It’s a reprise of a gambit that’s been tried and failed, but Habitat Green Investments, LLC, MM Bulldawg Manager, LLC, Tax Matters Partner, et al., Docket No. 14433-17, filed 2/10/25, are at it again.

Section 170(e)(1)(A) limits any charitable contribution by excluding any gain in value that is not capital gain; IOW, inventory gets valued at donor’s basis, and Section 724(c) keeps inventory donated to a partnership as inventory.

Once again, Habitat Greeners’ trusty attorneys are in there pitching. They claim the “easement” the Habitat Greeners donated is different from the land which they retained. While the partners may have donated inventory land (that is, land held for sale to customers in the ordinary course of business), they still have the land. All they gave to the 501(c)(3) guardian is an easement, which they say is only a “restriction,” and the Habitat Greeners don’t sell easements in the ordinary course of business to customers or anyone else. Like Alice in Wonderland, they donated the grin, not the cat.

Judge David Gustafson: “Petitioner’s position would create odd, even perverse, consequences if it were adopted. By petitioner’s reasoning, if it had donated its entire property in fee simple, then the property donated would have had inventory character, and section 170(e)(1)(A) would have reduced the amount of its deduction to be no more than its basis. But since petitioner donated merely an easement and retained the remainder of the property interest, then (says petitioner) it avoids section 170(e)(1)(A) and gets an unreduced deduction for the value of its donation. It is not clear why Congress would have created such an advantage for land owners who donate only partial interests.” Order, at p. 4.

Besides, contrary to the Habitat Greeners’ claim this was never before Tax Court, the argument failed in Oconee Landing Property, LLC, Oconee Landing Investors, LLC, Tax Matters Partner, T.C. Memo. 2024-25, filed 2/21/24. I blogged the opinion, but not on that point.

Today brings two (count ’em, two) recurring Taishoff incantations.

First, stipulate, don’t capitulate. Whistleblower 16459-22W, filed 2/7/25 did not heed (perhaps did not read) the well-worn incantation. Hence FiveNiner (as I will designate him/her hereinafter) gets no more than the augmented $139K discretionary award s/he got per Section 7623(a). Problem is, FiveNiner and trusty attorney stiped to the administrative record, which showed restitution only, no open assessments. Hence Section 7623(b) mandatory award was off the table. So STJ Diana L. (“Sidewalks of New York”) Leyden tosses FiveNiner’s motion for discovery to see if IRS got more.

“Petitioner in petitioner’s Motion to Compel Discovery seeks to discover whether the IRS opened a civil examination of either Taxpayer A or Taxpayer B. Apparently, the purpose for this is to see if additional amounts of tax and penalties were collected. However, the stipulated administrative record is clear—the IRS did not pursue a civil examination (audit) of either Taxpayer A or Taxpayer B. Accordingly, the record supports respondent’s assertion that the proceeds in dispute—the restitution award—did not exceed $2 million.” Order, at p. 3. Took fifteen (count ’em, fifteen) years from Form 211 to decision.

Next, the Dixieland Boondockery summary J smokeout. I’ve extolled the merits of summary J often enough before now.

The petitioners’ counter to IRS’ standard Boss Hoss signoff summary J is the qualified appraiser, qualified appraisal summary J. Case in point:  St. Andrews Plantation, LLC, Joseph N. McDonough, Tax Matters Partner, Docket No. 20849-17, filed 2/7/25. The StAndy’s get the appraiser qualified, subject only to Reg. Section 1.170A-13(c)(5)(ii), the “guilty knowledge” exception, which knocks out appraisals if the donor had knowledge of facts that would cause a reasonable person to expect the appraiser to falsely overstate the value of the donated property. But who knew what when is for the trial.

The StAndy’s have some substantial compliance claims, but those are for trial. Judge David Gustafson denies their vague Loper Bright claims with respect to the appraisal summary regs with citation to the Deficit Reduction Act of 1984, which specifically authorizes the specific regulation.

STJ Diana L. (“Sidewalks of New York”) Leyden cannot deal with the Employee Retention Tax Credit (ERTC) allegedly due Peoplease, LLC, T.C. Memo. 2025-14, filed 2/6/25, especially since Peoplease doesn’t challenge the $11 million Form 941 tab that underlies the NITL here.

