Judge Ronald L. (“Ingenuity”) Buch finds that Garaad Mohamed Muse & Shukri Jeylani Abdalla, Docket No. 15191-24S, filed 7/14/25, avoid Section 6662 accuracy and negligence chops by standing on ceremony.

Gar & Shukri got married in their native Kenya in a religious ceremony valid by the laws of that country. They moved to MN, acquired irreconcilable differences, and got divorced by means of a ceremony that would have been valid back in Kenya.

When they petitioned the deficiency caused by their separate HOH filings during the year they were ceremonially divorced, they lost because MN law said they were still married. MN law says MN domiciliaries can get divorced only by judicial decree, even if validly married under foreign law. Federal tax law goes by State law for who is and is not married. If married under State law, even if living apart, one can file only MFS or MFJ. IRS classified Gar & Shukri as MFS, and recomputed their taxes accordingly.

IRS conceded the Section 6662 chops as to Shukri, but as Gar ran a tax prep business, they left him to face the chops.

“Mr. Muse married Ms. Abdallah in Kenya in manner accepted by both his religion and that country. In the eyes of Kenya, Minnesota, and the Federal government, this was a valid marriage. Following those same customs and practices, Mr. Muse and Ms. Abdalla ceremonially divorced. While not a valid dissolution of marriage in the state of Minnesota, Mr. Muse was nevertheless reasonable in his belief that he obtained a valid divorce. In his experience, following the traditions of his religion with respect to marriage was respected in the eyes of the law. We find that he acted with good faith and reasonably believed performing a ceremonial divorce would satisfy the requirements of divorce in Minnesota.” Transcript, at pp. 9-10.

I can’t close without noting yet another typographical error, but not in this opinion. Judge Buch has another off-the-bencher, Ashley M. Huber, Docket No. 10742-24, filed 7/14/25. Ashley’s a protester, who featured here a couple weeks ago (hi, Judge Holmes). Judge Buch refers to that.

“We will not impose sanctions in this case, but we caution Ms. Huber against taking frivolous positions in future litigation. Although we previously warned Ms. Huber about the possibility of a sanction in another case, Huber v. Commissioner, T.C. Memo. 2025-29, that opinion was issued mere days before this case was called. On this record, we will not impose a sanction under section 6673.” Transcript, at p. 11.

For the cited opinion, see my blogpost “Something New,” 6/5/25. The case is T. C. Memo. 2025-59, issued 6/5/25.

Even though Chem-Div Inc., Docket No. 6928-23, filed 7/14/25, substantially prevailed, didn’t unreasonably delay, and its claimed litigation costs were reasonable; and IRS agreed it has no substantial justification for  alleged $2 million ChemDiv’s deficiency, ChemDiv had too much cash in the bank the day it petitioned.

In consequence whereof, Judge Courtney D. (“CD”) Jones finds ChemDiv doesn’t get Section 7430 legals.

ChemDiv’s trusty attorneys assert “… the balance sheet on the date of its Petition was an ‘anomaly,’ attributable to approximately $10,000,000 in cash that had not been distributed. ChemDiv argues that the Court should construe the law in accordance with ChemDiv’s view of Congressional intent since, as ChemDiv claims, it is exactly the type of taxpayer who should be able to recover costs. ChemDiv states that ‘determin[ing] Petitioner’s net worth based on a snapshot in time that is not consistent with its historical and accurate net worth is inconsistent with such Congressional intent.’ Accordingly, ChemDiv submits that its net worth is $5,704,610, and argues that a holding otherwise ‘would be inconsistent with Congress’ intent, the facts of this case, and would reward Respondent’s unreasonable conduct in this case.’” Order, at p. 5.

“Unreasonable” is putting it mildly. Check out Order at pp. 1-2, where “… the revenue agent said that she would not allow the accrual no matter what documentation ChemDiv provided.”

And when an Appeals conference ended with “no litigation risk” for IRS, Order, at p. 2, I wonder who made that assessment.

But the law says what it says.

