That entrepreneurial gentleman Scott A. Blum, star of my blogpost “OPIS Finis,” 11/18/12, seems to have an inexhaustible appetite for tax dodges, as he’s back today with Scott A. Blum and Audrey R. Blum, Docket No. 5313-16, filed 5/12/21*. This time it’s BLIPS. I’ll let Judge Kathleen Kerrigan explain.

Scott was a partner in “… Democrat Strategic Investment fund LL (DSIF), which engaged in a tax shelter, Bond Linked Issue Premium Structure (BLIPS). DSIF was an entity taxable as a partnership pursuant to the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. No. 97-248, sec. 402(a). 96 Stat. at 648, which established unified procedures for the IRS examination of partnerships rather than a separate examination of each partner. See secs. 6221-6234.” Order, at p. 1.

“The BLIPS transaction resulted in a purported tax loess which petitioners claimed on their 1999 Federal income tax return.” Order, at p. 2. Tax loess? Judge, I thought you might be referring to Clay; see my blogpost “Indians Not Taxed – Redivivus,” 11/28/16.

Howbeit, IRS descended on the Democrats (please, this is a nonpolitical blog; any resemblance between my remarks here and any political organization or party is purely coincidental). The Democrats’ TMP elected to challenge the FPAA in USDCNDCA, at which IRS won on all counts, including without limiting in any wise the generality of the foregoing, the Section 6662(h) overvaluation chop.

So IRS hit Scott with a bunch SNODs (hi, Judge Holmes).

The SNODs seek the chops USDCNDCA affirmed, and Scott claims he doesn’t owe them.

We all know pursuing affected items in Tax Court is a nonstarter. Happily, the next generation of partnership dodges will all be sorted out in a single proceeding. Maybe.

“Deficiency procedures apply to affected items which require partner level determinations (other than penalties, additions to tax, and additional amounts that related to adjustments to partnership items. Sec. 6230(a)(2)(A). This is a deficiency case and therefore, penalties attributable to affected items determined at the partner-level are not before the Court.” Order, at p. 2. (Citation omitted).

So anything in Scott’s petition relating to the chops is stricken.

Scott, sometimes it’s better just to pay the tax. And stay away from the tax loess.

*Blum 5313-16 Order 5-10-21 – 12a0ebc7-1e54-4118-8a3c-9e79daacb35a