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)?

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.

Though not a patch on the famous Kesting cases, some of which went back to the last millennium, Malka Yerushalmi, Petitioner, and Joseph Yerushalmi, Janet Baldwin, Next Friend, Intervenor, Docket No. 5520-08, filed 7/18/25, bids fair to run a quarter-century in good old Dickensian style.

As I said four (count ’em, four) years ago, “(T)hat 08 is no typo; I’ve drunk good Scotch that’s younger than this case.” See my blogpost “Ex Jersey Semper Aliquid Novi,” 9/8/21.

I do owe Malka a thank you note. Her case has given me plenty blogfodder (hi, Judge Holmes; I see you’re still on this case).

Howbeit, Judge Holmes takes Janet B. off the case as next friend and sends her back as Executrix of the Estate of Joseph Yerushalmi.

Having apparently outlived the late Joe, this case may outlive the rest of us.

No, this is not about a highroller caught in a Dixieland Boondockery. This is the story of John R. Dee, Docket No. 377-20W, filed 7/17/25. John is seeking more than the 1% IRS gave him for blowing on a highroller whose escapades John ripped from the headlines and promptly tipped off IRS.

Of course, IRS knew all about it. John’s tips about the management company and vice-president of highroller’s Sub S don’t add to IRS’ $7 million takedown of highroller’s wholly-owned Sub S and his own self. John’s earlybirding does get him a 1% $71K payday.

John claims he should get more. IRS wants summary J that John should take the money and run, and gets it.

STJ Diana L. (“Sidewalks of New York”) Leyden agrees John should do the Woody Allen.

“The only dispute that petitioner raises is that the amount of the award determined by the WBO was incorrect because ‘[w]hile certain facts were aggregated from media reports, petitioner’s claim involved extensive research and analysis of a multitude of public data and produced mountains of original information and analysis in support of petitioner’s allegations.’” Order, at p. 5.

IRS ran the Reg. Section 301.7623-4(c)(2) checklist as shown at Order at pp. 2-4, and all of John’s extensive research and analysis was only a dredge of public stuff.

John does much better than most blower-packagers. He doesn’t even get sequestered.

The Genius Baristas have relented, so I can now present Judge Ronald L. (“Ingenuity”) Buch’s peroration in Veribest Vesta, LLC, True North Resources, LLC, Partnership Representative, filed 7/17/25. It would be impertinent for me to add, abstract, or comment beyond a loud “Amen!”

“The Court heard from more than two dozen witnesses. Some of those witnesses were experts hired by the parties. Some of those witnesses were people involved in the donation or tax reporting of the conservation easement. More importantly, many of those witnesses were the good people of the City of Elberton and Oglethorpe County who had nothing to do with this case, other than they happen to be involved in the mining industry in the vicinity of the old Grimes quarry.

“Many of the people who sat through this two-week trial were not harmed by doing so. The Court, the attorneys, and the expert witnesses are all paid for being there. Petitioner was there by its own choosing.

“But both the unrelated fact witnesses and the tax system in general were harmed by this trial. The witnesses were inconvenienced. They were not involved in the transactions in any way. They missed days of work and had to travel into Atlanta for trial so that petitioner could pursue an argument deemed by courts to be ‘not credible’ and ‘nonsense.’ More broadly, taxpayers footed the bill for the resources necessary to conduct this trial.

Mr. Dye, petitioner’s paid expert, expressed his misplaced frustration with this process. Holding a cylinder of Georgia Gray granite in his hand, Mr. Dye passionately explained his frustration, saying:

‘So somebody’s got to decide whether this has a value . . . because I’m going to get up from the table today, and I’m going to go home. And I’m going to go back to work. And my 81-year-old father is out there right now today pulling this stone out of the ground for his 62nd summer.

‘Now, if this right here that I have in my hand supports 2,500 people and a $300-million industry in a county that only has 23,000 people, then somebody has to explain to me how it has no value.’

“Mr. Dye’s frustration is misplaced because his client has tried to argue that the value is in the raw land, when in fact, the value lies in the people of the City of Elberton and Oglethorpe County, people like Mr. Dye and his father. Like Arnold Jaudon, Randy Rice, Mark Hill, Tim Huguley, Willie Simmons, Billy Bryant, David Giannoni, and Mark Stevens. The real value lies not in the stone, but in ‘an experienced crew and capable leader to extract it.'” Order, at pp. 61-63.

