I know I’m beating this theme to death (pun intended), but family lawyers should listen. Even if the Big Beautiful Whatever permanently did away with Sections 71 and 215 (and in this case maybe it didn’t, although Judge Alina I. (“AIM”) Marshall ultimately finds that they’re out; see John DiTullio, T. C. Memo. 2025-120, filed 11/18/25, at p. 4, footnote 5), y’all may have pre-TCJA and pre-BBW hangovers.

JD got hurt on the job and eventually got disability. In the meantime, he shed loved-once, but tried to be fair. Their shared lawyer, with more than 30 (count ’em, 30) years’ experience, was supposed to draft and oversee execution of a QDRO splitting up the retroactive benefits JD finally got from his employer, State of NJ, post-divorce.

Except shared attorney didn’t, because loved-once didn’t pay her share of his fee. Judge AIM  Marshall names said attorney; I won’t, because I’ve been there.

So JD got another lawyer to prepare a Consent Decree.

My long-time readers have already done the Psalm 22:7 number (King James variation).

Of course, none of the documents say that JD’s obligation to stump up the benefits for loved-once ends with her death.

JT’s now-trusty attorneys from the Villanova Wildcats LITC get a Taishoff “Good Try,” as they try to slide in the NJ Public Employees Retirement System regs concerning QDROs, which state that all such in pension and disability cases cease with payee ex-spouse’s death.

Judge AIM Marshall won’t wear it.

“…we must consider whether the payment obligation would terminate by operation of New Jersey State law. Respondent states that New Jersey State law is ambiguous as to the termination of payments upon a payee’s death when there is no unambiguous termination provision in the divorce instrument. Petitioner counters that the payment obligation would have terminated under New Jersey State law because the reference to a ‘QDRO’ in paragraph 6 of the [divorce judgment] incorporated the PERS regulation which provides that withholdings under a matrimonial order will cease upon the death of a payee spouse. Petitioner’s reliance on the PERS regulations is misplaced because a predicate for their application was that the parties would prepare and execute a QDRO. We do not think that simply referring to a QDRO in paragraph 6 of the [divorce judgment] automatically incorporated the PERS regulations and the termination rule that petitioner relies on.” T. C. Memo. 2025-120, at p. 8.

And the rest of NJ law is silent.

JD’s now-trusty attorneys do get IRS to drop the chops.

Judge Mark V. (“Vittorio Emanuele”) Holmes shoots the Section 6015 giant slalom without a single tangle in the partitive genitive gates in Jodell Sample, T. C. Memo. 2025-118, filed 11/17/25. Jodell still lived with hubby dentist Joe although legally separated (from which separation she walked away with “one of their shared cars, their main residence in Minnesota, a second home in Montana, and [hubby dentist Joe]’s entire section 401(k) account,” 2025 T. C. Memo. 2025-118, at p. 3).

Nonetheless, Jodell, a high school grad who ran hubby Joe’s dentist’s office while claiming to know nothing of their tax posture even after an IRS agent visited, ducks joint-and-several for three (count ’em, three) years at issue, while going under for the remaining four (count ’em, four), the dividing line between knowing and not knowing being the open years after IRS agent’s visit.

The economic dividing line is the usual sumptuary scan.

“Sample doesn’t live a life of luxury, traversing the world on expensive vacations, sporting couture in sophisticated sports cars. See Rev. Proc. 2013-34, § 4.03(2)(e). Because we do not see the typical hallmarks of significant benefit, we will not find that Sample had more than normal support from her unpaid tax liability.” T. C. Memo. 2025-118, at p. 19. (Citations omitted). If you’re going for innocent spousery, the old rule KISS (Keep it Simple, Stupid) controls.

And Jodell didn’t put in additional information, despite chances to do so.

I note her trusty attorney has appeared in this my blog before, and he definitely knows his way around. If he’s not holding cards, he doesn’t play. And he did play a stormer in the factors game, getting 12 (count ’em, 12) favorables against only three (count ’em, three) negatives, with the remaining twenty (count ’em, twenty) being neutral. See Judge Holmes’ table, T. C. Memo. 2025-118, at p. 20.

A good review of the innocent spousery analysis.

Don’t miss David B. Fugler and Cindy D. Fugler, T. C. Sum. Op. 2025-10, filed 11/17/25. Dave’s a lawyer, but unlike the Golden Gopher alum who represented Jodell, he’ll play a busted hand with the best. He wants innocent spousery for both himself and his wife.

