Judge Joseph Nega concludes the Genie Jones story in Genie R. Jones, et al., T. C., Memo. 2026-99, filed 9/29/26. Jones I was subsumed in my blogpost “Take No Prisoners,” 3/25/25; I covered Jones II in “Unpuzzlement Deferred,” 7/21/25. Now Judge Nega concludes with the chops.

“Respondent has conceded that [Genie’s microcaptive] is not liable for the penalty rate enhancement pursuant to section 6662(i). Finding the remaining petitioners failed to adequately disclose the disputed transaction, we conclude they are each liable for the 40% enhanced penalty pursuant to section 6662(a), (b)(6), and (i).” T. C. Memo.2026-99, at p. 2.

One of the als gets nailed for a straight Section 6662(b)(i) with a beancount five-and-ten.

None of Genie, the als, or IRS, does a spectacular job of briefing, T. C. Memo. 2026-99, at p. 4. Judge Nega flatly refuses to do their work for them.

The microcaptivity job fails both the objective (did it shift the money?) test and the subjectivity (any business reason excapt taxes?) test. The microcaptive was the usual roundy-round, to dodge taxes while preparing to sell the insured business. The al repaid the “loan” only when under Examination.  

Every Section 7701(o) test flunked. The coverage shifts were purely windowdressing. The premiums were designed to hit a target, not manage economic risk.

Merely taking a deduction for “insurance” doesn’t tell IRS about microcaptivity, so the enhancement chop is sustained.