That’s the Supremes’ take on Section 6330, and Judge Courtney D. (“CD”) Jones is nowise loth to follow in Laquita Ann Hershberger, Docket No. 12868-24L, filed 7/16/25, even though Laquita isn’t one of those “‘laymen, unassisted by trained lawyers,’” who often “‘initiate the process.’” I’m quoting, of course, from Boechler, P. C., 596 US ____ (2022), at p. 9, the touchstone of Section 6330 disciplinary practice.

IRS gets summary J all the way on Appeals’ affirmance of the NITL NOD Laquinta and trusty attorney, whom I’ll call Geo, are contesting, until we get to CNC.

AO S (name omitted) rightly rejected Laquinta’s claims about her divorce settlement, as she never furnished any proof at the CDP. Even when she puts in those documents in Tax Court, Judge CD Jones isn’t convinced.

Now before my ultrasophisticated readers shout as one “What?! CDPs are record rulers! If the divorce stuff wasn’t in the admin record, why look at it?” I must quote Judge CD Jones.

“…(T)he U.S. Courts of Appeals for the First, Eighth, and Ninth Circuits have concluded that our review is limited to the administrative record for CDP cases.

“The U.S. Court of Appeals for the Seventh Circuit, to which this case is presumptively appealable, see § 7482(b)(1)(G)(i), has not specifically addressed this issue in a precedential opinion.” Order, at p. 4. (Citations omitted).

Hence, anything goes. And AO S even cut her initial determination of what Laquinta could pay on an IA by $500.

Laquinta never put in a Form 656, so OIC is out.

But AO S never mentioned CNC in the NOD.

“In the Case Activity Record, AO Snyder noted that Ms. Hershberger requested CNC status and also requested evidence of hardship status. Nonetheless, the Notice of Determination is completely silent regarding this requested collection alternative. Moreover, although AO S determined that Ms. Hershberger could pay under an IA, she did not separately consider CNC status.

“In particular, she failed to consider whether enforced collection would cause a hardship on Ms. Hershberger. Hardship is one of the considerations that the IRS must consider when determining whether a taxpayer is entitled to CNC status.” Order, at pp. 8-9. (Citations omitted).

Judge CD Jones notes that even if hardship puts Laquinta into CNC status, IRS can drop a NFTL to protect its interests, nudge nudge, wink wink.

Back to Appeals for consideration of hardship.

It’s a sixty-four (count ’em, sixty-four) page off-the-bencher in another phony syndicated conservation easement case from the usual suspects in Oglethorpe County, GA. The phony valuation (income capitalization method blown up by comparable sales, of which there are more than two dozen) cuts a $20 million valuation down to $111K, plus 40% gross substantial overvaluation chops.

But don’t read Veribest Vesta, LLC, True North Resources, LLC, Partnership Representative, Docket No. 9158-23, filed 7/15/25, for the 58-page trudge through Judge Ronald L. (“Ingenuity”) Buch’s evisceration of this dodge.

Read Transcript, Pages 59 through 63. Judge Ingenuity Buch fires a shot across the bows of the attorneys who try these nonsense cases. He lays out why they should be hit with Section 6673(a)(2) chops, multiplying proceedings needlessly and vexatiously.

I wish I could quote Judge Buch’s words, but the Genius Baristas have clogged Dawson’s Creek so that I cannot drag-and-drop.

But I can provide a takeaway: this is how you set up a Section 6673 chop. And more than that, this is how a judge expresses what a lot of us believe.

Estate of Billy S. Rowland, Deceased, James A. Park, Executor, T. C. Memo. 2025-76, filed 7/15/25, fails to port the DSUE (Deceased Spouse’s Unused Exclusion) of the late Fay Rowland. Fay’s last-minute-filed Form 706 fails to state the FMV of noncharitable and nonmarital assets forming part of the late Fay’s trusts FBO children and grandchildren.

Rev. Proc. 2017-34 allows the last-minute filing, but still requires full compliance with statutory and regulatory requirements for precise itemization. Substantial compliance guesstimates don’t get it in this case, although Ch. J. Patrick J. (“Scholar Pat”) Urda doesn’t preclude its applicability in other cases.