“The statutes are clear. As applicable in this case, 28 U.S.C. § 2412(d)(2)(B) provides that a “party” means in relevant part a ‘corporation . . . the net worth of which did not exceed $7,000,000 at the time the civil action was filed.’ Section 7430 is a waiver of sovereign immunity and must be strictly construed in the Commissioner’s favor. While we are sympathetic with ChemDiv’s frustration––at having to provide its substantiation to the IRS multiple times and engage in extended proceedings before respondent ultimately conceded nearly the entirety of the case––ChemDiv does not meet the net worth requirement. Accordingly, ChemDiv is not the ‘prevailing party’ within the meaning of section 7430(c)(4)(A)(ii) and is not entitled to recover any costs or fees in this case.” Order, at p. 5. (Citations omitted).

The trusty attorneys, whom I’ll call The Sullivans, get a Taishoff “Good try.” The client gets nothing.

No, Brandon the NC used car dealer who trumpets his travails with his all-cash sub-$5K bargains on YouTube under the moniker first set forth hereinabove at the head hereof (as my second-Grey-Goose-Gibson colleagues would say) is not in Tax Court (yet). And may never be.

Yet the much-lamented heavy monthly car payment is on Judge Goeke’s screen in Fritz B. Ziegler & Margaret S. Ziegler, Docket No. 4466-22L, filed 7/11/25. IRS wants to levy for the seven (count ’em, seven) self-reported but unpaid years, aggregating north of $350K. Fritz says he’s got insomnia and potential heart problems, can’t work and lives on Social Security.

Problem is, notwithstanding his ownership of a Subaru, Fritz signed up last year for another car.

“Petitioners’ arguments regarding the potential medical expenses, and the impact of the medical expenses on this case, are also inconsistent with a decision made by the Petitioners to incur a substantial car loan to buy an expensive vehicle in 2024. Petitioners purchased a Honda with the retail value of in excess of $51,000, and incurred a car loan, which required an in excess of $800-a-month payment. This transaction was on May 16th, 2024. The decision to make this transaction, and incur the additional monthly expense, is inconsistent with Petitioners’ position that they were concerned with the potential offset of medical expenses.” Transcript, at p. 8.

It seems Judge Goeke hasn’t gone car-shopping recently. My sources say $745 per month was the average payment for a new car last year, and a new Honda Pilot or Odyssey would’ve cost in that range in LA, Fritz’s home state, in 2024.

That said, Fritz & Margaret have $400K in home equity.

“The Settlement officer inquired about the equity in Petitioners’ home, which exceeds $400,000 in equity, and a vehicle; Petitioners owned a Subaru. His analysis was made without considering the impact of the purchase of the Honda. But we believe that purchase of the Honda, together with the fact that Petitioners have never made any serious effort to generate cash to pay this tax liability based upon their equity, supports the analysis of the Settlement officer. Petitioners would maintain they could not obtain any cash from their equity in their home, because there’s a lien on the home. However, it’s clear that Petitioners had no intent to ever sell the home to recoup the equity, or do any other arrangement with the Internal Revenue Service which might have used the equity in the home to satisfy their tax liability.” Transcript, at p. 10.

Answering a car question, don’t buy a new car if you owe taxes.

Unfortunately, Judge Cathy (“NCY = No Cognomen Yet”) Fung passes on applying the fuggedaboutit broadbrush of Loper-Bright Ent. to IRS Notice 2010-16, the change-of-address protocol, in Donna Davis, T. C. Memo. 2025-72, filed 7/10/25. She brushes off Donna’s trusty attorney’s attempt to brush off the famous protocol thus: “Because our decision in this case does not rely on Revenue Procedure 2010-16, we need not discuss the deference afforded to the IRS.” T. C. Memo. 2025-72, at p. 3, footnote 4.

I wish Judge NCY Fung had stirred a wee bit silt, as change-of-address jumpballs are a commonplace.

Donna’s got testimony but no paper. She even tried telephoning IRS to get her address change properly inputted but couldn’t get through the automated system. She shows the draft of a letter she says she sent IRS but can’t prove she mailed it. IRS has a properly completed PS 3877 and a tax return showing the address to which IRS sent the SND.

IRS wins; the SND was sent to the last known address, and Donna is out.

What deference, if any, Rev. Proc. 2010-16 gets remains a mystery.

Wash sales, where substantially identical securities are bought and sold within a 30 day window, generate no recognized deductible tax losses, per Section 1091. But IRS fails to go through the brokerage statement to verify if any of the losses claimed by Juan Carlos Wandemberg Boschetti, Docket No. 11045-24S, filed 7/9/25, were in fact generated from wash sales.

