Judge Goeke is a late entrant in the condundrum stakes, but he has a couple good ones (hi, Judge Holmes) in Antonia Gettridge, Docket No. 16153-23, filed 2/25/26.

Antonia claims a $45K Section 1341 claim of right credit that wipes out year at issue’s taxes and she overstates the withholding for which she claims a refund. IRS issues a SND embodying these, plus some other credits that Judge Goeke can’t make out. There’s also some other income in the mix, but for now the issues are the disallowed Section 1341 credit and the misstated withholding.

To have a Tax Court deficiency case there must first be a deficiency. So, since IRS gave Antonia no rebates, the basic Section 6211 definition here is tax due minus tax reported.

Except.

“Section 6211(b)(4) expands the definition of a deficiency to include the disallowance of certain refundable credits. The expanded definition of a deficiency allows taxpayers to contest the IRS’s disallowance of the designated refundable credits in deficiency proceedings. Under section 6211(b)(4), any excess of refundable credits allowable over the tax imposed by subtitle A, and any excess of reported refundable credits over the tax reported on a taxpayer’s return, ‘shall be taken into account as negative amounts of tax’ for purposes of section 6211(a).” Order, at p. 3.

OK, so Antonia has a valid SND?

Maybe not.

“Section 6211(b)(4)(A) lists the refundable credits in the following Code sections as subject to the deficiency procedures: sections 21, 24, 25A, 32, 34, 35, 36, 36B, 6428, 6428A, 6428B, and 7527A. The section 1341 credit is not among the listed credits.” Ibid., as my expensive former colleagues would say.

So does the disputed Section 1341 claim of right credit give rise to Tax Court jurisdiction?

As for the withholding jumpball, “(T)he amount of federal income tax withholding is not taken into account in determining the amount of a deficiency. Section 6211(b)(1) provides that Tax Imposed and Tax Reported are determined without regard to the section 31 credit for tax withheld on wages. Thus, withholding credits and overstatements are excluded from the definition of a deficiency.  The IRS may summarily assess tax in the amount of an  overstated withholding credit. §§ 6201(a)(3); 6213 (b)(1). Overstated withholding credit is not subject to the deficiency procedures. Accordingly, we will direct the parties to address whether we have jurisdiction in this deficiency case to determine the correct amount of petitioner’s withholding.” Order, at pp. 3-4. (Citations omitted).

So what, if anything, can Judge Goeke decide is the correct amount of Antonia’s withholding?

Submit memos by 4/15/26, along with what else you have to do on that date.

One would think that from anyone from his/her grade school days would remember that to explain a serious health-related absence a doctor’s note was essential. I’m surprised that the well-credentialed trusty attorneys for GO Risk Management, Inc., et al., Docket No. 14012-21, filed 2/25/26, didn’t seek (or allege that they sought but were refused) such.

Said trusty attorneys want to depose MT (name omitted) “…for the purpose of perpetuating his testimony because, petitioners assert, ‘Petitioners have substantial and well-founded concern that MT may not survive until the currently scheduled trial date of July 5, 2026, or that his condition will deteriorate to the point where he will be unable to communicate effectively.’” Order, at p. 1.

Before raising the want of underpinning, Judge Rose E. (“Cracklin'”) Jenkins notes the want of a Rule 81(b)(2) certificate of service on MT. 

Taishoff says maybe trusty attorneys should have foreseen this problem by alleging that MT’s condition precludes personal service, and none of attorney, guardian, conservator, or next friend could be located to receive service (if such were the case). And HIPAA may be a barrier to obtaining medical information.

Howbeit, the underlying problem with the application for deposition remains: “…petitioners provide nothing other than counsel’s assertions in the application in support of the contentions concerning Mr. Theisen’s health.” Order, at p. 1. And as petitioners haven’t shown that MT was served, Judge Jenkins can’t know what MT would say. or even knows about this.

Judge Jenkins has a suggestion.

“Given the allegations concerning MT’s health, the Court might consider granting a procedurally compliant application that provided a better foundation for the necessity and timing for the proposed deposition, as opposed to remote testimony at trial, but the infirmities of the application before the Court warrant its denial.” Order, at p. 1.

