When I saw Genie R. Jones, et al., T. C. Memo. 2025-78, filed 7/21/25, my heart took a Wordsworthian leap-up. “Here at last,” I thought, “is the promised exagmination round the factification of Section 7701(o)(1), the true meaning and effect of the codification of economic substance, putting to rest the Intra-Circuit anfractuosities in a unified field theory of economic substance, sham transaction, and adequate disclosure thereof.”

Alas, no; the bright hope I expressed in my blogpost “Take No Prisoners,” 3/25/25, that both economic substance and the adequate disclosure of a microcaptive insurance dodge would get “a full-dress T. C. because the statutory reconstruction of the economic substance doctrine is a puzzlement,” doesn’t happen.

All Judge Nega gives us is that, since the nominal insurance company pool in this case isn’t an insurance company because the policies it writes aren’t insurance, neither Section 831(b) allows it to exclude premiums from income nor Section 832(b)(4) allows deferral of unearned premiums.

IRS wanted a Supplemental Memorandum clarifying these points, as IRS found Judge Nega’s fifty (count ’em, fifty) page massacree of Genie’s microcaptive back in March ambiguous on those points. I must say IRS’ counsel have proven my point yet again: any lawyer who can’t find an ambiguity should find some other way to make a living.

Took four (count ’em, four) months, but they got it.

Now how about Section 7701(o)(1)?