But another no win, this time for Michael S. Mountanos, 2014 T. C. Memo. 38, filed 3/6/14. Mike was previously hit with a 40% substantial undervaluation on his would-be conservation easement. He didn’t stipulate that the purported grant was a sham, but instead fought it out in Tax Court–and lost. Tax Court calls that opinion Mountanos I.

But Mike is persistent. He wants to fight over the carryover charitable deduction he didn’t get, which was denied based on the overvaluation. “Petitioner now asks us, in a calculated maneuver to avoid the accuracy-related penalty, to address the alternative grounds respondent raised for disallowing the carryover deductions. We will deny his motions.” 2014 T. C. Memo. 38, at p. 2.

You may remember our old friend Keller. No? See my blogpost “It’s A Sham”, 9/25/12. If a deduction would have been disallowed based on taxpayer’s confession it was all a sham, whether or not overvaluation was in play, then Ninth Circuit said there was no overvaluation.

But in the meantime, the Supremes weighed in with “…United States v. Woods, 571 U.S.__, 134 S. Ct. 557 (2013). The Court held that the Commissioner’s determination that a partnership was a sham is not independent from a taxpayer’s overstatement of basis for purposes of the gross valuation misstatement penalty.” 2014 T. C. Memo. 38, at p. 6, Footnote 2.

Besides, Keller stipulated his deal was a sham. That kept him from contesting whether it was or wasn’t. Mike fought it all the way to a finish. He had his shot to prove his deal was valid and the valuation he claimed was real. He lost.

Judge Kroupa isn’t giving him a second shot at avoiding the 40% chop by arguing alternative grounds.

“Petitioner now attempts to lose his redetermination argument on a different ground so as to avoid liability for our applying the gross valuation misstatement penalty. Thus, he is attempting to take two bites at the same apple. The Court of Appeals in Keller noted that a taxpayer’s concession had significant consequences because it meant that the taxpayer was no longer able to argue the merits of his deficiencies in the Tax Court. Here, petitioner is attempting to gain advantage by both arguing the merits of his deficiencies in the Tax Court and then later seeking to lose his redetermination argument on a non-valuation ground to avoid the gross valuation misstatement penalty.” 2014 T. C. Memo. 38, at pp. 8-9, Footnote 4 (Citation omitted).

Mike is nothing if not inventive. He appealed to Ninth Circuit, so he wants Tax Court to consider his alternative grounds in case Ninth Circuit remands.

But that would be an advisory opinion, as it’s conjectural that Ninth Circuit would remand, and anyway Mountanos I disposed of the whole 40% chop issue.

“We held dispositively in Mountanos I that petitioner failed to prove that the conservation easement had value. Our addressing the alternative grounds that respondent raised would have no impact, then or now, on our disposing of this case. The alternative grounds that respondent raised for disallowing the carryover deductions are therefore moot. Accordingly, we decline the invitation to issue an advisory opinion.” 2014 T. C. Memo. 38, at pp. 10-11. (Citations omitted).

Mike hasn’t shown unusual circumstances or substantial error, and Mike’s Rule 162 arguments are the same as his (losing) Rule 161 arguments.

So Mike loses; but it was a good try.