Application tossed without prejudice; try again.

Turns out that maybe Judge Travis A. (“Tag”) Greaves and your reporter spoke too soon. Maybe my account of the Section 7436 worker classification 90-day cutoff isn’t the whole story. See Belagio Fine Jewelry, Inc., Docket No. 35762-21, filed 2/24/26.

For the backstory, see my blogposts “Is It or Isn’t it?” 6/25/24, and “It Is!” 4/15/25.

IRS moves to toss Belagio’s petition for failure to state a claim (maybe because Belagio is Golsenized to 11 Cir and maybe Pugsley isn’t the last word) and asks for a decision “determining the proper employment status of the worker at issue, and the proper amount of employment taxes, additions to tax, and penalties due from petitioner.” Order, at p. 1.

Belagio’s representative is present at the motion hearing and doesn’t object. Sounds to Taishoff like a stiped decision. So maybe equitable tolling is available in Section 7436 reclassifications. 

Except.

Judge Tag Greaves orders “respondent’s Motion to Dismiss for Failure to State a Claim upon Which Relief Can Be Granted…is granted, and this case is dismissed because the Petition was not filed within the period prescribed by I.R.C. section 7436(b)(2).” Order, at p. 2.

Taishoff says huh? If petition not timely filed, Court has no jurisdiction, unless equitable tolling applies, which is never discussed. If Court rules petition fails to state a claim, Court must have or assert jurisdiction to do so, and Court only gets jurisdiction with a timely filed (or equitably tolled) petition. Which is it, Judge?

Anyway, Benny the employee gets a two page W-2. And Belagio will get a bill for the Section 6651(a)(2) failure to pay timely add-on when the parties figure it out.

No, not another reality TV show for tax practitioner CPE. Jeffrey Pesarik, T. C. Memo. 2026-20, filed 2/23/26, has a trusty attorney who did a good job eliciting enough from Jeff and his credit card and bank statements to eke out $21K of capital expenditures to offset the sale of one of the two (count ’em, two) houses he built or rehabbed, both of which he sold in the same year. Trouble was, Jeff didn’t report either sale.

I’m surprised Jeff, a property manager in multiple States, never encountered a 1099-S.

Howbeit, as to one building, Ch J Patrick J. (“Scholar Pat”) Urda allows Jeff nothing, and moreover denies him Section 121 primary residence exclusion, as Jeff has no useful paperwork and his testimony is less than convincing.

On the other, his credit cards showing charges from builders’ merchants allows Ch J Scholar Pat to cut Jeff some Cohanslack.

Trusty attorney’s try to get Jeff off negligence chops doesn’t get far.

“Mr. Pesarik also argues that assorted disabilities, including posttraumatic stress disorder, depression, and attention deficit hyperactivity disorder, supply reasonable cause. ‘Where a taxpayer’s disability is raised as part of a reasonable cause defense, we have looked to the severity of the disability and the impact it had on the taxpayer’s life . . . .” Remisovsky v. Commissioner, T.C. Memo. 2022-89, at *5 (quoting Jones v. Commissioner, T.C. Memo. 2006-176, 2006 WL 2423425, at *6). Mr. Pesarik fails to demonstrate that his disabilities interfered with his ability to satisfy his tax reporting obligations or led to the substantial understatement here.” T. C. Memo. 2026-20, at p. 13.

It’s been years since I stood in the bonechilling cold of a stone cellar in a small Hudson Valley town, as the cellarmaster drained a quarter-glass from a barrelthief and handed it to me. “Might need another year,” we agreed. Turned out it did, and the result was good.

I remembered the same feeling as I read Judge Christian A. (“Speedy”) Weiler’s 46 (count ’em, 46) page giant slalom through the anfractuosities and permutations of Otay Project LP, Oriole Management LLC, Tax Matters Partner, T.C. Memo. 2026-21, filed 2/23/26.

For backstory, check out my blogposts “The Best Discovery,” 11/1/21, and “Innocents, Take Notice,” 10/7/24. Watching a Tax Court case develop is like tasting that raw red liquid in an ice-cold cave and trying to divine what it will become; it’s more instinct than ratiocination.

