No, not a preview of March Madness. Judge Joseph Robert (“JR”) Goeke delves deep into Schedules E and F, and Form 8960 Net Investment Income Tax–Individuals, Estates, and Trusts, in Gary M. Schwarz & Marlee Schwarz, Docket No. 12347-20, filed 2/27/26.

Doc Gary’s goofy reg case featured here sub. nom. “The Buck Stops Here,” 5/13/24, “The Goofy Silt-Stir,” 11/5/24, and “Muddying the (Goofy) Waters,” 11/24/25.

Now Judge Joseph Robert (“JR”) Goeke gets granular with the reckoning and reporting of the Section 1411 Net Investment Income Tax, as Doc Gary and IRS are enmeshed in the Rule 155 beancount. 

“Petitioners failed to address the fact that for each year the other income that they included on line 4a of their adjusted Forms 8960 was offset by their adjustments to line 4b. In effect, petitioners are seeking more than a 100% offset of the other income: (1) a 100% offset on line 4b, and (2) an additional offset on line 9c. In other words, petitioners seek both (1) a 100% offset of the other income as if it was ‘derived in the ordinary course of a non-section 1411 trade or business,’ see Form 8960 line 4b, and (2) an additional offset for ‘Miscellaneous investment expenses,’ see Form 8960 line 9c, as if the other income was gross net investment income pursuant to section 1411(c). These positions are plainly contradictory and nonsensical.

“We need not delve into the parties [sic] arguments regarding (1) whether income subject to section 183 and related expenses are included in the Net Investment Income calculation, and (2) the calculation method for line 9c deductions. At most, petitioners are entitled to offsets/deductions of 100% of the gross other income, which respondent’s calculations already include.” Order, at p. 4.

I expect my journalistic colleague Peter Reilly, CPA, will find this dénouement to a hobby-loss case a useful addition to his collection.