I must respectfully express sympathy with Judge Rose E. (“Cracklin'”) Jenkins, as she tries to unscramble the documentary frittata concocted by the wily rep of Richard A. Davanzo, Docket No. 7248-24L, filed 10/30/26. And thanks, Judge, for not calling the rep a “POA.”

This CDP comes from a rejected IA and is the second in a series of Davanzo cases, on the first of which Judge Jenkins casts judicial notice with a lengthy explanation of the bases therefor.

The administrative record, the lodestone and beacon star of all CDPs (except maybe in 8 Cir, although this is a Golsenized 3 Cir case; see Order, at p. 2, footnote 2), must allow Judge Jenkins to sort out what Appeals did (or didn’t), so after a ten (count ’em, ten) page trek through a paper-and-electron barrage, interspersed with referrals to ARI (Appeals Referral Investigation) and Collection interjections, a NOD, a remand, and a supplemental NOD, it turns out (spoiler alert) that Judge Jenkins can’t figure out whether Appeals leaned too heavily on what Collections told them.

“The Administrative Record in this case suggests some confusing handling by the IRS of petitioner’s many unpaid tax liabilities. Petitioner compounded the problems by consistently failing to timely provide complete current financial information and, it seems, not communicating particularly effectively with the appropriate arm of the IRS at the appropriate juncture. And if this Court could determine that Appeals had reasonably fulfilled its obligations in evaluating petitioner’s IA request, petitioner’s efforts to browbeat IRS personnel and belabor his case would have been in vain. However, given the significant holes and inconsistencies in the Administrative Record, this Court cannot, at this juncture, conclude that Appeals did not abuse its discretion.” Order, at p. 16.

“Browbeat and belabor,” Judge? When does effective advocacy cross the line?

Anyway, back again to Appeals, with a heartfelt admonition from Judge Jenkins, who must feel that she has been browbeaten and belabored.

“Accordingly, this Court will remand this case for yet another supplemental CDP hearing, in which this Court can only hope both petitioner and Appeals will endeavor to ameliorate their past failures.” Order, at pp. 16-17.

The record ruler, which is supposed to “expedite litigation and avoid unnecessary and expensive trials,” can turn out to be as bad a tyrant as the one it supposedly supplants.

Judge David Gustafson has given me the sad news that Arthur M. Bialer, T. C. Memo. 2026-110, filed 10/29/26, has been turned down for his whistleblower award because another blower beat him to IRS and the Senate Permanent Subcommittee on Investigations.

I got seven (count ’em, seven) blogposts out of Arthur’s jousts with the Ogden Sunseteers. Even though Judge Gustafson has to remind Arthur that the OS decide who gets an award and how much, Arthur wants to blame the courts for the shortcomings of Section 7623. He claims the grunts at LB&I made the determination, even though the instruction sheet from the OS says they make the call.

Still, Arthur was in the great tradition of my former client Mike Lissack, Suzanne Jean McCrory, that hardy perennial, and the late, great Fighting Joe Insinga, happy warriors who threw themselves headlong against the iron gates of Ogden, even to the Chief Whistler.

Art’s term is over, I fear.

Thus my native-born Texan descendants describe the activity that o’ercrowed the “pleasure, recreation, and other nonprofitable purposes” that gave Section 501(c)(7) exemption to Consolidated Sportsmen of Lycoming County, T. C. Memo. 2026-109, filed 10/2/26.

The Consols own 230 acres of meadowland and forests in the county aforesaid, whereon “members meet and conduct the club’s activities on this property. Facilities for member activities include rifle ranges, shotgun areas for trap and skeet shooting, ball fields, camping sites, picnic areas, and playground areas for children. Activities also include hunting, raising game, fishing, canoeing, kayaking, and swimming. Members also use the club for Civil Air Patrol training and participate in free safety training for police and environmental protection groups.” T. C. Memo. 2026-109, at pp. 3-4. Everybody agrees the members spend the great majority of their time leading that sportin’ life.

Except.

That meadowland and forest sit atop the Marcellus Shale. This is a natural gas tank that covers parts of NY, PA, and a couple other States (hi, Judge Holmes). So the Consols entered into an oil and gas lease, which over the seven (count ’em, seven) years at issue yielded better than $300K per annum on average.

Judge David Gustafson takes the practical approach.

“In these years CSLC’s members spent virtually zero hours on mineral activities, and CSLC’s officers spent de minimis hours. But minerals do not extract themselves, and in the absence of evidence about the amount of time spent by [lessee’s] personnel (and in view of CSLC’s burden of proof), we must assume that [lessee’s] personnel spent substantial amounts of time each year on the mineral extraction activity.” T. C. Memo. 2026-109, at p. 6.