Anyway, the Section 743(b) basis adjustment, intended to defer indefinitely three-quarters-of-a-billion-with-a-b profit deferred by Section 460 completed contract method accounting fails the economic substance test, despite petitioner’s objection that express statutory language o’ercrows said test. 9 Cir, whence Otay is Golsenized, says no. Where the parties, ostensibly splitting up their real estate empire, continue to hold construction obligations, their split-up is a sham.

“Respondent also correctly points us to the public bond and construction obligations which OPLP retained as evidence that Al and Jim did not intend to actually separate all business operations. Accordingly, we conclude that the transactions at issue were a tax-driven sham since these transactions primarily resulted in mere tax benefits. In other words, when considering the nontax reasons for the transactions at issue, any third-party investor would not benefit from the restructuring and distributions from OPLP.” T. C. Memo. 2026-21, at p. 41.

Multiple consultations with high-priced accountants and multiple tax lawyers, other than promoters, save Al and Jim from gross overvaluation and negligence chops.

Btw, the Winter Olympic Committee should consider the diagram at p.16 for the next giant slalom competition.

On the tines is James Haber, 166 T. C. 2, filed 2/23/26. James (“Little Jim”) Haber, famous immunologist and dodgeflogger who furnished much blogfodder, goes down for Section 6707 assessable chops for Section 6111 nonreportage.

Little Jim’s trusty attorneys elected to try a CDP and avoided a trip to Appeals.  They tried a divisible (partial) payment in USCFC, which tossed them because the Section 6707 chops are nondivisible. Must pay all to seek refund. Fed Cir affirms and denies rehearing. CDP, stayed during USCFC litigation, denies challenge to chops as Little Jim had a prior chance at Appeals. They petition.

No go, says Judge Emin (“Eminent”) Toro.

Reg Section 01.6330-1(e)(3), Q&A-E2 says a trip to Appeals is a prior opportunity to contest chops; Tax Court decisions have upheld the reg. And declining the trip is the same as having chosen the trip. See my blogpost “The CDP Is the Trial,” 9/19/22. Little Jim can’t say the Appeals route would have been “precooked” or meaningless because they never went. Their Chenery claims about which IRS communication was the offer of the Appeals trip likewise fails; all the letters are there. And timeliness of the letters is likewise irrelevant.

There’s the standard Appointments clause argument, but that fails because they never showed up before the AO. Anyway, Tooke took care of that argument. See my blogpost “Scrapbook, 1/29/25.”

Of course, Loper Bright gets a workout, but Judge Eminent Toro has CCA learning to stave off that attack.

Their Fifth Amendment attack is unclear, says Judge Eminent Toro, and the Eighth Amendment argument on the underlying penalties are off the board on prior right to contest.

I give Little Jim’s trusty attorneys a Taishoff “Good Try, Third Class” for effort. They should have read my blogpost “Appeal? Don’t  Appeal? You’re Forked,” 3/20/17.

No, nothing about tariffs or international trade negotiation from me: this blog remains nonpolitical. My political views are expressed elsewhere. What interests me today is Judge Nega’s further explication of Section 6103(h)(4)(C) transactionality in Family Office Foundation, Inc., Docket No. 10779-23X, filed 2/23/26.

At issue is the relationship of FOF to certain persons or entities denominated as Strangers and Nonparties, and Promoter, the latter being the subject of a permanent injunction for organizing phony charitable contributions of overvalued assets to Promoter-created 501(c)(3)s, where contributor retained control of said assets. FOF wants a Rule 103 protective order.  Judge Nega goes for a redacted administrative record.

“Petitioner claims that the administrative records contains [sic] references to individuals that are ‘unrelated’ to this case and seeks to have the record sealed to protect the privacy of those individuals (and entities). As an alternative to sealing the entire record, petitioner requests that they be allowed to submit an unredacted record under seal to the Court and redact another copy of the record for public access.” Order, at p. 2.