Ex-CSTJ Lewis (“Ya Gotta Love That Name”) Carluzzo is not amused.

“Aside from petitioners’ failure to show that any of the factors that are taken into account in deciding whether a spouse is entitled to section 6015(f) relief apply to petitioner, it would seem to offend common sense to allow both spouses section 6015 relief with respect to the same income tax liability. As we have previously noted, section 6015 relief is generally available to only one spouse for a single tax year… and in this case it is not petitioner.” T. C. Sum. Op. 2025-10, at pp. 7-8. (Citation omitted).

Neil R. Clement & Meredith M. Clement, Docket No. 22590-18, filed 11/17/25, take a double hit, as IRS hauls back the Section 31 wage withholding they claim for year at issue to offset an outyear’s unpaid liability, leaving them with an enhanced deficiency.  And even if they could apply to year at issue the Section 31 wage withholding, the Section 6211(b)(1) computation of a deficiency specifically excludes any Section 31 credit. 

Anyway, Section 6512(b)(4) ousts Tax Court of jurisdiction over IRS haulbacks of overpayments.

Hence Ch j Patrick J. (“Scholar Pat”) Urda leaves Neil & Meredith high and dry for the outyear but awash for year at issue: enhanced deficiency and no Section 31 credit.

IRS, however, fumbles in the backfield when they fail to plead, whether in answer or amendment, proper disallowance of a mortgage insurance premium deduction. IRS conceded a reduction in the deficiency, but that led to an arithmetic jumble that Ch J Scholar Pat can only state is “less than meets the eye,” a rounding error. Neil & Meredith prevail on the deduction. See Order, at p. 4, footnote 4.

Five (count ’em, five) years post-petition and two (count ’em, two) years of faithful quarterly status reports which apparently show minimal progress towards resolution of Timothy Sod, LLC, Timothy Investors, LLC, Tax Matters Partner, Docket No. 12584-20, filed 11/14/25, Judge Christian N. (“Speedy”) Weiler confirms the pledge he made to Congress at his confirmation hearing “to decide all matters in an impartial manner, by applying the facts before me to the relevant provisions of the tax code and by also looking to controlling precedent.”

So he offers his aid to IRS counsel and to the Sods (a rather unfortunate moniker, obviously chosen by one happily unacquainted with coarse UK colloquialisms).

“The Court has identified these cases as possible conservation easement cases or syndicated conservation easement cases, and the Court is inclined to assist with the potential resolution of some or all issues in the case without the need for a trial.” Order, at p. 1.

Realizing that some words of the late President Reagan have lately become politically inflammatory internationally, I hesitate to quote any in this nonpolitical blog, but I respectfully suggest that counsels for both sides weigh each word of their responses to Judge Speedy Weiler’s following directive.

The parties shall meet and file a joint status report stating “(1) whether the parties have met and conferred, either in person or by telephone, to discuss the issues in dispute or alternatively whether this case remains under the IRS Independent Office of Appeals’ jurisdiction (Appeals); (2) should this case not remain with Appeals, the parties are to also address and inform the Court of the following: a. the specific issues in dispute, b. the efforts that the parties have undertaken or plan to undertake to settle this matter, c. whether this case is related to or analogous to one or more cases pending before this Court (or the United States Court of Appeals) and is therefore a good candidate for an agreement to abide or consolidation, and d. whether either party plans to file any pretrial or dispositive motion(s) and, if so, the nature of such motion(s).” Order, at p. 1.

And let the parties file a stip of settled issues, dealing with, inter alia (as my expensive colleagues would say) Boss Hossery and the usual Section 170 Dixieland Boondockery stuff.

Moreover, if all y’all (I’m getting ready for next month’s trip to TX) ask nicely, Judge Speedy Weiler will host a pretrial conference, be the same face-to-face or Zoomiegram, as the parties desire.

Apache Corporation and Subsidiaries, 165 T.C.11, filed 11/13/25, have an esoteric question for Judge Emin (“Eminent”) Toro, whose opinion garners some fifteen (count ’em, fifteen) adherents, one concurrence, and a split decision from Judge James S. (“Big Jim”) Halpern.

Seems the Apaches had to bat clean-up in what my Texan relatives call th’awl bidniz, giving the Apaches a Section 172(f)(1) specified liability loss. Rather than the straight two-back-twenty-forward NOL, the lucky (?) holder of a SLL gets a ten-year carryback.

