From the Tax Court website: “In addition to observing the Thanksgiving Day holiday on Thursday, November 27, 2025, the Court will be closed on Friday, November 28, 2025. DAWSON will remain available for electronic access and electronic filing.”

I’m truly puzzled by  STJ Lewis (“It’s That Name Again”) Carluzzo’s off-the-bencher, Lola M. Hussey, Docket No. 1870-24L, filed 11/26/25.

I am at a loss to know why IRS assigned six (count ’em, six) lawyers to this case, and had two (count ’em, two) of those lawyers take this case to trial (?) when Lola M. defaulted. Exactly what is there to try in a CDP unless petitioner had no prior opportunity to contest liability? Here, the record was filed and supplemented; it showed, at least to STJ Lew’s satisfaction, that the usual deficiency procedures had been followed, Transcript, at p. 4. So STJ Lew decides to waste no time on discussing whether Lola M. had a prior opportunity to contest.

There’s no mention of IRS seeking greater liability or chops than in the SND.

So, pointing out that Lola M.’s reliance on a 5 Cir case was misplaced and that she’d put in no evidence that the SND was “arbitrary and erroneous” as she claimed, STJ Lew denies IRS summary J but sustains the NOD tossing Lola M.

Was this case an orientation milk run for rookie attorneys?

Ch J Patrick J. (“Scholar Pat”) Urda finally sheds his scholarly judicial detachment and unloads on Lake Jordan Holdings, LLC, Lake Jordan Partners, LLC, Tax Matters Partner, T. C. Memo. 2025-123, filed 11/25/25.

“… we return to the old question: ‘Who you gonna believe, me or your lyin’ eyes?’ Lake Jordan Holdings, LLC (Holdings), claimed a charitable contribution deduction of $12,740,000 on its [year at issue] tax return for the donation of a conservation easement over 157 acres of rural property in Elmore County, Alabama (easement property). Outside the current environment, this value would be truly remarkable. A 96% stake in Holdings, whose only asset was 165 acres of land—the easement property and eight adjacent acres of odds and ends—had cost $583,000 a few months before. In conservation easement world, however, it is just another day at the office.” T. C. Memo. 2025-124, at p. 1.

It’s the old story, the good ol’ boy with an eye for real estate and a need for cash meets a couple cottage industrialists (hi, Judge Holmes) who have found gold in them thar boondocks.

Ch J Urda has to do the geography, topography, and real estate developmancy, together with the non-MAI but Made As Instructed appraisals. Ch J Urda has the whole story at pp. 4-18, ending with the usual slide-under-the-tag at the end of December to get the donation into year at issue.

Yes, it is a donation, all the Section 170 Dixieland Boondockery boxes were checked, but the valuation is the usual farce. “In a declaration prepared during the pendency of this case, Mr. G swore under penalty of perjury that “[a]s of the Donation Date, I was a Certified General Real Property Appraiser with the state of Alabama ….’ Mr. G subsequently admitted that when he made the declaration he knew that he did not have such a license on the donation date. Given Mr. G’s admission that he lied to this Court, we will treat his representations with justly earned suspicion.” T. C. Memo. 2025-123, at p. 18, footnote 8. (Name omitted).

But wait, there’s more! ” In preparing this report, Mr. Gr and Ms. M liberally cut and pasted from assorted data sources without attribution. For example, the market data and economic trends sections of the report were directly lifted from online sources including Wikipedia.” T. C. Memo. 2025-123, at p. 20.

Fortunately, the CPA who prepared the 1065 and exhibits and the K-1s also attached Form Form 8886, Reportable Transaction Disclosure Statement, as required by Notice 2017-10. Of course, Exam disallowed the deduction. Petitioners’ claim that the SND was arbitrary and capricious doesn’t shift BoP in 11 Cir, because there BoP for deductions is always on the taxpayer claiming same. Anyway, preponderance rules.

IRS’ Section 170 arguments, as aforesaid, go by the board. That a taxpayer wants a tax benefit doesn’t negate donative intent. The Section 708(b) technical termination of partnership when 50% or more capital interest transferred issue was disposed of in Savannah Shoals (see my blogpost “Two Memos, Nothing New,” 3/26/24). And the various defects in appraiser and appraisal IRS alleges are brushed aside. As usual, the issue is weight, not qualification.

So we come to valuation, and all the usual suspects are paraded. Besides, there isn’t even a gas station close to this place. “The easement property is located a considerable distance from any commercial conveniences (including a gas station), one of the reasons Mr. G determined that an active adult community was not feasible on the property. And as local market participants confirmed…, the Titus area had seen very little development whatsoever.” T. C. Memo. 2025-123, at p. 36.

