I have to give Hale E. Sheppard, Esq., and his stalwart squad a Taishoff “Good Try, Second Class” for their ingenious Boss Hossery in Hancock County Land Acquisitions, LLC, Southeastern Argive Investments, LLC, Tax Matters Partner, T.C. Memo. 2025-50, filed 5/20/25. Whoever amongst Hale and his five (count ’em, five) compañeros came up with this one deserves it.

Malheureusement, Judge Albert G. (“Scholar Al”) Lauber, ace basher of Dixieland Boondockeries, will have none of it.

 It’s the IRS summary J classical gambit for Section 6751(b) Boss Hossery on the 20%-40% Section 6662 chops. Classical defense: was there proper delegation from Secretary; need discovery to see who did what; was Boss Hossery timely; wasn’t the real determination made by IRS High Command; Notice 2017-10 was the real determination.  The usual ripostes: CPAFs duly e-signed; Kroner and Laidlaw Harley Davidson supe was supervising when chops announced; general pronouncements from on high and notices not directed to any particular taxpayer for any particular transaction or year.

OK, im Westen nichts neues.

Except.

“Alternatively, at least with respect to the valuation misstatement penalties, petitioner asserts that HK and STH made the ‘initial determination of the penalty assessment.’ See §6751(b)(1). Messrs. K and H, senior in-house appraisers employed by the IRS, prepared an ‘appraisal review report’ that evaluated the appraisal submitted with Hancock’s return. Their report, which RA S received in August 2019, concluded that the fair market value of the donated easement was $5,169,400 rather than $180,177,000.

“’Once [an easement’s] value is determined,’ petitioner says, ‘the application of section 6662(h) is simple arithmetic.’ If Messrs. K and H made the ‘initial determination of [the penalty] assessment,’ see § 6751(b)(1), their supervisor, not RA S’s supervisor, would supposedly have been the proper person to consider penalty approval. Petitioner contends that uncertainty on this point creates a genuine dispute of material fact precluding summary judgment.” T. C. Memo. 2025-50, at p. 10. (Names omitted).

Judge Scholar Al clears that puck to the boards.

“In-house IRS appraisers do not have the authority to ‘determine’ penalties; they simply offer an opinion as to value. During an IRS examination it is the duty of the revenue agent to determine penalties, taking into account (among other things) the value of the property contributed and possible defenses the taxpayer may have. The word ‘determination’ has “an established meaning in the tax context and denotes a communication with a high degree of concreteness and formality.’ Belair Woods, 154 T.C. at 15. An ‘initial determination’ signifies a ‘consequential moment’ of IRS action. Ibid. (quoting Chai v. Commissioner, 851 F.2d at 221).” T. C. Memo. 2025-50, at p. 11.

A preliminary analysis by an in-house appraiser isn’t that.

Taishoff says, that quote from Chai reminds me ya gotta love what The Jersey Boys unleashed on the world so many years ago; such a fabulous cornucopia of blogfodder. In a world plagued with war, hatred, drug addiction, population collapse and overpopulation, half the world obese and the other half starving, and deadly diseases, some our best minds are occupied with trying to find ways to undermine Section 6751(b).

Sorry, my bad. Off the soapbox.