Section 7482 interlocutory appeals are even more extraordinary than nonparty depositions in Tax Court. The Section 7482(a)(2)(A) triple-jump, proving the case 1) involves a controlling question of law (2) about which there is a substantial ground for difference of opinion and (3) an immediate appeal from the order may materially advance the ultimate termination of the litigation, trips up even the inventive.

Judge Cary Douglas (“C-Doug”) Pugh leans on number 3 above to shoot down Silver Moss Properties, LLC, Silas Mine Investments, LLC, Tax Matters Partner, Docket No. 10646-21, filed 10/17/25.

Y’all will recall the Mossbacks wanted a jury trial for the Section 6663 fraud chop IRS wildcarded in via an amended answer. No? Well, check out my blogpost “Full House,” 8/21/25.

Judge Pugh drops a heavy-duty, law review style footnote blowing off number 2 above with somber reasoning and copious citation of precedent galore, but ends up saying “we do not need to rely upon petitioner’s failure to satisfy this second requirement, because petitioner’s failure to satisfy the third requirement is fatal to its motion.” Order, at p. 2, footnote 2.

The real issue here is “whether petitioner is entitled to claim a noncash charitable contribution deduction for the contribution of a conservation easement and, if so, the amount of that deduction. This primary issue will occupy most of the trial time, as it will require testimony by most, if not all, of the anticipated fact witnesses and likely all of the expert witnesses. The fraud penalty will apply only if we reject petitioner’s position on the primary issue and we also conclude that respondent met his burden of proving the fraud penalty applies. And the fact witnesses who testify regarding the fraud penalty are likely to testify regarding the facts relating to the primary issue. Eliminating the fraud penalty will only shorten their testimony regarding the secondary penalty issue; it will not eliminate the need for trial or the need for testimony of the fact or expert witnesses.” Order, at p. 2.

And Section 6662 negligence and substantial understatement of tax chops are still out there, which require defending in much the same way as fraud chops.

The Mossbacks claim that resolving the fraud chops will enhance prospects of settlement. Judge Pugh isn’t so sure that is relevant, but the CCAs are all over the lot on that. Resolving any question of law would shorten any trial, but that’s no reason for an interlocutory appeal on every disputed point of law.

Anyway, Judge Pugh thinks she might win on appeal, and that wouldn’t shorten anything.