So Juan Carlos gets the Section 165(f) loss, as limited by Section 1211(b) to $3000. He does have to pick up the $85K in wages he didn’t report, claiming he folded them into his stock market losses (which he surely had but can’t deduct more than $3K thereof in year at issue); IRS magnanimously folds the chops.

Juan Carlos fails to articulate why the $3K limit is unconstitutional as he claims, and STJ Diana L. (“Sidewalks of New York”) Leyden can’t find any reason.

Juan Carlos does get a Taishoff “Good Try, Novelty Division.”

Tax Court judges don’t do tax prep; that’s why we have Rule 155 beancounts. The opinion sets out the appurtenant principles. Each party does the arithmetic in conformance therewith. If they don’t agree, they can only fight about numbers.

If one party is unhappy with the principles, they can seek reconsideration (Rule 161) or revision (Rule 162) but they have only 30 (count ’em, 30) days to do it. As this is Tax Court, of course the 30 day period starts to run from a different point under each Rule.

Of course, there is a right of appeal in regular cases, but that arises only after entry of the decision which incorporates one of the Rule 155 submissions.

Judge Alina I. (“AIM”) Marshall continues the CPE class she started a year ago in Kenneth Steven Tuma, Sr. & Deborah Ann Tuma, Docket No. 15553-18, filed 7/9/25. Part One of the lesson can be found in my blogpost “Cannot Be Proved Too Often,” 7/11/24.

Ken wants a stay while he appeals. IRS wants more time to do their numbers. As this is extension number four, Judge AIM cautions the parties they’re not getting any more after this one, despite Ken’s ill health and IRS’ innumeracy. But there’s no stay.

“If a party disagrees with the opinion, then it follows that the party will also disagree with the computation. He will disagree even with his own computation, since his computation must be based on an opinion that he thinks is incorrect. But nonetheless his task is to perform the computation according to that opinion. His task is not to perform a computation according to the opinion he thinks the Court should have issued – but rather, to perform a computation according to the opinion the Court did issue. If a party disagrees with the Court’s opinion (and with the decision entered in accordance with it), then that party’s remedy would be an appeal from the Court’s decision, see Rule 190 and I.R.C. §7482, after that decision has been entered.” Order, at p. 1.

So do the numbers.

Edited to add, 7/10/25: And note that the bond you’ll need to post per Section 7485(a)(1) will be based upon the computation with which you disagree.

Or, The $24 Million Misunderstanding

The now-extinct game show is revived in Arden Row Assets, LLC, Natural Aggregates Partners, LLC, Partnership Representative, T. C. Memo. 2025-71, filed 7/8/25. ARA claims they have a deal with IRS based on an exchange of letters, but IRS claims no, and Judge Goeke buys it.

Under the post-2017 partnership régime, only the partnership representative (hereinafter and generally, the “Rep”) can make deals. Reg. Section § 301.6223-1(b)(3) requires a partnership to have a designated individual where the partnership representative is an entity. Here the Rep, Kaynard (misdescribed as “Maynard” at p. 24; time for another corrected T.C. Memo.?), played no part in the exchange of letters that supposedly settled this nonsyndicated conservation easement. Individual partners can no longer settle out with IRS as they could under now-superseded TEFRA.

Nobody raised whether IRS trial counsel had authority to bind IRS via letter, T. C. Memo. 2025-71, at p. 23, footnote 13.

The IRS universal settlement deal for phony easements was announced in ‘I.R.S. News Release IR-2020-130 (June 25, 2020). On October 1, 2020, the IRS issued guidance setting forth the terms of the initiative. I.R.S. Chief Counsel Notice CC-2021-001 (Oct. 1, 2020). The IRS offered settlements that disallowed the easement deductions in their entirety and allowed deductions of out-of-pocket costs that investors incurred to participate in the easement transactions (investor out-of-pocket costs).” T. C. Memo. 2025-71, at p. 4.

Problem here was, the easement wasn’t syndicated. The promoters held all of it, and their LLC had done 15 deals; the LLC’s M-2 showed a combined capital contribution for all their unsyndicated deals of $24 million, but real out-of-pocket for this deal was $110K.

