Clark J. Gebman and Rebecca Gebman, T. C. Memo. 2025-36, filed 4/17/25, scarcely merit the seven (count ’em, seven) pages of text, to say nothing of legal acumen, Judge Albert G. (“Scholar Al”) Lauber expends sending them off and sustaining Appeals’ NOD.

Clark and Rebecca have one merit: they’ve furnished me with beaucoup blogfodder. See my blogposts “No Good Deed,” 5/5/17; “No Good Deed – Redux,” 9/18/17; “Can’t Help Lovin’ That Man,” 9/6/18; and “We’ve All Had Clients,” 1/2/20.

But though Rebecca is still a lawyer in Our Fair State, her drafting skills are somewhat less than perfect.

“Petitioners’ pleadings are not a model of clarity, and it is unclear whether they continue to advance a claim to “innocent spouse” relief. In our 2020 opinion we held that Mrs. Gebman was not entitled to such relief for any of the tax years at issue. See Gebman, 119 T.C.M. (CCH) at 1004–05. In any event, the SO repeatedly told petitioners that they needed to submit Form 8857 if they requested such relief, but they never submitted that Form. See Treas. Reg. § 301.6330-1(f)(2), Q&A-F3 (‘An issue is not properly raised . . . if consideration is requested but the taxpayer fails to present to Appeals any evidence with respect to that issue after being given a reasonable opportunity to [do so].’). As a result, no ‘innocent spouse’ claim is properly before us.” T. C. Memo 2025-36, at p. 3, footnote 2.

IRS moves for, and gets, summary J. No Form 8857, no Form 433-A, no Form 656 with deposit, despite SO asking for all thereof.

“In their Response to the Motion for Summary Judgment, petitioners appear to make an offer to compromise the tax liabilities at issue. Any such offer must be submitted to the IRS, not to this Court.” T. C. Memo. 2025-36, at p. 7.

I expect they’ll appeal to 2 Cir, but it’s probably the end of the road. And after they caused a lot of grief for my esteemed colleague The Great Chieftain of the Jersey Boys, I can’t say I’m sorry to see them go.

I’ve done that, but not on the scale of Mark P. Himmel and Deborah W. Himmel, T. C. Memo. 2025-35, filed 4/17/25. Over six (count ’em, six) years at issue, Mark and Deb dropped $867K in their Arabian horsebreeding and training operation.

That earns Judge Tamara Ashford a trudge through the nine factors of the “goofy regulation” (Reg. 1.183-2(b)). And though Hurricane Katrina did damage their operation, and Mark got enmeshed in a cheating scandal while judging the National Championship, that’s not enough to show that externals torpedoed an otherwise thriving business. Mark’s $225K settlement of his lawsuit against the Nationals isn’t business profit.

Too much fun, not enough paper (no written business plan, insufficient careful recordkeeping), not enough experts (spoke to them, but didn’t hire them to guide Mark and Deb to success), and while they advertised and showed up at shows, and certainly put in time on the horse ranch, that’s not enough.

More horseplayers win at the track than in Tax Court.

No, I don’t know what that is, either, but Judge Albert G. (“Scholar Al”) Lauber will tell you in GWA, LLC, George A. Weiss, Tax Matters Partner, T. C. Memo. 2025-34, filed 4/16/25, at p. 73.

Here’s the backstory; see my blogpost “Expertizing,” 5/6/22.

The option scheme gets blown away. The optionor (Deutsche Bank) had neither risk of loss nor hope of appreciation, and served merely as custodian of a basket of publicly tradeds and some exotics, the optionee (GWA and its wholly-owned unrecognized) are the real owners. Worse, Sections 446 and 481 give them a real downer, to the tune of about $337 million. At best, Deutsche Bank ran  a margin-lending operation, and GWA and subsidiaries ran the show.

