STJ Jennifer E. (“Publius”) Siegel has a 32 (count ’em, 32) page small-claimer. I’ll let Her Honor judge-‘splain.

“The simplest version of this small tax case Opinion is that petitioners are liable for the deficiencies determined by the Internal Revenue Service (IRS) for each of the four years before us because they failed to meet their burden of proof and establish entitlement to any of the deductions claimed. If that were the whole story, however, this Opinion would not be 32 pages long. There is also a fraud penalty at issue for each year, and that requires a few more pages to discuss what petitioners claimed on their tax returns and to make clear how the IRS proved fraud by clear and convincing evidence. But really, this Opinion is long because one of the factors we consider in evaluating fraud is the sophistication of the taxpayer. And Mr. Janangelo is a pretty sophisticated taxpayer; Mr. Janangelo is an auditor at the IRS.” Peter J. Janangelo, Jr. and Mary Ann Janangelo, T. C. Sum. Op. 2026-8, at p 2.

Mr. Janangelo is also a CPA and a member of the Bar of Our Fair State.

“Mr. Janangelo was employed full time at the IRS during the years at issue and, at the time of trial, had been for almost 20 years. In his capacity as a revenue agent for the IRS, Mr. Janangelo conducts audits and reviews tax returns. He belongs to the National Treasury Employees Union (NTEU) and has been a union steward.” T. C. Sum. Op.  2026-8, at p.2. (Footnote omitted, but it says he works for IRS, not OCC.) 

I’ll spare you the rest, barring two points for audit.

“Mr. Janangelo argues that he is not required to substantiate any expense under $75, no matter what the category. He cites no authority for this proposition.” T. C. Sum. Op. 2026-8, at pp. 15-16.

Notwithstanding Section 446, requiring cash basis taxpayers to recognize income and expense when paid, ” Mr. Janangelo argued that the IRS should have been more flexible during his audits, explaining that his own audit practice working for the IRS is to allow a deduction, even if claimed for  the wrong year. Mr. Janangelo’s practice as a revenue agent may be to allow such deductions, but the Court’s role is to apply the law as written to the facts put in evidence. The Janangelos find support in neither.” T. C. Sum. Op. 2026-8, at p. 18

.I do not recommend either position.

Jeremy Berenblatt, T. C. Memo. 2026-75, filed 8/27/26, is an unending source of blogfodder. Y’all will recollect Jeremy blew on a digital options dodge seven (count ’em, seven) years after IRS interviewed him. So far no dough for Jeremy, but his trusty attorneys (whom I’ll call the Scotts) are in there pitching, trying to supplement (or maybe complete: the rules overlap) the administrative record, and have Judge Elizabeth A. (“Tex”) Copeland take 14 (count ’em, 14) judicial notices.

Problem is Dania Beach. Jeremy and the Scotts, says Judge Tex Copeland, are firmly aground. City of Dania Beach v. FAA, 628 F.3d 581 (D.C. Cir. 2010)) is the barrier. The three-way test is “1) if the agency “deliberately or negligently excluded documents [from consideration] that may have been adverse to its decision,” (2) if background information was needed ‘to determine whether the agency considered all the relevant factors,’ or (3) if the ‘agency failed to explain administrative action so as to frustrate judicial review.’ City of Dania Beach, 628 F.3d at 590.” T. C. Memo. 2026-75, at pp. 11-12.

Jeremy wants IRS’ notes from his interview. Even if that happened years before his Form 211, maybe they can be included on the “all relevant factors” front. But that’s not a catch-all; it only includes material to explain complex technical issues. IRS was already on the trial of the dodgefloggers. And Jeremy put what he had told the IRS in his Form 211, so the Ogden Sunseteers had the whole story.

Jeremy’s own file wasn’t attached to his Form 211. Anyway, it’s not adverse to the OS decision, provide relevant technical background, nor does omission frustrate judicial review.  As for IRS e-mails that he wants, they were created after he petitioned so could never have been considered in evaluating his blow. As for deliberately or negligently excluded, they had to exist when the decision was made.