Exemption revocations are record-rulers only if the parties agree, and here they do, so Rule 217(a) sends the Consols to a Rule 121 stipulated facts review. Going back to 1916 for the ancestor of the social club exemption now embodied in Section 501(c)(7), Judge Gustafson examines the key issue.

“Not at issue in this case is the amount of CSLC’s tax liability on the mineral royalties, or whether those royalties are taxed as UBTI (either passive investment income or business income) if CSLC qualifies as an otherwise tax-exempt social club or instead are taxed as regular income if CSLC reverts to taxable status. We therefore need not resolve here an amount of tax liability. For present purposes, it is sufficient to observe that, one way or another, CSLC owes tax on its mineral royalties. The question pending in this case is whether those royalties affect CSLC’s entitlement to tax-exempt status.” T. C. Memo. 2026-109, at p. 11.

The 1976 amendment to the IRC that removed exclusivity of exempt activities and substituted “substantially all” didn’t define “substantially all” and IRS never issued regs; they used a 35% outside unrelated income allowance as a guideline, like the infamous Primoli Rule of façade easements, with no basis in law or reg.

First, the statute considers what the club does, not the members. Restricting the test, whatever the percentage of whatever is tested, is too restrictive. The club is the exempt entity.

Second, using an unrelated party to perform activities generating money for the club is an activity of the club. Hiring an outside fundraiser, for example, has been held to be an activity of the club.

Third, BoP is on petitioner even in a record-ruler. If hours are the test, the Consols never showed how many hours the lessee put in on the drillsite as against how many hours the Consols put in on the sportin’ life. And if dollars are the test, the Consols never showed how much they collected from membership as against how much they got from th’ awl bidniz.

“To argue that ‘substantially all’ its activities were recreation, CSLC made a showing of its members’ recreation hours in a virtual vacuum, with no comparison to mineral extraction hours, and with the insistence that the Court ignore the mineral extraction dollars.” T. C. Memo. 2026-109, at p. 16.

As for the 35% free kick, Judge Gustafson needn’t go there, because more than half the Consols’ take comes from th’ awl bidniz. Anyway, the legislative history indicates that a club might be exempt even above the 35% barrier given facts and circumstances. But all the Consols offer on that point is the harm loss of exemption would do. Not enough.

But IRS generously concedes all but the last year at issue.

Judge Alina I. (“AIM”) Marshall rebuffs IFRS’ belated attempt to shift from straight individual taxation to the anfractuosities of Subpart F in Richard M. Rund, Docket No. 869-22, filed 10/28/26. As Richard’s trusty attorneys point out, “…this case was investigated and litigated for years as a bank deposit and foreign account reconstruction case and that respondent’s proposed Subpart F allegations introduce materially different factual issues involving foreign corporations and manufacturing activities occurring approximately two decades ago.” Order, at p.1.

True, Richard’s bookkeeping was near to nonexistent. But Richard claims his cancer treatment has debilitated him, his longtime CPA died and workpapers cannot be found, and the years at issue go back more than twenty (count ’em, twenty) years.

Even if IRS raised the Subpart F (foreign corporations) issues two years ago, they didn’t come up with numbers for another year.

IRS now want to amend its answer for a second time, after nearly five (count ’em, five) years since the original SNDs were issued. And there’s $30 million on the table now, five trial continuances already granted, and trial less than three (count ’em, three) weeks away.

And a general throwaway reference to Subpart F in the original SNDs was insufficient to alert Richard’s trusty attorneys to the rabbithole at their feet.

Trusty attorney boasts over thirty (count ’em, thirty) years of experience navigating unique challenges. Good job.

Judge Rose E. (“Cracklin'”) Jenkins directs Angela Stern to file a “protective” Form 8857 Request for Innocent Spouse Relief, with all documentation supporting her claim for relief under I.R.C. § 6015. For the rest, Michael Stern & Angela Stern, Docket No. 11100-23, filed 10/17/2, want either summary J and a one-day trial, or not and a two-day trial. Oh yes, and dismiss Angela for want of jurisdiction, and while you’re at it, Judge, reconsider and cabin the caselaw. There’s more, but that will do for these purposes.

Such a procedural smorgasbord could only have been prepared by The Great Chieftain of the Jersey Boys. Judge Jenkins kicks the case off the November trial calendar and tells the parties to stipulate whatever they can and work out a scheduling order.

But the “protective” filing and concomitant evidentiary proffer raise the conflict question. Can the present counsel lineup remain? Judge Jenkins orders the “protective” filing after a phonathon, so clearly this wasn’t sought at the outset.

The docket shows the Great Chieftain only made a limited appearance. Does conflict of interest arise from the protective filing, as clearly the petitioners’ interests do not mesh? And how far does the conflict extend? Are separate counsel required henceforward for everything?

