Computer Sciences Corporation, 165 T. C. 8, filed 10/6/25, says RA Supe G. didn’t do it when RA H suggested a five-and-ten 20% chop, but Judge Albert G. (“Scholar Al”) Lauber says Boss Hossery is an essential part of any deficiency case where chops are invoked, not a stand-alone, so the Puters have plenty chances (hi, Judge Holmes) to make their case for reasonable cause.

The Puters did a Section 368(c) shuck-and-jive with Bank of Tokyo-Mitsubishi UFJ that generated a $651 million capital loss, which IRS blew up. Dropping the Section 6662(a) negligence chop four years into the program, IRS stuck with the five-and-ten 20% understatement chop, on which RA Supe G signed off four (count ’em, four) times during the four years this rattled around between Exam and Appeals.

It’s old home week for Boss Hoss caselaw going back to Chai and Graev. How could you have a Boss Hoss faceoff without Belair, Kroner, Raifman, Palmolive, and a ride on Laidlaw’s Harley Davidson?

I’ve blogged ’em all. Pore l’il ol’ 5 USC §706(a)(2) hasn’t got a prayer.

The Puters collapse in this Hebrews 12:1 barrage.

I’ll save ya my usual rant on this statutory disaster.

Just about a year ago, I invited Mr. Paul Streckfus, the EO expert, to weigh in on the 501(c)(4) Texas gated communities joust bubbling up in Tax Court. Well, Mira Vista Homeowners Association, Inc., T. C. Memo. 2025-102, filed 10/6/25, concludes that if everybody can’t go in, no 501(c)(4) treatment, despite however many other of these enclaves have previously received the nod.

For backstory, see my blogposts “Common Good, All In,” 9/25/24, and “Taking Supplements,” 1/28/25.

Judge Christian N. (“Speedy”) Weiler says that hosting charity golf matches in their affiliated country club (even nonresidents allowed), private security, and “cooperation with local government, including the City of Fort Worth, relating to water usage, garbage and recycling collections, streetlight maintenance, and other general access to the Mira Vista development,” T. C. Memo. 2025-102, at p. 2, isn’t enough.

“While ‘the IRS has been something less than fully successful in establishing the precise limits of a Section 501(c)(4) exemption,’ the prevailing logic courts have embraced when addressing this matter is ‘that an organization that operates for the exclusive benefit of its members does not serve a ‘community’ as that term relates to the broader concept of social welfare.’ Flat Top Lake Ass’n, Inc. v. United States, 868 F.2d 108, 111 (4th Cir. 1989). T. C. Memo. 2025-102, at p. 7.

The Miras argue that public benefit, rather than public access or use, is the determining factor of a section 501(c)(4) exemption. They claim the general public receives a benefit through its efforts to benefit the residents and guests of the Mira Vista development. They claim these benefits arise from the existence of several facilities and services, including but not limited to a fishing lake, a dock, a playground, outdoor restrooms, physical access to events hosted by the Country Club, and a private patrol service.

These public benefits, says Judge Speedy Weiler, if any, are incidental, not principal as the law requires. The lake and the adjoining recreational venues are primarily for the benefit of the Miras; and like the rest of the grounds they are not generally accessible to the public. In accordance with Mira’s bylaws and rules, the gates are opened only for members, residents, and guests of each with the sole exception of those charitable events hosted by the country club. Even when the public is permitted entry to attend the country club’s charitable events, however, the facilities listed are not a part of, nor are they intended for, those events.

Judge Speedy Weiler points out that Section 528 is sufficient Congressional largesse, T. C. Memo. 2025-102, at p. 1, footnote 2.

CH J Patrick J. (“Scholar Pat”) Urda gives me a hint to reconsider my so far unsuccessful campaign to permit omnibus motions in Tax Court.

Kevin R. Reilly & Paige N. Hopkins, Docket No. 2122-25P, filed 10/3/25, really pushed the envelope. “Petitioners filed the Petition in the above-docketed matter, indicating therein that they seek review of a Notice of Certification of Your Seriously Delinquent Federal Tax Debt to the Department of State and a Notice of Determination Concerning Relief From Joint and Several Liability Under Section 6015 (or Failure of IRS to Make Determination Within 6 Months After Election or Request for Relief).” Order, at p. 1. (Footnote omitted). 

True, this is a petition, not a motion, but the principle is the same: while it is expedient to deal with related matters, principally discovery or evidentiary, in a single-shot order, there’s a vanishing point where questions of law and fact diverge so widely that no size can possibly fit all.

CJ Scholar Pat need not go so far, as neither Kev nor Paige can produce anything showing either that a NOD issued or six months had passed pre-petition since election or request on the innocent spousery side. Of course, Ken & Paige are pro ses, so I’m not surprised if they don’t know what they need to put in to save their Section 6015 claim, even though Ch J Scholar Pat gave them a second chance to do so.

That said, this sort of thing (Paige is the one with the alleged debt, Order, at p. 1, footnote 2) would necessitate bifurcation even if Kev & Paige had the innocent spousery receipts. So the single-shot really misses the mark in such a case.

