Toscano Holdings, LLC, Toscano Investments, LLC, Tax Matters Partner,  T. C. Memo. 2026-90, filed 9/22/26 (Here’s lookin’ at you, Kid, to the GoMD) says they got a raw deal at Appeals, so wipe the FPAA that knocked their Dixieland Boondockery down from $38 million to $6 million.

Judge Elizabeth Crewson Paris says the past is prologue, she won’t rewrite it, and Toscano can go to trial de novo. 

Toscano first refused to extend SOL so Exam could take a second look, then six (count ’em, six) months later offered to extend, but by then Exam had sent the file to Tech to craft the FPAA. Then after Toscano petitioned the FPAA, they got remanded to Appeals. The first Appeals hearing was postponed to avoid impacting the criminal trial of W the appraiser (who was acquitted on all counts). Then the hearing took place, with which Toscano finds fault.

Judge Paris won’t invalidate the FPAA. Toscano can go to trial and fight the one real question, valuation.

Once again, Greenberg’s Express rolls on.

Two (count ’em, two) years ago I asked whether pleading reliance on Section 6662(e)(3)(B)(i) objectivity was a good tactic. “Whether this is a good tactic remains to be seen,” I wrote in my blogpost “A Note of Sympathy,” 11/14/24. It did work for Amgen back then, according to Judge (then STJ) Jeffrey S. (“High-Rise”) Fried, and it works now for Eaton Corporation & Subsidiaries, Docket No. 2607-23, filed 9/22/26, a special day hereabouts.

Judge Albert G. (“Scholar Al”) Lauber recalls Judge High-Rise Fried’s analysis, and goes along with it, though of course not citing it as precedent, which it can’t be. But note well, practitioner: you can use the reasoning in an order as persuasive and mention the order.

IRS wants privilege waiver on all Eaton’s attorneys and CPAs, as Eaton asserts Section 6662(e)(3)(B)(i) as basis for their good-faith reliance argument to avoid net Section 482 adjustment chops. Eaton specifically does not mention experts, saying they relied on an objective test. IRS agrees, and Judge Scholar Al says it’s “100%” objective, but it still shows state of mind, and that brings in everything.

Judge Scholar Al doesn’t agree that asserting good faith reliance means all privileges are waived.

“We addressed a similar question in a discovery Order issued in Amgen, Inc. v. Commissioner, No. 15631-22. The IRS argued that the taxpayer, by advancing defenses to penalties, had implicitly waived privilege over various documents. We noted that an implied waiver of privilege may occur where the party claiming the privilege raises an issue as to its own knowledge, intent, or state of mind. T.C. No. 15631-22 (Order served Nov. 11 [sic], 2024, at 7). But the taxpayer there, in asserting penalty defenses, ‘ha[d] not pleaded any specific allegations relating to its own knowledge, intent, state of mind, or the reasonableness of its actions.’ And the taxpayer did not ‘rely on privilege[d] communications’ as a basis for its penalty defenses. Ibid. We accordingly ruled that no waiver of privilege had occurred.” Order, at p. 2.

Judge, the issue date of Judge Fried’s order was 11/14/24; 11/11/24 was Veterans’ Day, a public holiday in the District of Columbia. I trust Tax Court was closed, appropriately.

“Reduced to its essentials, respondent’s argument seems to be that a taxpayer is precluded from raising a defense to a transfer-pricing adjustment unless it waives privilege over all communications relating to that issue, even though the taxpayer does not intend to rely on those communications as a basis for its defense. The taxpayer would thus face a dilemma: it would have to waive privilege as a condition of exercising its right to assert a penalty defense, regardless of the nature of the defense it seeks to assert. In practical effect, this would impose a huge burden on taxpayers’ ability to secure privileged advice from their lawyers and tax advisors. This does not strike us as an appealing argument. It is especially unappealing on the facts of this case, where the penalty defense Eaton seeks to raise is 100% objective and in no way implicates its state of mind.” Order, at pp. 2-3. (Footnote omitted, but it says the order I blogged back on 4/6/15 raised a general good faith reliance defense, not the Section 6662(e)(3)(B)(i) defense, so doesn’t apply. See my blogpost “Never Call Retreat,” 4/6/15.)

Chaps, read my blog. I cover all this good stuff.

Their key witness, who could save Albert L. Hawk & Kelley G. Hawk, Docket No. 13467-25, filed 9/21/26, north of $1.7 million in deficiency, chops and interest, refuses to testify except remotely. Al & Kelley’s trusty attorneys already tried for a remote testimony or a deposition, but Judge Albert G. (“Scholar Al”) Lauber wasn’t having it the first time, nor this time on reconsideration. Key witnesses need to be live and in person.

I spent a good deal of time in an earlier post about diligent follow-up by client and trusty attorney. True, with much less than a million USD in play, one rapidly hits a paywall, especially when there’s no payday at the end of the trail. But when one gets north of the seventh figure, a proper regard for both ends of your green silken wallet mandates a certain largesse. Like a round-trip first-class ticket, premium room, and a couple slap-up dinners. (Hi, Judge Holmes)

Here, the key witness (I’ll call him The Englishman) resides in the UK and paid Al some $4 million. Al claims this is a loan. The Englishman provided affidavits and documents at Exam in support. But now he refuses to cross the pond.

Those with a mind debased by years of practicing law might suspect The Englishman is suffering from Hamlet’s Complaint, that “sicklied o’er with the pale cast of thought” thing. Or maybe Bert Kroner’s munificent pal Mr. H (see my blogpost “Imaginary Friend?” 6/1/20.

When your case depends upon a key witness, the kind of follow-up I earlier described is just the prologue. If any doubt remains, be prepared to settle. Fast.