IRS’ counsel agrees that the relationships of some of the referenced are too attenuated to fall within Section 6103(h)(4)(C)’s transactionality net, so those can be redacted from the public view. So that takes care of Section 6103(h)(4)(C).

But the protective order?

“In order to rebut the presumptive public right to free access to the facts, a party must come forth with appropriate facts to support claims of harm that would occur as a consequence of disclosure. 

“Historically, parties have met their burden to show claims of harm sufficient to seal records where patents, trade secrets or confidential information are involved. Id. at 921. A showing that the information would harm a party’s reputation is generally not sufficient to overcome the strong common law presumption in favor of access to court records.

“In this case, petitioner has not asserted any claims of harm beyond annoyance or embarrassment. Accordingly, petitioner has failed to rebut the presumptive public right of free access to the Court and we will not issue a protective order. SeeWillie Nelson Music Co., 85 T.C. at 925 (‘[M]erely asserting annoyance and embarrassment is wholly insufficient to demonstrate good cause.”). All of petitioner’s claims that the information of “Strangers” and “Nonparties” is confidential tax return information was only of any relevance to a section 6103 analysis of whether that tax return information may be disclosed in this proceeding—not to the analysis of whether an unusual Rule 103 protective order is warranted.” Order, at pp. 4-5. (Citations omitted, but get them; this is where most would-be sealers come unglued).

And before my ultra-sophisticated readers jump in with FRE 404(b) objections, incidentally upbraiding me for not mentioning same, Judge Nega got the point.

“Of course, as petitioner emphasizes, the fact that Promoter conducted many illegal transactions does not necessarily have anything to do with whether petitioner’s transactions complied with all relevant laws and does not control the tax implications of petitioner’s transactions.” Order, at p. 2.

Taishoff says watch the fallout from the SCEs, as those enmeshed therein bring on similar motions from blown-up Dixieland Boondockeries.

No, I’m not pitching a new cable TV reality show, although I’ll wager it could be a scream. No, here’s Judge Travis A. (“Tag”) Greaves scrapping a stip of facts on the eve of trial based on alleged facts not brought out at discovery. It’s Rule 91(e) on steroids; because IRS claims one (count it, one) sentence out of 40 ( count ’em, 40) paragraphs doesn’t tell the whole story, the whole new stip must be ready by next Friday, while trial starts Monday.

The case is Brown Bridge Newton 53, LLC, Brown Bridge 53 Manager, LLC, Tax Matters Partner,Docket No. 21274-21, filed 2/20/26.

The now-discarded stip said 53 got the property from a trust. IRS says it got other documents showing that one Jeff Grant (not my former boss, Baptist preacher, and self-help guru) got the property from the trust and conveyed it to 53.

So IRS asked 53 to elucidate, which they didn’t. IRS then asks to be relieved, to which 53 says IRS showed no grounds for relief.

Judge Tag Greaves says oh yes, IRS did.

“We have broad discretion in determining when justice requires that a stipulation be set aside. We have previously held that justice requires setting aside a stipulation when the evidence is contrary to the stipulation. Justice requires that we strike the first sentence of paragraph 40 of the First Stipulation of Facts and relieve respondent of this stipulation under Rule 91(e). The evidence set forth by respondent casts doubt as to whether [53] “acquired” the property from the … Trust, or whether the transaction should be viewed as a contribution from Jeff Grant. At the time that the parties stipulated to paragraph 40, respondent did not have in his possession the recently obtained evidence from third parties. Petitioners do not allege any prejudice resulting from striking this stipulation. As such, it would be unjust to hold respondent to a stipulation based on incomplete evidence. Instead, we will allow the parties to present their competing theories of the transaction at trial. Therefore, we will grant respondent relief from the first sentence of paragraph 40 of the First Stipulation of Facts. However, we will hold respondent to the second sentence of paragraph 40, which stipulates to the recorded deed.” Order, at p. 3. (Citations and name omitted).

Taishoff says why toss the whole thing for one sentence? Deem the sentence “impertinent,” use a Rule 52 Motion to Strike, and go on with the trial.

“The thing everybody knows cannot be proved too often.”

I can’t find the source just now, but I think it was Shaw’s music criticism. If any reader can help me, please comment below.