And here’s a vintage draught of Scholar Pat: “It does not take Kallikrates or Frank Lloyd Wright to understand that the success of a development or a building is rooted in place. The easement property’s lack of nearby commercial conveniences, its accessibility difficulties, and its challenging topography, combined with its river aesthetic and its distance from the main body of Lake Jordan, would push a developer to look for a similar location that might have fewer obstacles to surmount.” T. C. Memo. 2025-123, at p. 37.

IRS claims civil fraud, after its attempt to amend the answer was denied, moving to conform pleadings to proof. Though the Lake Jordans weren’t ambushed, they disclosed enough so IRS wasn’t deceived.

“The Court shares the Commissioner’s frustration with the mix of sophistry and cupidity at the heart of this transaction, as well as the utter waste of time and money spent in untangling the ins and outs of this abusive scheme. Fraud this was not, however.” T. C. memo. 2025-123, at p. 55. This was a laughably aggressive tax posture that anyone with the least shred of common sense would reject.

At close of play, the Lake Jordans get a $1.1 million deduction, and a 40% gross overvaluation chop.

There’s a common misperception that the IRM requires liquidation of assets to pay the liability before a CA will be considered. That’s not the case; see Timothy L. Fisher and Roseann Fisher, T. C. Memo. 2025-124, filed 11/25/25.

Judge Kashi (“My or the High”) Way Judge-‘splains.

“… AO V requested that petitioners explore borrowing against the available equity in their primary residence. The Court has generally held that there is no abuse of discretion when an AO relies on guidelines published in the IRM to evaluate a proposed installment agreement. The Court has also routinely held that an AO does not abuse his discretion when he rejects an installment agreement because a taxpayer refuses to liquidate assets to satisfy his tax liabilities.” T. C. Memo. 2025-124, at pp. 6-7. (Name and citations omitted).

AO V didn’t even require liquidation here. ” AO V did not require petitioners to liquidate any assets. She merely required that petitioners explore the possibility of liquidating or borrowing against their assets. Both this Court and the IRM require that taxpayers attempt to tap into the equity of their assets, including equity in a personal residence, to satisfy their tax obligations.” T. C. Memo. 2025-124, at p. 7. (Emphasis by the Court; name and citations omitted).

Taishoff says a mortgage broker’s letter and an FHA loan application would have done the trick, but Tim & Roseann did nothing, and petitioned the NOD.

Of course, there’s a hardship exception, but Tim & Roseann could hardly plead that, with a six-figure checking account and north of $1.5 million in home equity. T. C. Memo. 2025-124, at p. 8.  True, the RO who reviewed the proposed IA erroneously found more home equity, but both sides treated that as harmless error.

I’ve often chronicled here Judge David Gustafson’s obliging ways. He gives us yet another example, a “how to” for dealing with fractious and captious clients, in Brian L. Baxter & Rita C. Baxter, Docket No. 13302-23, filed 11/25/25. Brian & Rita had problems with their attorneys.

Attorney One files the petition, but backs out because of “disagreement on the course of litigation and proposed arguments for trial,” and no one objects, so Judge Gustafson lets Attorney One out. Order, at p. 1.

If client is dissatisfied with your advice, wanting you to take a losing path, bail. Remember, if you let client direct you and you lose, you’re to blame despite any written warnings you may have given them. They were right and you were scared or clumsy or both.

Brian & Rita don’t enter the stipulation process, so Judge Gustafson gives them an OSC to respond in writing to IRS counsel’s proposed stip or have the facts deemed stipulated (Rule 91). No response, so Judge Gustafson tries for a phoneathon, without result. So there follows an OSC at no extra charge, requiring Brian & Rita to bukh or be tossed for nonprosecution.

Going to the bullpen, Brian & Rita bring in Attorney Two. Attorney Two telephones chambers twice, stating he’s been retained.

Except.

Attorney Two is not admitted to Tax Court and hasn’t filed Entry of Appearance. No problem; Judge Gustafson will oblige.

“In response to his messages, we issued in this case an order that (1) gave instructions as to the attorney’s possible representation, (2) extended sua sponte… the deadline for petitioners to telephone chambers and file a response to our order to show cause, and (3) directed ‘that if petitioners do wish to retain an attorney to assist them in complying with that…deadline, then they shall retain him in time for him to file his notice of entry of appearance before that date.’ The attorney did not enter an appearance, and the Baxters have never placed any call or made any filing in compliance with our second OSC.” Order, at p. 2.

But Attorney Two, admitted to Tax Court or not, knows not to ghost a Court.

“Rather [the day before the adjourned return date on the latest OSC, Attorney Two] spoke by telephone with chambers staff. The attorney said that he would not be representing the Baxters in their case. He stated to staff that he had spoken with the Baxters, (1) telling them his reasons for not representing them, (2) reminding them of their… due date with the Court, and (3) advising them that he was going to call and notify the Court of his conversation with them.” Order, at p. 2.

