I most respectfully implore Judge James S. (“Big Jim”) Halpern as first hereinabove set forth; please remember that lawyers can’t add. So when RA KK (name omitted), armed with zeal and Excel, takes on the self-prepared, mostly handwritten returns of Richard John Cardulla, T. C. Memo. 2023-89, filed 7/19/23, numbers fly blizzard-like. RJ is “an attorney. His mailing address was in California when he filed the Petition. He has been involved in real estate activities for many years.” T. C. Memo. 2023-89, at p. 5.

Judge Big Jim spent most of pages 4 and 5 eviscerating RJ’s reply brief.

RJ is scanty with the substantiation, so many deductions founder. Blank lines on returns and arithmetic delictions furnish forth an eye-glazing trudge through RJ’s wheeling and nondealing. He can’t make out that he was in a trade or business for years at issue, but he does score on investment. Unhappily, Section 163(d)(1) investment interest capped at investment income puts paid to that one.

But Judge Big Jim comes into his own when Section 163(e) boards RJ over the bows. RJ buys out a couple partners (hi, Judge Holmes) with a 10-year, 10%, $1.2 million note, no installment payments, and single payment of principal and accrued interest at maturity. The note is bona fide, mostly for want of any contrary evidence.

RJ wants to deduct the accrued but unpaid interest annually.

In piratical tones, Judge Big Jim intones, “OID!”

Taishoff says “OMG!”

There follows from page 22 to and including page 27 a granular analysis of how to compute, characterize, categorize, deconstruct and defenestrate RJ’s note.

I recommend the analysis to those who can add.