Judge Emin (“Eminent”) Toro knows the way well enough to send off San Jose Wellness, 156 T. C. 4, filed 2/17/21, like the unhappy heroine of the 1968 Bert Bacharach-Hal David hit. The San Joses run a pottery, and want to deduct depreciation (because not “paid or incurred” like other deductions) and charitables (because, well, they’re not a business expense).

Judge Eminent says Sections 167 and 170, respectively, call these items deductions, and besides, “As the Supreme Court has explained, the ‘deductions specified in Part VI of Subchapter B of the Income Tax Subtitle of the Code [which includes sections 167 and 170] are “subject to the exceptions provided in part IX.’” Commissioner v. Idaho Power Co., 418 U.S. 1, 17 (1974) (quoting section 161). One of these exceptions is section 280E.” 156 T. C. 4, at p. 7.

And Tax Court has held again and again that pottering is trafficking.

But the San Joses want to preserve their arguments for appeal, so they claim they’re not trafficking.

It takes Judge Eminent 30 (count ’em, thirty) pages of discomposed electrons to complete the send-off of the San Joses. He’s puzzled when IRS fails to cite the Northern California Small Business Assistants case (156 T. C. 4, at p. 9, footnote 7), in which a divided bench blew off the not-a-deduction argument. But maybe IRS’ counsel read my blogpost “Through the Vegetation,” 10/23/19, and were scared off by Judge David Gustafson’s brilliant dissent, and my editorial riffs thereon.

Howbeit, Judge Eminent says “case closed.” And the San Joses get the accuracy chop.

The San Joses can join the Assistants and appeal. But with the presently-constituted 9 Cir., I’m not seeing great odds.