I’m going to indulge in the third-favorite indoor sport at the end hereof, so take this as a warning. I mean, of course, second-guessing someone else’s trial strategy. So here are the facts of David L. Tunkl, T. C. Memo. 2026-83, filed 9/10/26, with Judge Adam B. (“Sport”) Landy’s account of the facts and his disposal of the arguments of petitioner’s trusty attorneys.

David is a high-priced art dealer who was short of what is pocket change in fine art circles, a mere $16.5 million. So he went to Gallery, a big-ticket highrolling outfit, and got $16.5 million on a handshake to buy and flip Picasso’s Man With Ice Cream Cone (I kid you not) for a $14 million profit to be split. Except the ice cream melted and so did the deal. Burt since Gallery put no restrictions on what David could do with the $16.5 million, David went off and bought a Francis Bacon (not the 16th Century Shakespeare body double, the 20th Century figurist). Much later Gallery insisted on papering their Picasso deal and backdating the paper.

David operated with a Sub S and himself, but intermingled finances. IRS claimed unreported income for the $16.5 million.

Trusty attorneys claim customer deposit, but that needs a CWA like a charitable donation, or equivalent. Nothing like that for six (count ’em, six) months after, and insufficient.

Claim of Section 7701(a)(2) partnership between David and Gallery is pursued neither at trial nor on brief, hence deemed conceded. See T. C. Memo. 2026-83, at p. 8, footnote 3. No, this is not the second-guess of which I was speaking at the head hereof, but you can pick up on it. Failing to file a 1065 is strike one, and failure of Gallery to testify or provide documents in support is strike 2.

Claim that the $16.5 million was a loan founders on want of 9 Cir’s 7 (count ’em, 7) part test; David petitions from CA, hence Golsenized to 9 Cir. And David repaid only $2.5 million, after Gallery brought in their lawyers.

David loses.

Here’s my second-guess.

Judge Sport Landy makes much of the complete want of paperwork or any explicit restriction on David’s use of the $16.5 million. But he does note that Gallery and David weren’t a one-night stand. 

“Mr. Tunkl purchased paintings and sculptures for the Gallery, which were later resold for profit. Before the year in issue, Mr. Tunkl participated in 13 transactions with [Gallery owner], totaling between $100 and $200 million. Mr. Tunkl identified three specific transactions where he purchased a painting for [Gallery owner] at a low price that was subsequently sold for a substantial profit. Given their relationship and industry practice, Mr. Tunkl and [Gallery owner] rarely executed written agreements for their business deals.” T. C. Memo. 2026-83, at p. 2.

Now for my second-guess. There’s a $5 million deficiency, plus chops and add-ons, on the table. Why not scare up a few experts from the art world to testify as to the custom and usage of the trade, business, or occupation? If such be the case, let them testify that everything is done on a handshake, that trust among dealers is the essence of the business, that no piece of paper is a shield to a breach of trust, that routinely millions of dollars transfer between on-and-offshore banks on nothing more than a phonecall between dealers. Might save the deposit argument. Or even joint venture.