The Apaches also have a regular NOL they want to carry forward, so they filed an election to forego the two-year carryback for the regular NOL per Section 172(b)(3) and Reg. Section 1.1502-21(b)(3).

Except.

The Apaches specifically state they’re waiving nothing as to the SLL and take the ten-year carryback. They also stip with IRS that they’re not claiming the SLL’s sibling product liability loss carryback.

IRS says it’s all or nothing.  Waive two means waive ten.

Negatory, says Judge Eminent Toro.

There are various NOL carrybacks differing from the general 2-back-20-forward, like some individual casualty and disaster losses, or farming losses. But the whole loss gets carried back to the earliest year of the permitted cycle, unless carryback is elected out. SLLs, however, can be elected back into the 2-back-20-forward régime. Section 172(b)(5) also provides that an SLL can be treated as a separate NOL after the regular SOL has been taken into account for the relevant year.

Clear? Thought not.

But Judge Eminent Toro does an adroit dictionary chaw, coming up with separate periods of time for each enumerated NOL. Yes, NOLs are unitary, one per taxpayer, but its components may permit utilization thereof in more than one timeframe.

“Reading section 172(b)(3) as providing a taxpayer with an all or nothing election—relinquish each and every one of the periods set out in section 172(b)(1) or be stuck with all of them—makes little sense given the number of different carryback periods set out in section 172(b)(1). It also makes little sense in view of Congress’s going out of its way to give taxpayers additional choices when it comes to specified liability losses, see I.R.C. § 172(f)(6), eligible losses, see I.R.C. § 172(b)(1)(E)(iv), and farming losses, see I.R.C. § 172(h)(2).10 The Government itself recognized as much when interpreting a prior version of the statute.” 165 T. C.11, at p. 15.

And IRS has treated product liability NOLs separately from the general NOL. No reason to treat clean-ups differently. Likewise, in close calls, taxpayer wins.

As for the partial dissent, whatever the previous incarnation of this statute said, the current version is the law. Summary J for the Apaches.

Judge Ronald L. (:”Ingenuity”) Buch concurs, simply because of the tie-breaker. Where either the split or the all-or-nothing approach is equally plausible, taxpayer wins.

Judge Big Jim Halpern says even if he buys the idea of separate carrybacks for pieces of NOLs (which he doesn’t), he doesn’t buy waiving some and keeping others.

“The relevant policy question is whether a taxpayer with an NOL that includes an SLL should be able to have its cake and eat it, too, by carrying its SLL back ten years while forgoing the carryback of the rest of its NOL and thereby avoiding the displacement of other tax attributes generated in the more recent years. I agree that there may be no compelling reason to require the taxpayer to give up the carryback of its SLL as the price of preserving the tax attributes that would be displaced by the carryback of the rest of the taxpayer’s NOL. But I am also unaware of a strong policy reason to allow selective carryback waivers. The stated reason for the carryback waiver in the first place would be achieved by either a selective or an all-or-nothing waiver election.” 165 T. C.11, at p. 35.

So neither aside should get summary J, and Apache should either carryback two and ten, or carryforward everything for twenty.

Taishoff says, here comes the appeal.

No, not a law firm; Judge Courtney D. (“CD”) Jones has given me 38 (count ’em, 38) pages in reply to my request from a year ago September that more amici join the party. And did they ever! I count no fewer than 10 (count ’em, 10) briefs amicus in Sunil S. Patel and Laurie McAnally Patel, et al., 165 T. C. 10, filed 11/12/25.

For those tuning in late, or who have forgotten my three (count ’em, three) previous blogposts anent the Patels and their microcaptivity, Tax Court blew off said microcaptivity as not being insurance (see my blogpost “Two Memos, Nothing New,” 3/26/24), hence sustaining deficiencies. Then Tax Court decided the Patels were chopworthy, but left the Section 7701(o) economic substance codification impact on Section 6662(b)(6) and (i) for another day (see my blogpost “Loro Firmano, Tu Perdi,” 9/22/20), calling in the amici brigade.

The other day is here.

First, the biography of Dr. Patel’s microcaptivity occupies some five-and-a-half pages. One year’s chops are unhorsed via Section 6751(b). IRS has BoP on want of economic substance on the chops, but there’s plenty enough want of economic substance to sustain the deficiencies, 165 T. C. 10, at p. 12, footnote 12.