How often have I quoted Judge Vasquez: “[T]he distillation of truth from falsehood. . . is the daily grist of judicial life.” Diaz v. Commissioner, 58 T.C. 560, 564 (1972). Mixed metaphor aside, John Henry Besaw, T. C. Sum. Op. 2025-8, filed 10/2/25, fails the distillery, as he cannot document his wife’s gambling won-and-lost record, and his trial testimony is less than stellar. Again, IRS’ paperwork is less than perfect, stating that a disallowance of deduction increases liability dollar for dollar, but STJ Diana L. (“Sidewalks of New York”) Leyden says she sustaiuns IRS’ disallowance. And while John Henry prepared his own taxes and the Code is complex, he has to do better than guess at gambling losses.

Another Section 104 physical injury case, and this is tough. Cerissa Rene Fortune-Paladino,, T. C. Memo. 2025-101 filed 10/2/25, “has suffered appalling indignities at the hands of her supervisor, the emotional scars of which clearly remain.” T. C. Memo. 2025-101, at. p. 5. The account of Ms. Fortune-Paladino’s mistreatment makes one long for the days of Kipling’s hero Strickland and the horsewhip he used on another such. Unhappily for ex-Ch J L. Paige (“Iron Fist”) Marvel “…this is not the first time that the Court has had to address the taxability of settlement proceeds in this type of case, and the law regarding the requirements for exclusion from gross income under section 104(a)(2) is quite clear. Section 104(a)(2) excludes damages that are intended to compensate for any physical harm or sickness. Ms. Paladino concedes that she did not suffer any physical harm or sickness resulting from the sexual harassment she endured, and her complaint confirms that she did not allege any physical harm or sickness. Accordingly, we conclude that the Commissioner’s determination is correct.” T. C. Memo. 2025-101, at p. 5.

To quote the Man from Mumbai, “by the laws of the family circle, ’tis written in letters of brass” that there can be no denial or diminution of a charitable deduction without an IRS motion for Boss Hossery summary J. So even when pointed dissents follow a denial of summary J all around in The David and Barbara Green 1993 Dynasty Trust, Mart D. Green, Trustee, et al., T. C. Memo. 2025-100, filed 10/2/25, there comes Judge Emin (“Eminent”) Toro to award IRS summary J in the usual barrelshoot.

The issue is the Notice of Partnership Adjustment at Exam. The Dynasts claim the electronic signature thereon doesn’t satisfy Boss Hossery. But this is preliminary, doesn’t show Exam is finished. Judge Eminent Toro goes through the 30-day Letter liturgy.

Taishoff says the bludgeoning the statute was supposed to prevent always takes place “preliminarily.”

That a workpaper from IRS shown to the Dynasts doesn’t name them, but the Sub S corporation in which they hold stock, doesn’t matter, as Reg. Section 1.6662-5(h) says initial penalties go to the entity first, even if later passed through to the shareholders.

And while the NOPA is supposed to state penalties separately for each item, that footfault doesn’t invalidate the notice; the parties will fight out the computations on the trial.

This is a common State courtier jibe, especially employed when the jiber has just lost the case and is soothing his (it’s generally “his”) seething soul with the second double Grey Goose Gibson. It might be the subtext of the dissents in The David and Barbara Green 1993 Dynasty Trust, Mart D. Green, Trustee, et al., 165 T. C. 7, filed 10/2/25. The Dynasts are the celebrated Hobby Lobbyists of corporate religiosity fame. They and the als have donated a bunch ancient texts (Aramaic, Hebrew, Greek, and Latin, dating from centuries Fifteen to and including Eighteen)(hi, Judge Holmes), for which they claim a $23 million deduction to The Museum of the Bible, a 501(c)(3) down the block from The Glasshouse. Stated basis therein is a cool $1.7 million, 165 T. C. 7, at p. 5.

They and IRS want summary J, unpacking the interplay between Sections 641, 642(c), and 681 with respect to unrelated business income of an electing small business trust (ESBT), and canvassing strict vs. substantial compliance with a couple Section 170 provisions, as modified by the Deficit Reduction Act of 1984, and IRS regs promulgated thereunder. Among other things, the appraisal with the Form 8283 stated that two other experts were in on the tackle, but the lead (who was the only signatory) said it was entirely his. IRS says that voids the appraisal, but the Hobby Lobbyists say substantial compliance, citing Belair.

Playing defense, since even if deduction is disallowed, the Hobby Lobbyists claim caselaw allows all but gross valuation misstatement chops to be waved off by good faith reliance,  they want summary J on good faith reliance on advice which they got from a major-league CPA firm. Moreover, the statute itself permits the deduction even if substantiation is sketchy. Section 170(f)(11)(A)(ii)(II) expressly provides that section 170(f)(11)(A)(i)—the rule denying the deduction on substantiation grounds—“shall not apply if it is shown that the failure to meet such requirements is due to reasonable cause and not to willful neglect.” So this is the peg on which the majority hangs its hat. Deciding reasonable reliance is always a question of who told what to whom when, what the taxpayer did, and what was too good to be true. No summary J.