“Because Deutsche Bank could not profit from appreciation in the value of the basket securities—by retention of the ‘premium’ or otherwise—the Barrier Contracts offered it no opportunity for investment gain. Instead, its compensation consisted solely of the leverage fees it received for supplying financing to GWA, the ticket charges it received for trades executed in the securities basket, and the opportunity to earn interest on the $10X of collateral GWA supplied. These forms of profit do not constitute ‘investment gain’ realized by the owner of securities. Rather, they constitute ordinary business income of a prime broker that lends money to a customer who holds and trades securities in a margin account.” at p. 75.

There’s discussion about whether an unrecognized-boxchecked LLC can make a separate mark-to-market Section 475 election (no, it can’t), but anyway the one GWA made is defective because it covers some but not all of its securities, and the statute requires all, lest parties load up current losses and hide current gains.

If options are your thing, with “Greeks” and European-vs-American varieties on your radar, and heteroskedastics are your 23-skidoo, read the opinion, all 139 (count ’em, 139, and I have) pages.

Bottom line: GWA owes ordinary rates, not capital gains. It’s a securities trader that can’t mark to market. Plus chops, of course.

CSTJ Lewis (“His Name Is My Name Too”) Carluzzo has done the 1 Kings 19:19 number on STJ Zachary S. (“High-Rise”) Fried, his erstwhile Attorney-Advisor prior to his own elevation to the Tax Court Bench.

“High-Rise” indeed. STJ Fried goes from newby to Chief in less than a year-and-a-half. But of course CSTJ-designate Fried has much Tax Court creds.

As we say this time of year, here’s the ganze had gadyah.

I find it hard to believe that all y’all were hanging, breathless, on the fate of equitable tolling in a Section 7436 employee status case. True, I did blog the earlier iteration of Belagio Fine Jewelry Inc., 164 T. C. 7, filed 4/15/25, last June; see my blogpost “Is It or Isn’t It?” 6/25/24.

It’s the usual day-late, dollar-short non-blessed PDS getting the petition to the Glasshouse on Day 91.

Judge Tag Greaves said last year that  the 90-day rule was a non-jurisdictional claim-processing rule, but left equitable tolling for another day.

The headline is the answer. IRS loses.

“Specifically, as to the 90-day deadline, section 7436(b)(2) provides: If the Secretary sends by certified or registered mail notice to the petitioner of a determination by the Secretary described in subsection (a), no proceeding may be initiated under this section with respect to such determination unless the pleading is filed before the 91st day after the date of such mailing.” 164 T. C. 7, at p. 5.

Jurisdiction and equitable tolling are two different matters. A court may have jurisdiction as a matter of law, but equitable tolling, though presumed, doesn’t automatically follow. A statute is not a suggestion to be tinkered with.

“As for the deadline in section 7436(b)(2), we see nothing in the statute’s text to rebut the presumption that equitable tolling applies. Section 7436 does not expressly prohibit equitable tolling. Nor does the wording strike us as ‘unusually emphatic,’ ‘highly detailed,’ or ‘technical.’ Although section 7436 uses emphatic wording—’no proceeding may be initiated’—it does not strike us as unusually emphatic. It seems no more emphatic than the wording of the Federal Tort Claims Act, 28 U.S.C. § 2401(b), which provides that a claim ‘shall be forever barred’ for failure to comply with the 6-month deadline that the Supreme Court held did not preclude equitable tolling.” 164 T. C. 7, at p. 7 (Citations omitted). (Emphasis by the Court).

Finally, don’t sweat the small stuff. “The number of petitions under section 7436 is even dwarfed by the number of collection due process cases, representing 5.06% of the cases filed with the Court. The increased administrative burden related to these collection due process cases was insufficient to rebut the presumption in favor of equitable tolling in Boechler, P.C. v. Commissioner, 142 S. Ct. at 1501.” 164 T. C. 7, at p. 9. (Citation omitted).

Two full-dress T. C.s for a tiny silt-stir.

Four (count ’em, four) years ago last month Judge Travis A. (“Tag”) Greaves issued an order which tossed fraud chops on Brian D. Beland & Denae A. Beland, Docket No. 30241-15, filed 4/15/25 because IRS got the Section 6751(b) Boss Hossery after they showed the Form 4549 changeling to them. See my blogpost “Boss Hoss to the Rescue,” 3/1/21.

