The IRS has a slam dunk in Mark Feathers and Natalie E. Feathers, T. C. Memo. 2024-88, filed 9/23/24. While the financial wheeling-dealing is head-spinning, the bottom line is that the small business lending businesses Mark was running combined unregistered securities with a Ponzi scheme. Mark took a 33-month fall in USDCNDCA (see below).

IRS got into the act with the usual bank deposits and specific-item analyses, which you can read for yourselves. And if you want to learn how to buy an SBA small business lending license, Judge Mark V. (“Vittorio Emanuele”) Holmes will tell you, T.C. Memo. 2024-88, at pp. 5-6.

The only reason I found this case noteworthy is that, despite the amount of money involved, on which IRS virtually entirely prevails, there still has to be a Rule 155 beancount.

“The [Year One] bank-deposits analysis concluded that [Mark’s Sub S] had $1,654,110 in gross receipts, and $82,310 in rental income not includible on Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation. Adding these two numbers together leaves us with $1,736,420, which is $38,578 less than in the notice of deficiency, requiring a decision under Rule 155.

“Other than that we don’t see any problems with the Commissioner’s numbers for [Year One], and there is no doubt that he has traced that income from the Funds to [Mark’s Sub S] and on to Mr. Feathers.” T. C. Memo. 2024-88, at pp. 12-13.

Despite wading through a plethora numbers (hi, Judge Holmes), and showing how carefully he can add, he won’t add.

https://www.sec.gov/enforcement-litigation/litigation-releases/lr-24128