Peoplease didn’t originally claim at Appeals that the ERTC would offset the Form 941 tab. IRS now wants summary J sustaining the levy. Peoplease ripostes with the ERTC, and wants time to get it and pay the tab therewith.

“Petitioner did not raise the asserted submitted amended returns and unprocessed claims for ERTCs for periods not in issue at the CDP hearing. The Court does ‘not have authority to consider section 6330(c)(2) issues that were not raised before the Appeals Office.’ Section 6330(c)(2) issues are ‘any relevant issue[s] relating to the unpaid tax or the proposed levy,’ including, among other things, challenges to the appropriateness of collection actions and challenges to the underlying liability under section 6330(c)(2)(B).

“Further, in a CDP case the Court does not have jurisdiction to determine an overpayment of an unrelated liability. A mere claim of an overpayment is not an available credit and thus cannot be taken into account in a CDP hearing to determine whether the underlying tax in issue remains unpaid.” T. C. Memo. 2025-14, at p. 4. (Citations omitted).

John 20:23 doesn’t apply in US Tax Court.

Unhorsing the Boss Hoss by means of the Nirvana fallacy fails despite the attack of the trusty attorneys for Habitat Green Investments, LLC, MM Bulldawg Manager, LLC, Tax Matters Partner, Docket No. 14433-17, filed 2/6/25, despite another audacious effort to scuttle chops via summary J, led by Vivian D. (“Golden”) Hoard, Esq.

Judge David Gustafson agrees that Mr. B, who supervised RA E (names omitted) throughout the examination of the Dixieland Boondockery at issue, was best fitted to give the hoofprint that sealed the chops. But Mr. B had been superseded as Boss Hoss by Ms. V when he sought and got approval from her, and thereafter communicated same to the Greens.

“We can assume (as petitioner asserts) that Mr. B was the immediate supervisor during all of the substantive work of the audit and that he would have been the ideal and most knowledgeable supervisor to evaluate the proposed penalty determination. However, the statute does not require the ideal. All it requires is that the approver be the immediate supervisor. Under Rule 121 we assume that Ms. V was the supervisor at the time she signed the approval; and under that assumption, section 6751(b)(1) is satisfied.” Order, at p. 1.

Once again, the actual is the enemy of the ideal.

Away back on 12/17/19, I stated that “I’m not saying that Barb and Hal are, or are not, injured innocents, nor that they are, or are not, gameplaying rounders. Without seeing all the papers, there’s no way I can say.” See my blogpost “Was Justice Scalia Right?”* of even date therewith, as my expensive colleagues would say.

Well, five (count ’em, five) years on, Judge Courtney (“CD”) Jones is beginning to think along those lines, at least as far as Hal is concerned. See Harold Kupersmit, Docket No. 6691-23L, filed 2/5/25.

Hal has petitioned a bunch stuff (hi, Judge Holmes), for most of which he has either had a chance to contest and lost at 3 Cir, or else never got tickets to Tax Court. And he never gave the AO the Form 433-A and the rest of it for the NITL for which he had properly petitioned.

Apparently no one at IRS or at Tax Court checked out Hal and spouse Barb’s previous history, or read my blog.

So Judge CD Jones can do nothing beyond the Section 6673 yellow card, with emphasis.

“Although the Court will not impose a sanction at this time, we caution Mr. Kupersmit that if he continues to pursue frivolous arguments in this or any subsequent proceeding, he may be sanctioned in an amount up to $25,000.” Order, at pp. 8-9. (Emphasis by the Court).

* https://taishofflaw.com/2019/12/17/was-justice-scalia-right/

James Clark, T. C. Memo. 2025-13, filed 2/4/25, has spent 30 (count ’em, 30) years supporting himself as a freelance writer of movie reviews and seller of movie memorabilia. For year at issue, he lumped all his earnings together, listed them as “other income” and went to an H&R Block shop to file his return.

What’s wrong with this picture? No Sched C, no Sched SE. IRS processes return, issues SND for SE and five-and-ten substantial understatement chop. James petitions timely as postmark on his mailed petition proves, but petition didn’t get to IRS for four (count ’em, four) months, too late to stop assessment. So IRS reverses assessment per Section 6213(a), and notifies Social Security Administration, which issues a letter saying no SE due. James says IRS estopped.