Well today, 9 Cir’s reversal of Laidlaw’s Harley Davidson Sales, Inc. causes Judge Tag Greaves to vacate the above referred to order resulting from the full dress T.C. For the Laidlaw reverseal, see my blogpost “Ya Feelin’ Lucky?” 4/2/22.

IRS is seeking to vacate the order granting partial summary J to Brian & Danae, tossing the fraud chop. Judge Tag Greaves says there’s no Tax Court Rule about vacacting an order; Rule 162 talks about decisions, and there isn’t one here, because the order only addresses fraud chops; the rest of the case is still up for grabs after a mere ten (count ’em, ten) years.

But FRCP  60(b)(6), brought in by Rule 1(b) provides an order can be vacated for “any other reason that justifies relief.”

Change in law (9 Cir) is good enough reason.

As for timeliness of IRS’ motion to vacate (only three years after Laidlaw reversal), “Golsen requires that we follow the Ninth Circuit’s Laidlaw’s Harley Davidson Sales, Inc., regardless of whether this Court would reach the same conclusion. It would be a waste of judicial resources to stand by a legal conclusion that would be reversed on appeal. This change in controlling law is an unusual circumstance that justifies granting leave to file a motion to vacate and vacating our prior order.” Order, at p. 6.

Taishoff says Laidlaw was wrongly decided. The use of “assessed” in Section 6751(b) is unskillful drafting. An embalmed mistake is still a mistake.

“Je Suis Charlie – Bis”

This is a non-political blog. Or at least, it set out to be so, fifteen (count ’em, fifteen) years ago. I hope I’ve kept true to my intention. It was my hope to continue, to report Tax Court day by day, with commentary aimed at improving the system only, leaving political considerations outside.

I am nearing the end of my career. My ability to deal with the daily strain of practice is wearing out.

But when I see this profession, which occupied the bulk of my life (and all of my working life), trashed and degraded by those with no greater aim than fattening already fat wallets by yielding whatever worth they have left, I am weary with forbearing and cannot stay.

No, I’m no paragon of virtue. I’ve got my share, and more than my share, of times when I’ve gone into the tank or fallen short.  And I know neither courage nor honesty, nor even allegiance to God and Country, can pay the rent or the mortgage.

But I must add my voice to those of my colleagues who are protesting this government’s attempt to subjugate the profession and bend it to their invidious will. Once again, we are all Charlie. Whether the terrorists wear shemaghs or MAGA hats is nothing to the point. They must be fought, and it is never cheap to fight.

Maybe Big Law is too big. Maybe Big Law has forgotten what law is about. Maybe EBITDA and ROI have replaced independent professional judgment and integrity.

Maybe law is just a sham. Maybe it’s really soap bubbles for the rich and chains of steel for the poor. Maybe those of us who believed in it are losers. But it’s better than what this government is offering.

So for me, there is no more neutrality. Elie Wiesel got it right: “Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented. Sometimes we must interfere.”

If anyone is capable of effectuating the goal hereinabove set forth at the head hereof (as my expensive colleagues would say, if the government lets them), it is Judge Ronald L. (“Ingenuity”) Buch. But he must perforce forbear, as Daryl Cheatham, Docket No. 751-24, filed 4/15/25 (“It’s That Day Again”) gives him nothing but old-time protester jive wherewith to furnish forth this off-the-bencher.

“We have further explained in Wnuck v. Commissioner, ‘[I]t is doubtful whether tax jurisprudence will be much advanced by issuing yet another opinion affirming the obvious truisms about tax law’. 136 T.C. 498, 504 (2011). For example, we have previously spilled ink addressing the frivolous argument that income tax is an excise tax and it cannot be imposed as a non-apportioned direct tax under the 16th Amendment, an argument Mr. Cheatham repeats in this case.” Transcript, at p. 6. (Citation omitted).

