Thus spake Gardner N. Marcy and Maria Marcy, 2018 T. C. Memo. 42, filed 4/3/18, and IRS’ counsel. Gardner and Maria tried to bury a million or so of capital gain in a Jenkins & Gilchrest son-of-BOSS, which IRS torched.

Everyone concedes there was no economic substance in the deal, no business was done, no true pooling of labor, goods, money or skill. But has l’il ole’ Tax Court jurisdiction make such a finding in a non-TEFRA deficiency proceeding?

Judge Gale: “We conclude that we do.” 2018 T. C. Memo. 42, at p. 12.

Whatever the litigants agree, they cannot confer jurisdiction on the court; only Congress can do that.

But the phony entity didn’t file a partnership return.

And the concessions plus trial evidence shows there never was a partnership, so Section 6221 doesn’t apply.

Thus Tax Court can redetermine the deficiency and the good-faith defense to the chops.