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. But 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.

Judge Christian N. (“Speedy”) Weiler explores what a Form 872–M, Consent to Extend the Time to Make Partnership Adjustments, does to Section 6235 SOL in Katanga Properties, LLC, R. Brent Evans, Partnership Representative, 167 T. C. 10, filed 9/9/26.

R. Brent, duly appointed PR, oversaw timely filing of 1065 for box-checked Katanga. IRS selected same for exam, so R. Brent and IRS signed said Form 872-M. IRS issued a NOPPA two (count ’em, two) years later. R. Brent let the calendar run out on the 270 days to file a request to modify.  IRS then sent the FPA, which R. Bent now claims blew the 3SOL, wherefore is untimely and invalid.

R. Brent claims the 872-M only extended the time to file NOPPA, not time to request modification nor FPA.

No, says Judge Speedy Weiler.

“Petitioner ignores the plain text of section 6235(a), which provides that ‘no adjustment under this subchapter for any partnership taxable year may be made after the later of.’ Furthermore, the use of ‘or’ between paragraphs (1) and (2), and paragraphs (2) and (3), supports our understanding that the paragraphs are read disjunctively and indicates that the reader must determine the ‘later of’ deadline for which partnership adjustments may be made. Thus, the statutory text furnished by Congress, and our precedent, establish that subsection (a) allows the Commissioner to make adjustments any time before the latest of paragraphs (1), (2), and (3). See Mammoth Cave Prop., LLC v. Commissioner, No. 5401-24, 166 T.C., slip op. at 8 (Mar. 9, 2026); JM Assets, LP, 165 T.C. at 11.” 167 T. C. 10, at p. 6

For Mammoth, see my blogpost “A New Day – Redivivus,” 3/9/26; for JM Assets, see my blogpost “A New Day – Redux,” 7/2/25.

When R. Brent tries to drive a syntactical wedge between Sections 6231(b)(2) and 6235(a), Judge Speedy Weiler shuts him down.

“… it is apparent that section 6231(b)(2) acts in conjunction with section 6235(a) and sets forth the requisite minimum timing in which an FPA may be issued. Section 6231(b)(2) subparagraph (A) establishes the 270-day modification period and subparagraph (B) refers to section 6235 for the timing on issuing the FPA. Congress’s use of the word “adjustment” is sufficiently broad as intending to include the process by which the Commissioner makes adjustments, namely first by a NOPPA, followed by an FPA. Accordingly, any agreed-upon extension under section 6235(b) would necessarily extend the limitations period for making adjustments, and any extension must be taken into consideration in determining the latest of the periods found in paragraphs (1), (2), and (3).” 167 T. C. 10, at pp. 7-8. (Footnote omitted, but it says that though there’s a statutory 60-day window wherein IRS may issue an FPA, that doesn’t preclude a later issue, provided the limitation period is still open.)

I feared that the BBA regime might deprive me of the great TEFRA blogfodder, despite my much-publicized protestations that I wouldn’t mourn TEFRA. Once again I failed to reckon with the inventiveness of my colleagues. Good try to Katanga’s trusty attorneys.

Judge Elizabeth A. (“Tex”) Copeland, acutely aware of the billions the Government had collected from the digital options dodgers and the cottage industry of blowers seeking pieces of said pie, has restated her opinion anent the claim of Jeremy Berenblatt.

For the previous iteration, see my blogpost “On the Beach,” 8/27/26. The latest, Jeremy Berenblatt, T. C. Memo. 2026-75 (CORRECTED), is filed 9/9/26. The foregoing is noted for the record. I have not parsed the corrected version against the previous iteration. Those with a working knowledge of AI will doubtless do so.

I had thought that if a protester-defier raised a single meritorious claim in the blather of protester-defier jive, the protester-defier got the Luke 18:14 treatment and avoided the Section 6673(a) frivolity chop s/he otherwise richly deserved.

Judge Kashi (“My or the High”) Way didn’t note that Judge Ronald L. (“Ingenuity”) Buch applied that principle back a year ago January; see my blogpost “A Small Success,” 1/13/25. Judge Ingenuity Buch spared Karen Lee Shuster the Section 6673(a) treatment because her frivolity, reporting her tax on her return as zero and in fact paying zero, did not breach the Section 6651(a)(2) failure to pay barrier.

Karen Lee is back, of course, this time in a CDP; frivolity is again on the menu. Karen Lee Shuster, Docket No. 6019-24L, filed 9/8/26, has Karen Lee trying to relitigate what she lost in the above-cited.

Judge Way amerces Karen Lee $1K for frivoling.

“Petitioner pursued frivolous arguments in a recent deficiency case before this Court. See Transcript of Bench Opinion, Shuster v. Commissioner, No. 27575-22 (Jan. 13, 2025), aff’d, No. 25-1062, 2025 U.S. App. LEXIS 24745 (6th Cir. 2025). This Court warned petitioner against making such arguments in the future but chose not to issue a penalty at that time.”  Order, at p. 10.

Without wishing to put words in Judge Buch’s wordprocessor, I expect a single meritorious claim was enough to ward off a frivolity chop, lest the threat of penalties chill even a barely meritorious claim.

But I am far from endorsing Karen Lee’s litigation style.

“Petitioner has nevertheless continued to waste this Court’s resources. As in her deficiency case, petitioner has flooded this Court’s docket with specious motions. In her Second Amended Petition, petitioner rehashed, over fifty pages, the same constitutional arguments for which she was recently admonished. In her First and Supplemental Requests for Admission, petitioner filed 139 requests for admission, nearly all of which were frivolous, irrelevant, or both. The list goes on.” Idem.

IRS counsel claim they burned between 25 and 50 hours dealing with that junk.

