing the deal is not. Buddy Visel does show his true colors when Al asks him to cough up; he replies with “an expletive-laden response” refusing. T. C. 2026-66, at p. 11. 

Trusty onshore attorneys engage in an extensive joust with IRS about reopening the record, at pp. 21-24. Needless to say, it’s that Boss Hoss sign-off again. And since the petition stays assessment, and apparently both RA and supe were still in place and going strong when the explanatory paperwork was proffered, Boss Hossery is sustained.

Except. 

Al and Syl reasonably relied on their trusty CPA when they deducted buddy Visel’s London jaunt and whatever else they took, so no Section 6662(a) chops once the Rule 155 beancount establishes their final bill.

No, not a new Texas poker sensation to separate you from your money. This is Judge Cary Douglas (“C-Doug”) Pugh’s advice to Gerald A. Beacom and Jean A. Beacom, GT. C. Memo. 2026-65, filed 8/11/26. The kerfuffle concerns an AMIT carryforward Gerald was taking that stretched back to 1999 or maybe sometime through 2005, he couldn’t recollect exactly; “(understandably, given the passage of time)” says Judge C-Doug Pugh. T. C. Memo. 2025-65, at p. 2.

But that doesn’t help Gerald, even though he says he lost his old records in a flood.

“Petitioners defend their lack of documentation by claiming that IRS guidance requires taxpayers to retain prior year returns for a maximum of seven years. Internal Revenue Serv., Publication 17: Your Federal Income Tax 17–18 (Dec. 16, 2021), https://www.irs.gov/pub/irs-prior/p17–2021.pdf (prescribing various periods for retaining records, including seven years for losses from worthless securities and bad debt deductions); see § 6511(b). They misread that guidance. It requires taxpayers to retain documentation supporting the items reported on a return for seven years. Petitioners should have maintained records supporting their claimed AMT credit for seven years from the date of the return on which they applied the credit, not seven years from the date of the return when they first paid the AMT. That is, petitioners were required to retain, as evidence of their eligibility for the AMT credit in tax year 2021, records (such as their prior returns) documenting the source of the AMT credit (and its prior utilization, if any) for seven years from 2021, not seven years from 1999 or 2000.” T. C. Memo. 2026-65, at p. 6. The flood took place years before 2021 (year at issue).

Oh, Boss Hoss, what sins are committed in thy name! Judge Rose E. (“Cracklin'”) Jenkins finds that what we thought was “settled law” was undone as the Boss Hoss leaves the stable after 2 Cir picked the issue preclusion lock.

And where better to encounter this latest resurgence of The Jersey Boys’ Greatest Hit, the Chai-Graev double, than in Annamalai Annamalai & Parvathi Sivanadiyan, Docket No. 2398-23L, filed 8/11/26, the latest episode in this eleven (count ’em, eleven) year blogfeast?

Ever since Warner Ent., Inc., we thought issue preclusion barred any Boss Hossery defense to a chop where liability had been litigated, deficiency and chops assessed, and decision was final. See my blogpost “How Now?” 8/22/22.

Seemed to touch all the bases: same parties and privies (that’s nonparties bound by participating parties), could have been raised and litigated at trial or in motion papers, no supervening change in law.

Except.

Boss Hossery has separate statutory requirements which an AO at Appeals has to fulfill at a CDP, whatever happened on a trial or summary J. So said 2 Cir in Besicorp. v. Com’r, No. 23-296 (6/29/26). 

“Most salient here, the Appeals Officer must also ‘obtain verification from the Secretary [of the Treasury] that the requirements of any applicable law or administrative procedure have been met.’ Id. § 6330(c)(1). Only after satisfyingthese requirements and considering the arguments and evidence presented by the Service and the taxpayer may the Appeals Officer issue a ‘Notice of Determination’ upholding or rejecting the lien or proposed levy.” Besicorp, at p. 9. Whatever the parties pled or proved at trial or motion, the AO must find Boss Hossery de novo. 

Judge Cracklin’ Jenkins finds the record (this is obviously a CDP review) fails to show that Boss Hossery was raised or considered either in the order and decision or at the CDP from whose NOD Annamalai petitions. All the AO did when she found no Section 6761(b) sign-off in the file was get a memo from counsel that the order and decision precluded Boss Hossery. And in her and counsel’s defense, pre-Besicorp that was the law.

OK, so how now, this latest silt-stir?

“Given the state of the Administrative Record and the absence of any argument by respondent about the verification requirement, this Court does not conclude that the Second AO did not abuse her discretion in sustaining the levy with respect to the section 6663 penalty for the 2007 tax year despite not verifying compliance with section 6751(b). Unlike the Second Circuit…, however, this Court does not conclude that the Second AO’s failure to verify approval permits a conclusion that no approval was obtained. Accordingly, the Court will remand this case to Appeals for further review to determine whether the verification requirement can be met with respect to the 2007 tax year. If Appeals is not able to verify approval of the 2007 section 6663 penalty, respondent may fully address the import of that failure at that juncture.” Order, at p. 21. (Citation omitted).

This is Remand No. 2 in this case.

I can but again quote myself when I blogged Senior Judge Mark V. (“Vittorio Emanuele) Holmes’ dissent in my blogpost “Stir, Baby, Stir – That Silt,” 12/20/17.

“Oh brother, says Judge Holmes, you tried to bring peace, but like a much more exalted Authority you have brought not peace, but a sword. Section 6751(b) is a statutory one-off, a hapax legomenon as that classicist Judge Lauber and that Master of Tohubohu Judge Holmes put it. It’s intended to keep lower-level RAs and Examination types from bludgeoning settlements out of terrified taxpayers by threatening chops.

“But it doesn’t work.”

Except, that is, to stall once more a twenty (count ’em, twenty) year old Tax Court case.