Judge Morrison could have saved a lot of electrons had he simply stated the above in Anaheim Arena Management, LLC, H&S Investments I, LP, A Partner Other Than the Tax Matters Partner, T. C. Memo. 2025-68, filed 6/30/25. AAM had a management contract with City and County to run Honda Arena, a major entertainment venue.

AAM was managing the Honda Arena for a piece of the action. But when revenue fell short of operating expenses plus capital repairs and replacements, AAM advanced money. There were promissory notes galore, with stated interest and repayment dates, and events of default and acceleration clauses. Problem was, only AAM signed as lender; the debtor was stated as “Honda Arena.” Except Honda Arena is a building, not an individual, trust, estate, partnership, association, company or corporation.

We get the full-boat eleven (count ’em, eleven) factor 9 Cir debt-vs-equity analysis, which AAM flunks on every measure. It’s all advances to keep the management agreement with the City and County alive. Although Judge Morrison seems confused that the source of repayment of the alleged debts is limited to profits from the Honda Arena means “this factor does not indicate that the advances are not debt.” T. C. 2025-68, at p. 47. I think you meant “this factor does not indicate the advances are debt,” Judge; otherwise, AAM did win on one factor.

Judge Morrison bars IRS from claiming the notes became worthless in a year other than AAM claimed, as IRS raises this too late, thus ambushing AAM.

AAM does avoid penalties, as they leveled with their hotshot CPAs (who had much experience and creds) and showed good faith reliance.

There’s a jurisdictional scrap over whether H&S was the TMP, and thus should have petitioned in the 90-day window, rather than in the 60-day add-on for notice partners, but caselaw says a TMP can file as a notice partner even if they miss the 90-day window. T. C. Memo. 2025-68, at p. 41.

If you want to read a management contract for a major entertainment venue, Judge Morrison has digested this one at pp. 4-16.

Edited to add, 7/8/25: Judge Morrison corrected the error I noted, and one I missed, in Order, 7/8/25.