Howbeit, Judge Rose E. (“Cracklin'”) Jenkins sets the parties right by giving them a chance to think over their claim that their settlement agreement moots their deficiency case in Estate of Kevin N. Kalkhoven, Deceased, Kimberly Kalkhoven, Executor, Docket No. 31338-21, filed 2/20/26.

“… the parties filed a Motion to Dismiss on Ground of Mootness (Doc. 37). In the motion, the parties state that they have entered into a closing agreement, and that ‘there remains no dispute between the parties.’ … the Court issued an Order (Doc. 39) holding the Motion to Dismiss on Ground of Mootness in abeyance and directing the parties to file a status report.” Order, at p. 1.

Yes, Section 7121(b) means what it says. Absent fraud or malfeasance, closing agreements are final and courts have nothing more to say.

Except.

Section 7459(d) also means what it says. Dismissing a petition otherwise than for want of jurisdiction means entering decision in the amount stated in the SND.

Whereupon, the parties confabulate and “(I)n the Status Report, the parties state that they ‘have agreed that the Court should deny the joint Motion to Dismiss and that a decision consistent with the Closing Agreement should be entered into this case.'” Order, at p. 1.

They also ask for 45 (count ’em, 45) days to submit the proposed stiped decision, and get it.

A Taishoff “Well Played” to Judge Jenkins.

Taishoff says I thought maybe the petitioner was self-represented, and maybe the IRS had the rookies on this case. A quick docket search proved me wrong. The petitioner was represented by as heavy a bunch hitters (hi, Judge Holmes) as can be found. The IRS team is hardly less illustrious.

The leader of the petitioner’s team has expressed what I wish I had been. “I have the good fortune to lead a group of tax lawyers who not only enjoy mastering the intricacies of the tax code, but who also communicate in plain English and look for practical ways to help clients achieve their objectives.”

Let all practitioners say “Amen!”

And remember, a good practitioner is always learning.

“I didn’t have time to write a short one.” This celebrated sentence from Mark Twain doesn’t fit Judge Albert G. (“Scholar Al”) Lauber’s 66 (count ’em, 66) page epic stitching up North Donald LA Property, LLC, North Donald LA Investors, LLC, Tax Matters Partner, T. C. Memo. 2026-19, filed 2/19/26.

For while he does the standard blow-by-blow ringside call of this off-the-shelf Dixieland Boondockery, he gives us the takeaway up front.

“On its Federal income tax return for [year at issue], North Donald claimed for this donation a charitable contribution deduction of $115,391,000. It asserted that the ‘before value’ of the farmland—its value before being encumbered by the easement—was $439,492 per acre. It thus took the position that the land had appreciated by more than 14,000% in 21 months.” T. C. Memo. 2026-19, at pp. 1-2.

“We conclude here, as we did in J L Minerals, LLC v. Commissioner, T.C. Memo. 2024-93, at *3, that the valuation of the conservation easement ‘was an outrageous overstatement,’ wholly untethered from reality. Employing the comparable sales method, as backstopped by the price actually paid to acquire the property… we find that its ‘before value’ was $2,975 per acre and that its ‘after value’ was $2,300 per acre. The delta between these figures—the reduction in value attributable to the easement—is $675 per acre. The value of the easement—and hence the allowable charitable contribution deduction—is thus $175,824 ($675 × 260.48 = $175,824).

“North Donald claimed $1,157,469 of ‘other deductions’ on its [year at issue] return. This sum included a $1,055,000 ‘consulting fee’ paid to the promoter that marketed the conservation easement to investors and $50,000 paid to a law firm that served as a ‘material advisor’ to the SCE transaction. We find that these expenses constituted nondeductible syndication costs and that the rest of the ‘other deductions’ must also be disallowed.” T. C. Memo. 2026-19, at p. 2.

For the J L Minerals backstory, see my blogpost “Blunging Farblundgeit,” 10/8/24.

IRS’ asserted Section 6663 fraud chops fail, as the deal was fully disclosed on the return. But the Donalds do get hit for the 40% gross valuation misstatement chop.