“In short, the possible availability of the reasonable cause defense precludes partial summary judgment in favor of the Commissioner on the substantiation issue. And, because trial will be required on this issue (as well as the open valuation issues that the Commissioner’s own Motions highlight), we decline to decide summarily the remaining substantiation issues, which (depending on the outcome of trial) might not need to be decided at all. See, e.g., Chrem, T.C. Memo. 2018-164, at *25 (‘Barring settlement, these cases will need to go to trial on the assignment of income issue and the “reasonable cause” defense. Under these circumstances we deem it prudent, for two reasons, to deny in their entirety both pending motions for partial summary judgment. First, if [the taxpayers] prevail on the “reasonable cause” defense, it will be unnecessary for us to decide whether they substantially complied with the appraisal reporting requirements. Second, there could be some factual overlap between the two sets of issues.’).” 165 T. C. 7, at p.17.

For the Chrem story, see my blogpost “Fair Is Foul – Maybe,” 9/26/18.

The dueling statutes and regs are also off the menu.

“As to the Motions related to the Trusts and the interplay among sections 641, 642, 681, 512(b)(11), and 170, after a careful review of the Motion papers, neither side has convinced us that it is clearly entitled to the rulings that it seeks. We therefore believe it prudent to defer resolving those issues until a full record for these cases is developed at trial and the matters concerning the substantiation issues are also resolved.” Idem., as my expensive colleagues would say.

CJ Urda, and JJ Kerrigan, Buch, Pugh, Ashford, Copeland, Jones, Greaves, Weiler, Landy, Arbeit, and Fung are down with this.

Judge Alina I. (“AIM”) Marshall isn’t. Hop to it, guys, she says (much more politely).

“Rule 121(a) provides that the ‘Court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The Court “shall”—not may.

“The parties chose to postpone a scheduled trial session in favor of waiting for answers to their complicated questions of law. They filed Cross-Motions for Partial Summary Judgment pertaining to Hobby Lobby’s compliance with the section 170(f)(11) and Treasury Regulation § 1.170A-13(c) substantiation requirements, ESBT petitioners’ entitlement to deductions under sections 642(c) and 681(a), and the determined penalties. The six Motions, along with attached memoranda, replies, and other related filings, exceeded 1,000 pages.

“The parties also filed four Stipulations of Facts exceeding 10,000 pages. On the basis of these extensive filings, the Court can decide multiple issues of law now.” 165 T. C. 7, at p.19.

Yeah, summary J is drastic when it deprives someone of a trial, but when everybody agrees on the facts so there’s nothing to try, why make them go through a trial where it’s at least possible that these legal questions will have to be answered anyway. Partial summary J clears the decks. JJ Guider and Jenkins sign on to this.

In her own dissent, Judge Jenkins says Chrem went off on a possible overlap between reasonable cause defense and a factual issue, assignment of income. Here there’s no overlap. The ESBTs here have 95% of the deduction, so the statutory-regulatory interplay is meaningful. In other cases, Tax Court decided substantiation first, good faith reliance afterward; let’s put the horse before the cart. And the Hobby Lobbyists haven’t put in affidavits or much else about the advice they got and what they did. Compliance and substantiation are the real deal, but because good faith reliance is a fact question, Judge Rose E. (“Cracklin'”) Jenkins would deny summary J on only that issue. JJ Nega, Way, and Guider, join her all the way, but Judge AIM Marshall only agrees about summary J and substantiation, not about trust issues.

Middle Department Inspection Agency, Inc., T.C. Memo. 2025-99, filed 10/1/25, asserts all manner of errors of fact and law, but Judge Courtney D. (“CD”) Jones finds the AO followed the IRM, so affirms the NFTL and NITL. The ambiguous language in the rejection of an OIC which pled special circumstances because the AO denied that “consistently underfunding the pension plan qualifies as a special circumstance because, ultimately, the pensioners were paid net payments without regard to the future payments they were entitled to/promised,” T.C. Memo. 2025-99, at p. 20, is stated in the context of ability to pay the Section 4971 underfunded defined benefit plan excise tax, not how such a plan is terminated.

There are 18 (count ’em, 18) underfunded years, $9 million in unpaid tax, and an OIC of $250K while MDIA admits to north of $2 million in assets.

MDIA’s trusty attorney leaves no ambiguity unaddressed, and every argument vociferated, but at close of play, MDIA is a profit-making business whose payment of tax would not impair the community, the tax laws are there to be enforced, and the AO’s conclusion that OIC is too low is sustained.

When MDIA went bankrupt, the owner kept the pension plan despite having been able to blow it off, and claims (though doesn’t prove) he paid all the covered retirees without missing a payment and bought some of them annuities, so Pension Benefit Guaranty Corp. signed off on the exit. T. C. Memo.  2025-99, at p. 10.

No good deed goes…but you know the rest.