No, says Judge Tamara W. Ashford. If this sounds familiar to Judge Ashford, it’s because another (unrelated) Ashford (William T.) tried the same move. See my blogpost “You Might As Well Capitulate,” 9/22/22.*

SSA withdrew the SE because it hadn’t been properly assessed. But it will be back as soon as James loses this case. His writing-and-selling gigs are clearly self-employment, pass every test. Moreover, James reported the income as nonemployee compensation.

As for the chop, it’s a close call. Good faith belief and want of sophistication can offset, and James is only a high school graduate, but at day’s end he has been around the block too many times.

“At trial petitioner appeared sincere but seemed a little confused as to the tax treatment of the income he admitted receiving from freelance movie review writing and selling movie-related memorabilia in [year at issue]. To be sure, his sophistication regarding federal income tax matters is rather limited in the light of his educational background, but he has been in business for himself over 30 years and indeed he acknowledged at trial that he always just pays the penalty for failure to pay estimated tax when he files his return each year (as he did for [year at issue]). He also stated that H&R Block prepared his [year at issue] return, but that statement alone does not show that he actually relied on advice from a tax professional during the preparation process. Accordingly, we find that petitioner failed to present persuasive evidence of a cognizable effort to assess his proper tax liability or reasonable cause for the error. Because the understatement of income tax was by definition substantial, we will sustain the penalty.” T. C. Memo. 2025-13, at pp. 7-8.

Gotta wonder what training that H&R Block shop gave its line preparers.

* https://taishofflaw.com/2022/09/29/you-might-as-well-capitulate

So Judge Christian N. (“Speedy”) Weiler finds in Andrew Parker, Docket No. 775-23L, filed 2/4/25, especially when Andrew and IRS seem to have hashed out their differences. Each has filed Motion for Entry of Decision, which Judge Speedy Weiler will put on hold.

The only hitch is in a “below the line” agreement in the decision document. For more on below-the-liners, see my blogpost “Below the Line,”11/4/23*.

Now stips are contracts and treated as such. Those resulting in entry of decision can be enforced like decisions (what we State courtiers call “judgments”).

Below-the-line (that is below where the Judge “so orders” the stip) agreements are still enforceable, but they aren’t decisions, so you’ve got to go separately to enforce, and contract defenses apply.

“While on the other hand, if there is no meeting of the mind, or agreement, then this Court is precluded from enforcement of a proposed stipulation between the parties.” Order, at p. 1. I think you meant “meeting of the minds”, Judge, that basic element of contract formation. Takes two to tango.

So let the parties enlighten Judge Speedy Weiler as to what their minds met on.

* https://taishofflaw.com/2023/11/14/below-the-line/

Classicist Judge Patrick J. (“Scholar at”) Urda disproves a classic mantra of mine in Thomas W. Langlois, T. C. Memo 2025-12, filed 2/3/25, and showing off his Latin erudition in a footnote. And more.

The footnote bears the title first set forth hereinabove at the head hereof, as my expensively prolix colleagues would say.

Here it is, in extenso.

“Ecce math. Mr. Langlois contended that he made capital contributions of $59,309 in 2012; removing the Form 1099 category reduces this amount to $49,917. After we take into account his 2012 distributive share of loss from Hair Station ($32,636), he is left with an adjusted basis of $17,281. For 2013 the removal of the Form 1099 category reduced his claimed capital contributions from $55,925 to $20,342. Adding his 2012 basis to his 2013 contributions yields $37,623, which is less than the distributive share of loss he claimed for 2013 ($40,309) and left him with an adjusted basis of zero (and a surplus loss of $2,686). Things continued along this path in 2014, which saw a reduction in his contributions to $20,793, well below the sum of the carryforward loss from 2013 ($2,686) and the distributive share of the 2014 loss he claimed ($38,569), which left him with an adjusted basis again of zero and a loss of $20,462 to be carried forward. Even assuming that Mr. Langlois made capital contributions of $15,189 in 2015 as he asserts, he has an insufficient basis—in light of the loss carryforward of $20,462—to deduct the distributive share of loss claimed on his 2015 tax return ($29,537).” T. C. Memo. 2025-12, at p. 16, footnote 7.

Judge Scholar Pat is a lawyer who can add.