Section 7491 BoP shifts are rare, and Harness Rock, LLC, Ornstein-Schuler, LLC, Tax Matters Partner, Docket No. 29331-21, filed 8/12/25, really hasn’t asked Judge Goeke for a shift. The Harness Rockers want Judge Goeke to rule that IRS’ Section 170(e)(1)(A) argument is new matter, which would trigger the shift.

Judge Goeke does, shifting aside Oconee Landing, Rock Cliff, and Jackson Corners, in all of which Tax Court held it wasn’t, despite the wild-card boilerplate language of the FPAA. But Judge Goeke prefers 46 Henry Locust Rd.

Here’s the relevant FPAA language.

“To the extent you are able to establish that a noncash charitable contribution has been made, you failed to establish that it satisfied all the requirements of I.R.C. § 170 and the corresponding Treasury Regulations for deducting a noncash charitable contribution. If it is determined that you have satisfied all the requirements of IRC. § 170 and the corresponding Treasury Regulations for deducting a noncash charitable contribution, you have not established the value of the noncash charitable contribution.” Order, at p. 2.

The Harness Rockers’ trusty attorneys sent a Section 170(e)(1)(A) Branerton to IRS in April, which IRS ghosted. Then IRS raised the issue last month.

IRS claims the broad language of the FPAA takes in all of Section 170. But that broad language speaks of allowing the deduction; Section 170(e)(1)(A) speaks of valuing the deduction.

“Respondent did not explicitly raise the section 170(e)(1)(A) issue until July 2025, approximately two months before the trial. While Harness Rock’s organizers/managers may have been aware of the possibility that respondent might pursue such an argument based on letters they received from law firms regarding similar transactions undertaken by other entities they organized/managed, we do not believe petitioner should have been forced to speculate as to respondent’s position so close to the trial date. This is especially true considering that addressing the section 170(e)(1)(A) argument will require the production of additional, different evidence.” Order, at p. 5.

Besides, Section 170(e)(1)(A) provides an alternative valuation method, which the FPAA would take away.

“…the Henry Order shows that respondent’s language could not have pertained to the amount of the deduction in that case because sustaining it would have resulted in an allowable deduction smaller than respondent’s alterative [sic] valuation position. Although there has been no argument that respondent’s section 170(e)(1)(A) argument would produce such a result in this case, we believe the Henry Order demonstrates the somewhat unthinking nature and mechanical use of respondent’s broad FPAA language. There is no indication that such language is sufficient to raise section 170(e)(1)(A) as an issue in petitioner’s case, when similar language did not raise section 170(e)(1)(A) as an issue in Henry. We note that the Henry Order is more recent than the Oconee, Rock Cliff, and Jackson Orders; in those earlier cases we had not yet been confronted with such an issue with respect to section 170(e)(1)(A).” Order, at p. 5.

And clearing this up now, with trial a month away, lets the parties know what evidence to produce.

But before the Harness Rockers’ trusty attorneys pop the corks on the Krug, they should check this out.

“We note that both parties are represented by knowledgeable counsel and appear to have engaged in extensive discovery and other preparation for trial. We consider it unlikely that there will be an evidentiary tie on the section 170(e) issue that would cause the burden of proof to be the deciding factor. See Knudsen v. Commissioner, 131 T.C. 185, 188 (2008). At trial, both parties should be prepared to introduce all admissible evidence relevant to this issue.” Order, at p. 1, footnote 3.

While I oughtn’t to single out any of the Harness Rockers’ thirteen (count ’em, thirteen) trusty attorneys, all of whom get a Taishoff “Good Job,” I do want to give a shout-out to my colleague Lyle (“Full-Court”) Press, Esq.