On the desk of Judge Joseph Robert (“JR”) Goeke stops the bucks sired by Heart Attack, “the biggest buck they [Dr. Gary M. Schwarz, co-star of Gary M. Schwarz and Marlee Schwarz, T. C. Memo. 2024-55, filed 5/13/24] had ever seen,” T. C. Memo. 2024-55, at p. 12.  Also nilgai, oryxes, and blackbuck, bass (both Florida and hybrid), and crested cormorants.

Dr. Gary ran a bunch ecotourism and hunt-for-fee operations, as well as real estate wheeling-dealing. So this is a goofy regulation case, except here the goofy regulation is Reg. Section 1.183-1(d)(1).

Dr. Gary can’t prove that the real estate appreciation he hopes will offset the seven-figure operating losses generated by his self-leasing operation. Hyping the lease rent makes ordinary losses in one entity out of passive gains to another.

His trusty CPA never asked for, nor saw, the leases, and, when he was showed them on the trial, claimed the appreciation should have been shown as gain each year, rather than at termination, when the improvements paid for by Dr. Gary’s operation belonged to the landlord. But the trusty CPA is good enough to get Dr., Gary off the 20% five-and-ten chops.

If you want to know how to run a TX ranch ecotourism business, Judge JR will tell you in exhaustive (if not exhausting) detail, 117 (count ’em, 117) pages’ worth, just as Judge Ruwe told us about how the Boston Bruins do a road trip (see my blogpost “Feed Those Bears,” 6/26/17), but looking at how the Bruins are doing just now, they would have better stayed at home). Who says tax law is dull?

Those my nearest and dearest (hi, Judge Holmes) who actually own a TX ranch should take a look.

But don’t do it like Dr. Gary.

“Many facts stipulated, alleged, argued, testified about, and otherwise presented to the Court in this case are, or appear to be, incorrect or misleading. The parties’ work occasionally reflected an uninspired attitude toward developing, trying, and briefing this case. As a result, many potentially relevant facts and arguments were undeveloped, ignored, misrepresented, and/or missed.” T. C. Memo. 2024-55, at p. 7.

And Judge JR is not about to seek Judge David Gustafson’s title as Obliging Jurist by trying their case for them.