Ch J Patrick J. (“Scholar Pat”) Urda is a real judicial activist. He’s got five (count ’em, five) new venues for in-person trials, opens all Tax Court venues to all forms of trials (small claimer and regular alike), and substitutes scheduling calendars for trial calendars.

This all results from a deep-dive into DAWSON’s statistical wealth of what really goes on in USTC.

Read all about it here: https://ustaxcourt.gov/files/documents/A_09082026.pdf

It’s another one of them thar days, as Rule 25(a)(5)(A) instructs us to employ when Rule 10(d) swims into our ken.

Wherefore, as my remunerated writing position has been terminated by my publisher, thus deleting me from the ranks of the laborers, I nevertheless hereby acknowledge the statutorily set aside Labor Day.

I don’t know if Judge Albert G. (“Scholar Al”) Lauber wants to, but it looks like he must go down to the sea again in Peter H. Askew & Anne H. Askew, et al., Docket No. 20114-24, filed 9/4/26. Pete & Anne and the als donated a sailing ship to the United States Merchant Marine Academy Sailing Foundation, Inc.

And given the white shoe counsel representing the Askews and those appearing for the Sailers, we clearly aren’t talking about a 14-foot International dinghy.

The present scuffle concerns the usual trial subpoena for documents, to which the USMMA objected. Judge Scholar Al comes down for liberal discovery and tells the Sailers to heave to.

The Sailers’ trusty attorneys raised “irrelevant or not ‘reasonably calculated to lead to discovery of admissible evidence'” objections. Rule 147(d)(3)(III) makes “unduly burdensome” the real test. Of course I haven’t reviewed what IRS specifically asked for or what it would take the Sailers to comply, so I can’t say for certain that their trusty attorneys’ objection was a waste of time. But if IRS wanted to know when the Sailers sold the ship, we can guess where this case is going.

No, not the Barbara Stanwyck-Bert Lancaster thriller of seventy-plus years ago. Ivan Merida Ortiz, T. C. Memo. 2026-81, filed 9/3/26, put his ITIN on his 1040. This knocks out his $1400 claimed 2021 economic recovery rebate credit under section 6428B.

Judge Benjamin A. (“Trey”) Guider, III, judge-‘splains.

“Section 6428B is clear that if the taxpayer does not provide a valid identification number on his or her return, then the $1,400 section 6428B(b)(1) amount is treated as being zero. § 6428B(e)(2)(A). The statute is also clear that a valid identification number is a Social Security number. § 6428B(e)(2)(D)(i). An ITIN is not a Social Security number, so it is not a valid identification number. Petitioner would never have been issued his ITIN if he had, or was entitled to, a Social Security number. See Treas. Reg. § 301.6109-1(d)(4). Petitioner’s inclusion of an ITIN shows that he did not have a valid identification number. Consequently, petitioner is not entitled to a 2021 economic recovery rebate credit.” T. C. Memo. 2026-81, at pp. 3-4.

And Ivan has another wrong number.

“Petitioner also requests that this Court ‘release [the] economic impact payment for [the] year 2020’ that he did not receive. This claim arises from petitioner’s alleged claiming of credits under sections 6428 and 6428A for the 2020 taxable year. The 2020 taxable year was not included in respondent’s SNOD, so we lack jurisdiction to consider this claim.” T. C. Memo. 2026-08, at p. 4. Remember, all the SNOD covered was the 2021 credit. 

Judge Christian N. (“Speedy”) Weiler sorts it out, and IRS’ proof falls short in Dania Wales, T. C. Memo. 2026-82, filed 9/3/26. IRS wants to toss Dania’s innocent spousery petition because she filed her Form 8857 too late after CCISO issued a Final Notice of Determination (FND), arguing no jurisdiction.

No doubt there was a FND or that it was mailed to Dania’s last known address, unclaimed, and ultimately returned to CCISO.

Except.

All IRS can established is that it was sent first class presorted. And neither the famous USPS online tracking number nor certification from a USPS paralegal can help.

“We acknowledge that respondent has furnished a USPS Tracking Plus Statement that includes the tracking history for the Final Determination Notice’s specific tracking number, as well as a separate certification by a USPS paralegal regarding the accuracy of the Tracking Plus Statement. The USPS Tracking Plus Statement, however, fails to indicate whether the contents of the letter were sent by certified or registered mail. Further, the tracking number itself does not indicate that it was sent via certified or registered mail. Finally, the certification respondent offers from the USPS paralegal fails to state whether the Final Determination Notice was sent by certified or registered mail.

“This type of documentary evidence falls short of what we have accepted in the past to show proper mailing in situations where the Commissioner does not present a Form 3877.” T. C. Memo. 2026-82, at p. 6.

Section 6015(e)(1)(A) sets forth the relevant time and mailing constraints.

Tax Court has jurisdiction.

A Taishoff “Good Job” to Dania’s trusty attorneys Chris, Brian, and Jason.

Judge Mark V. (“Vittorio Emanuele”) Holmes disrespects not a single partitive genitive, but tramples, upends, and deconstructs both IRS’ bank account reconstructions and petitioner’s implausible testimony and uncooperative behavior, in Hank Risan, et al., T. C. Memo. 2026-78, filed 9/2/26.

Hank is a self-styled Renaissance man indicted for fraud. T. C. 2026-78, at p. 4, footnote 5. But IRS doesn’t allege fraud here. IRS has troubles enough, with computational fumbles at exam and an unsupported alter ego argument. Unreported income allegations are washed away. And while Mark’s testimony draws a large bill on credulity, his trusty attorney points out enough to let BoP sink a lot of IRS’ case.

What will be left for the Rule 155 beancount to sort and what the final deficiency will be is a real head-spinner.