Taishoff says both attorneys played it right.

But Judge Gustafson is obliging to the end, even though ghosted by petitioners.

“For the information of the Baxters, we point out that, under Rule 162, ‘Any motion to vacate or revise a decision … shall be filed within 30 days after the decision has been entered ….’ We do not encourage the Baxters to attempt reconsideration, since we cannot know (1) whether they have any excuse that they might proffer for their repeated failure to comply with our orders, and (2) whether there is any merit to their position that could overcome ‘[t]he apparent outcome of this case’. We would not expect to entertain any motion under Rule 162 that was not timely filed or did not address both these points.” Order, at p. 3.

Here’s the opinion I anticipated last year (see my blogpost “The “Goofy” Silt-Stir, 11/5/24), Gary M. Schwarz and Marlee Schwarz, T. C. Memo. 2025-122, filed 11/24/25. The Supremes’ disciplinary sortie in Loper Bright Entrs. caused Gary’s and Marlee’s trusty attorneys to reargue T. C. Memo. 2024-55, filed 5/13/24 (see my blogpost “The Buck Stops Here,” 5/13/24).

Said trusty attorneys, the National Foreign Trade Council, Inc., and the Chamber of Commerce of the United States of America all want Judge Goeke to invalidate (or maybe sustain) Reg. Sections 1.183-1(d)(1) and 1.183-2(b) as not being the best interpretation of Section 183 or having been promulgated in violation of the notice-and-comment provisions of the Administrative Procedures Act.

Tough luck, chaps, Judge Goeke says he don’t need no stinkin’ regulations (although he says so in much more polite terms). Section 183 limits Section 162 business deductions in nonbusiness contexts. Here the issue is offsetting real property appreciation gains with massive money-losing ecotourism (farming) operations.

Once again, Judge Goeke is in the weeds of TX real estate in Starr and Zapata counties, sorting out the value of cloudy waters in lakes and ponds, and dismembering the experts’ valuation opinions. He gives us exhaustive tables, and somber reasoning and copious citation of precedent going back a century, to figure out what an activity for profit means.  And what activities should be conjoined. Gary’s and Marlee’s ecotourism isn’t real estate. Real estate made serious money; ecotourism took heavy-duty losses. “No competent real estate activity would have conducted staggeringly unprofitable ecotourism for such nominal benefits.” T. C. Memo. 2025-122, at p. 35.

So those expecting the goofy regulation to collapse under the Supremes’ disciplinary scourge will have to remain unsatisfied.

Judge Rose E. (“Cracklin'”) Jenkins answers that by saying it doesn’t matter in Anthony J. Eidem, Docket No. 15479-24L, filed 10/24/25, incidentally wiping out a predecessor order which remanded Anthony back to Appeals for reconsideration of abating adds-ons, after IRS showed it had already remitted a bunch, leaving only $73 thereof outstanding. Order, at p. 2, footnote 2.

It seems the AO’s notes didn’t show separate consideration of Anthony’s claims about abating the late file and late pay add-ons, only abating interest. On that score, that Anthony was in jail and in CNC didn’t entitle him to abatement of interest on his self-reporteds doesn’t mean his add-on claims shouldn’t have been considered, although that’s harmless error.

“However, given that all of the additions to tax under section 6651(a)(1) and (2) had been abated and that there is nothing to indicate that petitioner was entitled to a waiver of the additions to tax under section 6654 for [Year One and Year Two], the AO’s apparent failure to appropriately consider abatement is harmless error.” Order, at p. 9. (Citation omitted).

There were four (count ’em, four) years at issue, all self-reported and unpaid. IRS filed a NFTL when it put Anthony in CNC, as for the back two years Anthony was in and out of jail and claimed he had neither income nor assets. Anthony had also gotten first-time abatement before.

All Anthony has for abatement of interest is incarceration, and that’s not reasonable cause for nonpayment.

“… incarceration alone does not give rise to reasonable cause, see Llorente v. Commissioner, 74 T.C. 260, 268–269 (1980), aff’d in part and rev’d in part on another issue 649 F.2d 152 (2d Cir. 1981), even if the taxpayer was incarcerated at the time the return was due, which, as respondent notes, is not clear was true for petitioner for all of the years at issue.” Order, at p. 8.

An early lesson all lawyers should learn, even before they are licensed, is to protect the record. Briefly, the contrapositive of the old Yellow Pages (for those of you not card-carrying Medicare members, that was a book with actual yellow paper pages listing businesses and professional service providers) advertising slogan “If it’s out there, it’s in here.” If it’s not in here (in the record), it’s not out there (for judicial review).

