That’s the plight of Cindat Manhattan Hotel Portfolio LLC, Docket No. 12905-20, filed 7/21/25, making their fourth (count ’em, fourth) appearance in this my blog. Depriving me of further blogfodder by settling out, the Cindats have one last shot. Turns out the ultimate tax due is zero, because the year-at-issue deficiency is zeroed out by a NOL carryback. So the Cindats want the stip of settlement and resulting decision to show zero interest for year at issue.

But Judge Elizabeth A. (“Tex”) Copeland says Rule 261(b)(2) reverses the classic Tax Court play-before-you-pay story.

“In general, motions to redetermine interest must include a schedule detailing the computation of what Petitioner contends is the correct amount of interest. Rule 261(b)(1)(B). Petitioner must describe the extent to which it registered its disagreement with the Commissioner, or its rationale for not doing so. Rule 261(b)(1)(C). Petitioner must also attest that it has paid the full amount of the deficiency and interest assessed by the Commissioner before invoking Rule 261, and must include a breakdown of the amount and dates of each such payment. Rule 261(b)(2).” Order, at p. 2.

The Cindats’ situation complicates matters. There’s no question of how much year-at-issue interest is due; but even if the underlying deficiency gets zeroed out, the Rule and the IRC don’t help.

“We likewise note that, even if we were to have jurisdiction at this time over Petitioner’s motion, the parties are bound by the stipulations filed with this Court. See Rule 91(e). Petitioner signed a stipulated decision clearly stating that interest would accrue, and we will not disturb the agreement made in the stipulated decision. And, were that not the case, section 6601(d)(1) expressly provides that a reduction in tax attributable to a net operating loss ‘shall not affect the computation of interest under this section for the period ending with the filing date for the taxable year in which the net operating loss . . . arises.’” Order, at p. 2, footnote 2.

So providing that no interest would be due in the stip of settlement wouldn’t help, the rationale being the Cindats had the use of the year-at-issue underpayment until the events of the subsequent year wiped out the liability.