Of course equitable estoppel against IRS fails on multiple grounds.

The 2022 case of the year is back at Tax Court and Judge Ronald L. (“Ingenuity”) Buch gives it the T. S. Eliot treatment in an off-the-bencher Boechler, P. C., Docket No. 18578-17L filed 7/15/25.

Boechler, P. C., was a ND single-shingle plaintiffs’ personal injury (asbestos) firm. Boss Jeanette Boechler, Esq., had a “hectic” life during year at issue.

“Ms. Boechler was one of the caregivers for her mother who was in her late 90s. Ms. Boechler resided in the same residence as her mother and her sister, Lisa Boechler. She shared caregiving responsibilities with Lisa, as well as another sister who lived in Fargo, North Dakota. Ms. Boechler assisted her mother by making meals, taking her to doctor’s appointments, and performing other tasks around the house. Ms. Boechler was also a single mother to her son who graduated high school in [year at issue]. He was about to leave home for the first time to attend college.” Transcript, at p. 5.

The issue was late 941s which IRS claimed  and gave her a Section 6721 chop, which Jeanette disputed. Jeanette miscalculated when the petition from the CDP was due, but had a bunch PI cases percolating (hi, Judge Holmes) and was moving her son into college in NY. Jeanette’s petition, signed by her counsel, was two (count ’em, two) days late.

IRS’ response: “(W)hile Ms. Boechler’s personal circumstances may have been difficult, they were not uncommon, they were not beyond her control, and they do not rise to the level of extraordinary.” Transcript, at p. 8.

The Supremes said Congress didn’t prohibit equitable tolling of the 30-day cutoff, Section 6330 was “unusually protective of taxpayers” and such litigation is often initiated by pro se litigants.

The two-pronged test for equitable tolling is that petitioner diligently pursued their rights and that extraordinary circumstances beyond petitioner’s control prevented timely filing.

“Boechler did not allege or establish any facts that indicate it diligently pursued its rights. There is no indication that Boechler followed up with its attorney to ensure the attorney or supporting staff timely filed the petition. Cf. Holland, 560 U.S. at 653–54 (holding that a litigant diligently pursued his claim when he followed up multiple times with his attorney to ensure the petition was timely filed). Ms. Boechler testified that she could not recall if she filed the petition or if she supervised or otherwise provided direction to the person who filed the petition. And given that the petition was filed by counsel, the record is unusually silent as to what direction, if any, was provided by or to counsel to ensure timely filing of the petition. In short, the record is silent as to whether anyone diligently pursued Boechler’s rights. Failure to satisfy the first prong is sufficient for us to deny Boechler’s claim of equitable tolling. See Menominee, 577 U.S. at 256 (holding that failure to meet one element of the equitable tolling test is sufficient for the Court to deny equitable tolling).” Transcript, at pp. 11-12.

As for the second prong, merely being a busy attorney with family responsibilities (especially when these are shared) isn’t extraordinary (ain’t that the truth). Nor is getting the arithmetic wrong when dealing with SOL.

IRS wins.

I expect the trade press and the blogosphere will provide the editorial comments I now refrain from making.

A bunch Dixieland Boondockery opinions (hi, Judge Holmes), with no joy for the investors.

Vivian D. (“Golden”) Hoard, Esq., and her colleagues are still hunting the Section 6751(b) bubble in Jefferson Property Holdings, LLC, Strategic Fund Manager, LLC, Partnership Representative, T. C. Memo. 2025-75, filed 7/14/25, and Sand Valley Holdings, LLC, Sand Valley Investors, LLC, Tax Matters Partner, T. C. Memo. 2025-74, filed 7/14/25. Much of a muchness, supervisors signing off before they lose their supervisees, the fight over who made the initial determination, but at the end of the day, the cool second look that Congress wanted has been swamped by the sloppy drafting of a remedial statute. Judge Albert G. (“Scholar Al”) Lauber finds nothing new; citations are the usual suspects.

Judge Nega needs 55 (count ’em, 55) pages to deal with four (count ’em, four) consolidated cases, all with appraisal strikeouts. But even though the syndicated conservation easement deductions fail for want of competent appraisals, Judge Nega must decide if the substantial overvaluation chops that IRS wants to assess are warranted. So the defective appraisals are still at issue.

Spoiler alert!

IRS wins.