Judge Rose E. (“Cracklin'”) Jenkins has a prime example in Halal Farms USA, Inc., Docket No. 2601-21L, filed 11/21/25. You can read the history for yourself at pp. 2-6. Judge Jenkins must unscramble Appeals apparent unawareness of the difference between a C Corp and a Sub S, while trying to deal with the 2009 amendment that blocks the passthrough of Subtitle C employment taxes.

IRS moves for summary J, here a Hail Mary so forlorn that “hopeless” doesn’t begin to describe it.

Here’s a sample.

“…the administrative record’s complete dearth of notes from Appeals from any point in its consideration of petitioner’s issues is not only notable in light of the suggestion in the RO’s notes that Appeals case activity records exist. It also makes it impossible for this Court to understand Appeals’ reasoning and actions with respect to a number of issues. In particular, the lack of tax assessed with respect to petitioner and the RO’s notes about petitioner being an ‘S corp’ and filing an ‘1120S’ suggest that there could be merit to petitioner’s position that it was an S corporation, within the meaning of section 1361, required to file a Form 1120–S, U.S. Income Tax Return for an S Corporation, instead of a Form 1120…. There is no indication of consideration of this issue in the purported attachment to the purported notice of determination, and no notes to otherwise reflect what issues Appeals did consider, leaving this Court to draw inferences in the light most favorable to petitioner to conclude that there was no such consideration.” Order, at p. 8.

And unlike the vast majority of CDP cases where petitioners try to wildcard in liability issues where they blew the prior opportunity to contest, here the Halals did timely raise the issues but there’s nothing in the record to show what Appeals did or didn’t do therewith.

So of course there’s a remand for Appeals to try to get the record straight.

Taishoff says that if this is all IRS has, they had best settle.

I am not jumping on Appeals or IRS here; their errors could well have counterparts on the other side. Rather, I am using this order as a lesson to practitioners on both sides of the scrimmage: protect the record. Make sure it tells your whole side of the story.

It’s common in Tax Court litigation: IRS moves to toss, and petitioner stands mute, despite the Judge’s or STJ’s invitation to bukh. And the result is usually less than optimal for the mutant.

But the exception proves the cliché, and Ala Abufarie, Docket No. 17943-22, filed 11/20/25, probably does as well by saying nothing as by writing his/her autobiography in response to IRS’ motion to toss for want of prosecution.

Judge Morrison rewards Ala’s reticence, taking IRS’ concessions into account as he does the arithmetic on the two (count ’em, two) years at issue, sending off Ala with a deficiency, an add-on, and a chop, but less than what the SND claimed.

Without knowing the facts, of course, I can’t say Ala did better keeping still, but it sure looks that way.

The ancient grunts’ wisdom plays out again for Tom Prescott, T. C. Memo. 2025-121, filed 11/19/25.  Tom was a whistleblower who was third to jump on Target A, but, relying on a phonecall and meeting with an attorney in the Tax Division at DOJ, claims Reg. Section 301.7623-4(c)(4) tiebreaker rule should get him a piece of the reward, all of which was awarded to WB-1 and WB-2.

Except.

WB-1 and WB-2 got there long before Tom blew, Tom’s gen on the other participants in the dodge was useless (see T. C. Memo. 2025-121 at p. 2, footnote 2), DOJ doesn’t have to dish on grand jury proceedings (one of Target A’s cronies went down, leading to Target A entering into a DPA and disgorging) so no deposition of DOJ attorney.

Tom’s claim that maybe so might could be DOJ relied on some of Tom’s stuff founders on the record rule, Van Bemmelen, and the regs.

“The WBO’s conclusion is supported by the governing regulation. There is no indication here that CI ‘initiate[d] a new action, expand[ed] the scope of an ongoing action, or continue[d] to pursue an ongoing action, that the IRS would not have initiated, expanded the scope of, or continued to pursue, but for the information provided.’ See Treas. Reg. § 301.7623-2(b)(1). The regulation makes clear that a whistleblower’s information does not ‘substantially contribute[] to an action’ where the IRS simply ‘analyzes the information provided or investigates a matter raised by the information,’ when that matter was already on the IRS’s radar screen. Id. As far as the record reveals, that is an apt description of what occurred here.” T. C. Memo. 2025-121, at p. 14.

And the meeting with the DOJ attorney? “The fact that petitioner’s information appeared sufficiently relevant to trigger a meeting does not establish that his information in fact assisted DOJ in any way, much less that it ‘substantially contributed’ to the recovery of proceeds from Target A. A whistleblower does not ‘substantially contribute’ to an action simply by virtue of submitting his information to an investigating agent. Treas. Reg. § 301.7623-2(b)(1).” T. C. Memo. 2025-121, at p. 15.