There’s a lot of argy-bargy about in camera review of grand jury testimony, T. C. Memo. 2026-75, at pp. 16-20, but I leave that to the technicians. F.R. Crim. P. § 6(e)(3)(E)(i) is well outside my wheelhouse.

As for the 14 judicial notices, they also founder on Dania Beach. ” As a threshold matter, Mr. Berenblatt does not detail how his requested adjudicative facts fit into the City of Dania Beach framework. Moreover, none of Mr. Berenblatt’s 14 RAFs are facts generally known within the jurisdiction or capable of accurate and ready determination. RAFs 1, 2, 3, 4, 7, 10, 11, 12, 13, and 14 describe the course of the prosecution of the… promoters and relate to Mr. Berenblatt only obliquely, if at all. They therefore cannot properly be considered adjudicative facts in the first instance. Moreover, to the extent that the RAFs incorporate inferences and speculation, they are not facts at all.” T. C. Memo. 2026-75, at p. 22.

No, you don’t have to suffer to prove you have a profit motive. But it helps if you worked hard and got hurt. Just ask Sydney L. Gutierrez-Chapin, star of Frank L. Chapin, Deceased, and Sydney L. Gutierrez-Chapin, et al., T. C. Memo. 2026-76, filed 8/27/26. The late Frank (that’s Frank CPA) and Sydney had a tangled trail over the six (count ’em, six) years at issue, so I’m not going to summarize all the ground Judge Vasquez covers.

But two (count ’em, two) points in his opinion are worth a look.

The late Frank and Sydney both grew up on farms and tended animals. At home in ID, they were quarter horse and Appaloosa breeders, ropers and racers. My colleague Peter Reilly CPA knows this story well. 

But here’s the kicker (and I mean kicker): “As with cattle, in the spring, petitioners monitored the horses ready to foal around the clock, including four to five times at night, and moved the horses with foals to separate areas. Petitioners have overseen the births of over 100 colts.

“Other responsibilities on the ranch included cutting, baling, and stacking hay. In addition to the field work, petitioners repaired the fencing and various buildings on the land. The physical labor needed to maintain the ranch took a considerable toll on petitioners. Additionally, both petitioners sustained injuries at different times from falling off or being kicked by horses.” T. C. Memo. 2026-76, at p, 8. 

And notwithstanding personal bankruptcy, the late Frank and Sydney stayed in the barn and in the saddle. True, the late Frank and Sydney were a trifle casual with their paperwork and stayed the course when others would’ve bailed. IRS folded some deductions if Judge Vasquez found the late Frank and Sydney had a profit motive.

Judge Vasquez says pain equals gain. “Section 183 does not require that taxpayers operate their ventures with perfect business acumen. Petitioners’ persistence in the face of hardship may reflect unusual business judgment, but it does not belie an honest profit motive, which we find petitioners to have established.” T. C. Memo. 2026-76, at p. 23.

Remember, the late Frank was a CPA. So how about bookkeeping?

“Respondent contends that petitioners are liable for the section 6662 penalties because they failed to keep, maintain, and produce organized records relating to their business income, expenses, net operating and capital losses, and Schedule F activity, resulting in their need to reconstruct numerous documents. Mr. Chapin prepared their 2009, 2010, 2011, and 2012 returns using working trial balances, balance sheets, and profit and loss statements. All income was recorded, regardless of the account in which it was deposited, including any cash received, and Mr. Chapin allocated expenses among personal expenses, expenses incurred in the accounting practice, and expenses incurred in their farming activity. He then reconciled each account every month. Petitioners kept their receipts, including those for personal expenses and organized them in ledger categories. To the extent that petitioners failed to effectively present that evidence at trial, we believe that petitioners’ age and the passage of time were significant contributing factors. Accordingly, we find that petitioners are not liable for accuracy-related penalties on the underpayments relating to respondent’s adjustments to income and disallowances of Schedules C and E deductions not subject to section 274(d).” T. C. Memo. 2026-78, at pp. 30-31.

Unhappily, Sydney “fell woefully short of the stringent requirements of Section 274(d)” and loses those deductions.