For the backstory on oft-quoted Scott F. Wnuck, see my blogpost “One’ll Get You Five,” 5/31/11.

Perhaps the late Mr. Justice Antonin Scalia was partly right when he compared Tax Court to a village traffic court: the Glasshouse in the City of Governmental Efficiency may be a safety valve, a place where frustrated taxpayers get to blow off steam; where they get heard before a truly competent judge who cares but can do nothing to vary the law. Wherefore little harm is done either to the fisc or the public peace. And the advance of tax jurisprudence can wait for still another day.

STJ Diana L. (“Sidewalks of New York”) Leyden reaches back to Han Suyin’s 1952 novel in a broad-spectrum overview of privilege in its many-splendored forms. Marc Worrall & Sue J. Worrall, Docket No. 14734-23, filed 4/14/25, have ten (count ’em, ten) trusty attorneys, all burning and churning by day and night through every form of privilege (except only intraspousal, clergy-penitent, and patient-physician), but STJ Di stays with them and their ten (count ’em, ten) IRS adversaries for seventeen (count ’em, seventeen) pages.

STJ Di invokes a wide view of Section 7525 qualifying tax advice, so check out Order, at pp. 8-12. Mere filing instructions and statements of the law and regs unrelated to specifics don’t get it, likewise business advice isn’t enough.

A sculpted conflict waiver can earn work product privilege if tied in to reasonably anticipated litigation.

Attorney-client, of course, is the main course, so if you need apposite somber reasoning and copious citation of precedent for your next brief, STJ Di and the 20 trusty attorneys lay it all on you in the Order, at pp. 3-8.

This is a microcaptive case, featuring exotic coverages for Marc’s & Sue’s lobstering company. Should make for a fascinating opinion, when all the discovery is over.

The Branerton ideal, that “(T)he discovery procedures should be used only after the parties have made reasonable informal efforts to obtain needed information voluntarily,” has been so thoroughly ignored, and when not ignored abused, that it might as well be put to rest.

Judge Travis A. (“Tag”) Greaves finds himself refereeing yet another interrogatories-vs- documents jumpball in J.G. Boswell Company & Subsidiaries, Docket No. 2408-19, filed 4/11/25.

The Boswells want IRS’ legal research, which is a nonstarter, but they do get all the facts upon which IRS relies. Research notes are attorney work product. Judge Tag Greaves finds a lot of IRS’ responses are sufficient.

But IRS is offside in demanding documents, which the Boswells are hunting up and turning over as found. Judge Tag Greaves lets them hunt.

“Respondent’s motion is premature at this point. We expect the parties to work cooperatively in preparing this case for trial. Respondent’s requests call for the production of a voluminous set of documents. Petitioner has indicated its willingness to produce the requested documents and represents that it has produced the relevant documents that it has located. Rather than working collaboratively with petitioner\ to establish a schedule for a rolling production, respondent filed the motion to compel. Given petitioner’s representation and willingness to produce the documents, we will deny respondent’s motion and order the parties to work cooperatively on setting a production schedule for these documents.” Oder, at p. 5.

Play nice, kids; but Judge Tag Greaves won’t countenance stalling.

“We note that petitioner may not delay production of these documents until the production date set forth in the pretrial scheduling order for the exchange of exhibits. That deadline relates to the exchange of documents for trial and not the exchange of discovery. Petitioner need not however produce documents related to expert reports until the deadlines set forth in the pretrial scheduling order.” Order, at pp. 5-6.

This blogpost is, as all my blogposts are, an abbreviation. Those interested should read the whole order.

As I read the order, I marveled at this sentence in the “Background.” “The parties have been engaging in informal discovery for several years.” Order, at p.1. As I read what the parties are seeking now, after “several years” of informal discovery, I was reminded of the famous question Sherlock Holmes asked the young Police Inspector Stanley Hopkins: “What did you do, Hopkins, after you had made certain that you had made certain of nothing?”

Hopkins didn’t answer “Why, make a motion in Tax Court, of course.”