IRS mistook this unsyndicated for a syndicated, where the syndicatees put in real cash. When IRS offered to take the M-2 number in lieu of the syndicatees each proving their actual out-of-pockets as in syndicated deals, they mistakenly offered the same deal to this unsyndicated, who jumped on it. If taken, the promoters would have lost a $57 million deduction, but gotten a $24 million deduction.

Judge Goeke does some drilldowns into contract law to let IRS off the hook. True, the unsyndicated’s lawyer sailed a wee bit too close to the wind.

Chops go by the board, as this case is related to LakePoint, for which see my blogpost “‘Bad Faith, He Maun Definitely Fa’ That’ – Redivivus,” 8/29/23.

Taishoff says nobody comes away looking good here, except maybe IRS Oversight Committee member Kimberly Mattonen, Esq., who caught the strange disparity in numbers. She gets a Taishoff “Good Move.”

Takeaway- When offbeat numbers jump off the page, jump on them.

The Grassley Amendment, now ten years old, expressly restricted Tax Court to the Federal Rules of Evidence. So when matters involved in grand jury proceedings swim into ken, FRCrimP Rule 6(e) takes second place.

Judge Rose E. (“Cracklin”) Jenkins Judge-‘splains in Mohammad Fawad Aryanpure & Malika Aryanpure, Docket No. 17120-23, filed 7/7/25.

“Petitioners’ Motion also requests in camera review of the additional documents identified in Exhibit A, which petitioners contend may be solely amongst third parties and inappropriately identified by respondent as being subject to deliberative process privilege. Respondent’s Response argues that such documents are outside of the scope of the Court’s Order and that, in any event, petitioners waived any objections other than on the grounds of deliberative process privilege. The Response further argues that the documents are protected by attorney-client privilege and Rule 6(e) of the Federal Rules of Criminal Procedure, incorporating the arguments made in the Document Response.” Order, at p. 2.

FRCrimP Rule 6(e) bars disclosure of grand jury matters by specified persons, including IRS attorneys.

IRS says they don’t even have DOJ stuff.

“It also noted that respondent ‘is not in possession of the Department of Justice’s files to be able to identify with specificity individual documents that are not protected by Rule 6(e),’ making it unclear to this Court how the documents in question came to be in respondent’s possession.” Order, at p. 2.

Judge Jenkins orders all documents to be presented today. She’ll first check for privilege, and then hear argument about what unprivileged materials, if any, warrant Rule 6(e) protection.

Edited to add, 7/8/25: Judge Rose E. (“Cracklin'”) Jenkins reviewed the documents, and found “there is no ongoing grand jury proceeding that could be affected by disclosure. Furthermore, having reviewed the documents in question and observed their limited relevance to the issues in this case, the Court does not believe that even if there were an ongoing grand jury proceeding, disclosure of the documents would have affected it.” Order, 7/8/25, at p. 3. IRS, hand ’em over.

Twelve score and nine years ago our forebears brought forth on this continent a new nation, conceived in liberty, and dedicated to the proposition that all men are created equal.

Now we are again engaged in testing whether that nation, or any nation so conceived and so dedicated, can long endure. We are on no great battlefield, we cannot dedicate any place.

It is for us, rather, to be dedicated to the still unfinished work which those forebears have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us, that we today highly resolve that that this nation, under God, shall have a new birth of freedom, and that government of the people, by the people, for the people, shall not perish from the earth.

If you don’t know what that means, consider yourself lucky. If you do, consider the plight of Cody J. Bertram and Nicole Bertram, Docket No. 1265-25S, filed 7/3/25. Cody was on TDY in FL when the SNOD was mailed to his last known address in TX; Nicole was having serious health issues at the time.

The petition was 90 (count ’em, 90) days late.

Ch J Patrick J. (“Scholar Pat”) Urda: “…we note that the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. sections 3901 et seq., postpones or suspends certain types of civil deadlines for eligible military service members. That statute, however, does not apply to extend the period for timely filing a Tax Court petition. See 50 U.S.C. § 3936(c) (the SCRA does not extend periods of limitation prescribed by or under the internal revenue laws of the United States). We further note that I.R.C. section 7508(a)(1)(C) extends the time to file a Tax Court petition in response to a deficiency notice if an individual is in military service in a combat zone or contingency operation. However, this provision does not appear to apply to Mr. Bertram’s temporary military duty assignment.” Order, at p. 2.

Equitable tolling fails, as Cody and Nicole are in 5 Cir.