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.

As the current government shutdown enters the record books, the “small court” grapples with upset trial schedules. STJ Lewis (“A Name to Remember”) Carluzzo urges the litigants to pursue resolution, whether by assiduous trial preparation or negotiated peace, in Christopher Jones, Docket No. 1450-25S, filed 11/5/25.

IRS wants a continuance of the December 8 trial date, but STJ Lew won’t take the easy way out. He holds the motion in abeyance, while urging the parties to strive on. Notwithstanding that they need not now comply with the SPTO, they must still prepare for trial or settle.

“Unless: (1) otherwise directed by the Court; (2) the trial session is cancelled; (3) the case is continued; or (4) a proposed stipulated decision is submitted sooner, both parties must appear on Monday, December 8, 2025, as presently required. The failure of a party to appear as directed could result in the entry of decision against that party.” Order, at p.1.

Let House and Senate do (or not do) whatever, Tax Court litigants must go on (even if IRS counsel is unpaid).

Richard Steven Harris, T. C. Memo. 2025-113, filed 11/4/25, claims he was the proprietor of the business that employed him, so his Sched C fails because his employer provided compensation for some of the expenses he claimed, Section 274 substantiation knocks out others, so he can’t show the expenses were “necessary.”

Of interest, he claims $74K of the $534K his employer was allowed per Section 179D Energy Efficient Commercial Building Deductions as “designer.” He was the sales manager on the jobs that set up the deduction.

Judge Christian N. (“Speedy”) Weiler finds the 179D deduction lacks evidentiary support. Harris doesn’t show anything but uncorroborated testimony that he analyzed the original sequence of operations to determine how the existing systems were intended to operate, inspected the existing systems to determine how they were actually operating in comparison to the original sequence of operations (i.e., to identify any failures or ad hoc changes made to the original sequence of operations), and modified or changed the sequence of operations as necessary to better operate the systems.

Note he did have forms from his employer’s tax consultant showing him as designer and allocating him a part of the deduction. But Harris, pro se, never called the consultant as witness, nor did he attempt to get the forms in as business records. Taishoff says he might not have succeeded if he did, but worth a try.

Tax Court may be the “small court” but you still have to try your case.

Though I’m sure this is not Judge Emin (“Eminent”) Toro’s first encounter with heightened rhetoric, whether from north, south, east, or west, he notes that same does not convert a conservation easement valued by IRS at $612K into a $10,234,108 write-off for Paul-Adams Quarry Trust, LLC, Francis L. Adams, Tax Matters Partner, T.C. Memo. 2025-112, filed 11/3/25. Neither does same make this ” a difficult case.” T. C. Memo. 2025-112, at p. 6. Notwithstanding less difficulty, Judge Eminent Toro runs up 105 (count ’em, 105, and I have) pages to dispose thereof.

It starts with the usual give-and-go, flipping a busted Dixieland granite quarry. But by the time you get to page 7, you’ve heard enough.

“… when the easement was granted over the Paul-Adams property in 2017, Paul-Adams claimed the property was worth $10,545,088, relying on its supposed value as an operating granite quarry. In petitioner’s view, the dormant Paul-Adams property could, within four years of being revived, produce a material percentage of the total granite dimension stone produced annually in the entire State of Georgia.

“Petitioner has provided no credible evidence of how this would be achieved or why, if these claims were true, the property had not already been used for this purpose. The claimed value of the parcel in 2017 represented a more than 2,400% increase over its prior sale price in 2007. And its purported value was more than 750% of the value of the property Mr. Adams was leasing at the time, which included a larger quarry with a much better track record, and with respect to which he had an option to buy.

“In view of the entire record in this case, we find petitioner’s claim utterly unsupportable.” T. C. Memo. 2025-112, at p. 7. Btw, if you want to read a lot more about GA granite than you want to know, check out T. C. Memo. 2025-112, at pp. 10-13.

And while petitioners’ appraiser survives the Reg. Section 1.170A-13(c)(5)(ii) guilty knowledge test, he’s sailing mighty close to the wind when petitioners’ discounted cash flow numbers show up in his appraisal metadata.

A key fact is that the petitioners tried to quarry on the property, lost money (despite being longtime quarry operators), closed up the business, and sat for five (count ’em, five) years with the property dormant. Though they claim they found valuable granite, they closed up just when a major buyer was looking for more product. Makes no sense. And they lost $360K in the operation before shutting down, when starting a new quarry operation wasn’t that much more.

“Both experts assumed that the market could absorb the dimension stone extracted at the newly opened hypothetical quarry and that the new quarry would capture significant market share in practically no time. They further assumed that the new quarry would run at a level of efficiency achieved at the best quarries in the area, would quarry high-quality granite, and would have no trouble finding a qualified work force even though labor constraints have been a constant source of problems for other quarriers in the area. We do not share the experts’ enthusiasm and, making factual determinations, consider their analyses unrealistic, unreliable, and unhelpful. We catalog here only a few of the many failings of petitioner’s experts, which hypothetical willing buyers would not have ignored.” T. C. Memo. 2025-112, at p. 48. And you can’t run discounted cash flow analysis when a business has none. Especially is this so when there are plenty of comparable sales.

At close of play, highest and best use pre-easement is as an exploratory site for (maybe) future mining, not a going concern. Post-easement, recreation and passive activities, on which both sides agree.

Finally, petitioners claim the Section 6662(h) chop is void for vagueness.

“Section 6662(h), the statute setting forth the gross valuation misstatement penalty, and the related statutory and regulatory provisions are not vague. A person of ordinary intelligence has fair notice of what is prohibited. The value of property claimed on that person’s return must not be 200% or more of the correct amount. Nor has petitioner pointed to any rule in the related regulations that fails to provide fair notice of the conduct that the rules prohibit.

“To the extent petitioner takes issue with how the courts have applied the rules in specific cases, his recourse is to argue that those cases were wrongly decided, as he has done here. But disagreement with outcomes of cases does not render the relevant standard unconstitutionally vague.” T. C. Memo. 2025-112, at p. 105.

News reaches me that Frantic Frank Agostino is bringing the Jersey Boys in touch with Downtown. He joins The Big K-Crew.

Best of luck to all hands. Now send me some good blogfodder, guys.

The new, rock-’em-sock-’em, jim-handy Tax Court website has launched, and mirabile dictù, it works! Mostly.

It states thereon that a press release issued yesterday, on a Sunday no less, announced the shutdown-induced cancelation (maybe) of the  Examination for Admission to Practice in the United States Tax Court, a/k/a the Slaughter of the Innocents.

Except.

At the time of writing (9:57 a.m., EST, 11/3/25), the link thereto leads one to a press release dated 10/27/25, which says nothing about said Examination.

My faith in the Genius Baristas remains unimpaired.

Edited to add, 10:21 a.m., EDT: Sarah Silfies Finken, Esq., Administrative and Case Services Counsel at Tax Court, acting Public Affairs Officer, tells me that the Examination will proceed as scheduled on 11/5/25. I will post any other or further information as received.

Edited to add, 10:44 a.m., EDT: Ms. Finken confirms Examination to proceed as scheduled; good luck to all candidates.