Next, since CCAs were all over the lot on how to define economic substance, Congress gave us Section 7701(o) in 2010, and threw in the Section 6662(b)(6) 20% chop at no extra charge. And Section 7701(o) first requires a relevancy test: is economic substance relevant to this transaction? Sure is, says Judge CD Jones. And the two-part test in Section 7701(o)(I)(A) and (B) is not coextensive, despite a couple USDCs (hi, Judge Holmes) saying it is. 165 T. C. 10, at p. 17, footnote 14.

But once past relevance, it’s the usual microcaptive roundy-round, where deductible cash paid to microcaptive revolves back into petitioners’ pocket. So this is an economic substance case. But is the Section 6662(b)(6) 20% chop enhanced by Section 6662(i) undisclosure to 40%?

Judge CD Jones says yes, because the flow of funds wasn’t disclosed, the cast of characters involved in the flow of funds wasn’t disclosed, how premiums were calculated wasn’t disclosed, and the reinsurance pooling arrangement wasn’t disclosed. ” We do not intend to suggest that all, or any particular one, of these items had to be disclosed for the Patels to have adequately disclosed the transaction under consideration. We provide this list as examples of the many things not disclosed by the Patels.” 165 T. C. 10, at p.30, footnote 30.

Taishoff says, to avoid the 40% enhancer, Judge CD Jones suggests you write across the top of your return, “CONTAINS PHONY DEAL – PLEASE AUDIT ME.”

Reliance on experts fails, as Dr. Sunil Patel relied mostly on himself and on his promoters and enablers, and the substantial authority he quotes don’t support premiums based upon increasing tax deductions with no actuarial support.

Enhanced chops sustained.

Ch J Urda and Judges Kerrigan, Buch, Nega, Pugh, Ashford, Copeland, Toro, Greaves, Marshall, Weiler, Way, Landy, Arbeit, Guider, Jenkins, and Fung agree with this opinion of the Court.

It was cold. It snowed. It was windy. We marched.

Despite the announced end to the shutdown of the Federal government, Tax Court has canceled the trial sessions for the week of November 17, 2025, in Denver, Colorado; Detroit, Michigan; New York City, New York; and San Francisco, California.

Though Kwangjin Song, Docket No. 18415-21S, filed 11/7/25, timely petitioned the SND, fiancée Iimee didn’t, so she isn’t a petitioner. Wherefore when IRS applies the joint overpayment for Year One to the liability for Year Two, the Section 6213(a) stay on assessment and collection isn’t triggered as to her joint liability.

Ch J Patrick J. (“Scholar Pat”) Judge-‘splains.

“…as Iimee Song did not join in the Petition (1) I.R.C. section 6213 does not bar the assessment and collection of the joint [Year Two] tax liability as to her; (2) the tax liability for [Year Two] was properly assessed against Ms. Song; and (3) therefore, both the application of the joint overpayment for [Year One] to Ms. Song’s [Year Two] tax liability and the issuance of the [Year Two] levy notice to Ms. Song were proper.” Order, at p. 1.

No mention of possible innocent spousery, but Ch J Scholar Pat tells Kwangjin to let him know if IRS pursues assessment or collection against him. Meantime, Kwangjin’s motion to restrain assessment and collection fails.

When you file joint, consider carefully before you blow the joint.

No, That Is Not a Misprint

Though to the civilian eye the word first written hereinabove at the head hereof (as my already-on-their- third-Grey-Goose-Gibson colleagues would say) is clearly a spelling error, the word as thus written reprises the tone of Tom Stoppard’s famous character in his 1981 variant on “Hello, Dolly.” And I’ve used that spelling four (count ’em, four) times in blogposts before now, though have never yet explained its derivation.

I most respectfully submit, however, that Joanne G. Rosso, T. C. Memo. 2025-125, filed 11/6/25, is indeed a clessic.

Ex-Ch J Maurice B. (“Mighty Mo”) Foley is both terse and charitable, giving IRS the win.

“Petitioner claimed a $28,485 deduction relating to legal expenses but failed to submit sufficient documentation to substantiate $2,194 of these expenses. See § 6001; Rule 142(a); Treas. Reg. § 1.6001-1(a). She also failed to establish that the remaining $26,291 of litigation expenses relate to the production or collection of income. See §§ 212(1), 262(a); Rule 142(a); United States v. Gilmore, 372 U.S. 39, 46–49 (1963).” T. C. Memo. 2025-115, at p. 3.

When a prospective client tells you that you are the fourth lawyer they’ve consulted, the previous three being incompetent, read this case. Then decline the representation.