In my young day, flippers would try to stall closing to shop the deal to other buyers. If they got a better offer, they’d try to gazumph their counterparty. Please pardon obscure technical term.

The most recent stall in the SCE line is going viral. Just a couple days ago (hi, Judge Holmes) we saw the trusty attorneys in Yacht Creek try the move; hold off entry of decision (EoD) on the stip they signed so that they could shop the deal to IRS Office of Conservation Easements (OCE).

Well, the trusty attorneys for Centurion Georgia, LLC, Jon Guven, Tax Matters Partner Docket No. 18139-23, filed 10/26/26, are at the same game. Judge Courtney D. (“CD”) Jones adheres to the quaint notion that a deal is a deal; if you thus stipulate, you thus capitulate.

Judge CD Jones did hold off EoD to make sure the Section 248(b) nonparticipants had been served, but the time for them to object was past when the stall was invoked.

“Although Rule 248(b)(4) permits the Court to defer entry of decision after the objection period has expired, the question remains whether petitioner has identified circumstances warranting further delay. In determining whether to hold respondent’s Motion for Entry of Decision in abeyance, the Court exercises its discretion to manage its docket, weighing “competing interests and maintaining an even balance.” See Landis v. North Am. Co., 299 U.S. 248, 254–55 (1936). The existence of that discretion, however, does not itself justify holding the Motion for Entry of Decision in abeyance. Petitioner must therefore identify sufficient reasons for the requested delay. The Court’s earlier decision to refrain from acting on respondent’s Motion for Entry of Decision, see Doc. 108, does not resolve whether further abeyance is appropriate in the light of the grounds now advanced. The Court considers those grounds below.

“Petitioner emphasizes that it accepted respondent’s settlement offer under a shorter deadline than that generally announced for the settlement initiative. But petitioner does not explain why the shorter deadline provides a basis for delaying entry of decision after it accepted the offer. Neither does the subsequent announcement of the OCE alter that conclusion. IRS News Release IR-2026-95 (Aug. 19, 2026) withdraws deadlines for outstanding offers but provides that prior elections remain effective and will be processed according to their terms. Thus, the announcement does not indicate that accepted settlements should be deferred or reopened. In any event, the withdrawal of IRS settlement deadlines does not require the Court to postpone disposition of this case.” Order, at p. 3.

The Centurions’ claim of irreparable harm founders on their assertion that no new terms are contemplated. Their offer to report every thirty (count ’em, thirty) days is no reason to hold up EoD. Taishoff says their claim that reporting would allow Judge CD Jones to monitor their negotiations means more work for the Judge; guys, the aim of the exercise is to make it easy for the judge to give you what you want and get rid of you and your case.

Taishoff also says that the Centurions still have a CDP to buy time; they can try to shop the deal then, although the odds are really bad.

The lead case in a five-way agreement to be bound was taken off the trial calendar based on a signed settlement letter between IRS and TMP of the lead petitioner. IRS moved to enter decision based thereon, but wanted it held until the Rule 248(b) 60-day window for nonparticipating partners to weigh in had run. Before that clock had run out, TMP moved to hold the EoD in abeyance pending TMP talking to IRS’ Office of Conservation Easements (OCE), or alternatively objecting to EoD.

Judge Rose E. (“Cracklin'”) Jenkins won’t have it.

“Petitioner’s change of heart does not retroactively void the agreement on which respondent’s Motion for Entry of Decision under Rule 248(b)(1)(B) was predicated, and the Court may enter decision in this case under Rule 248(b)(4). Notwithstanding petitioner’s reply protestations, petitioner’s motion does seek unilaterally to renegotiate its settlement with respondent through the proposed discussions with the OCE. The Court has held that ‘prior representations to the Court about the status of the settlement’ preclude attempts to invalidate a settlement. And the Court has granted motions for entry of decision based on settlements that taxpayers have subsequently sought to repudiate, rejecting the notion that the fact that a settlement was not filed as a stipulation precluded its enforcement. The Court has looked with particular disfavor upon attempts to renege on settlements after a trial in the case had been cancelled on the basis of the settlement. Although trial was not scheduled in this case, trial in a case to which this case was stipulated to be bound was cancelled, on the understanding that all of the related cases would be settled pursuant to the settlement initiative referenced in the settlement letter in this case. Petitioner may not now withdraw the agreement on which basis a trial was cancelled and respondent filed the Motion for Entry of Decision.” Yacht Creek LLC, Yacht Creek Investments LLC, Tax Matters Partner, Docket No. 504-23, filed 10/23/26, at pp. 2-3. (Citations omitted).

Note that the TMP said it “has no interest in trying the case and ‘does not repudiate the basis for the settlement it reached with Respondent.’ It further states: ‘The entry of the proposed decision submitted with Respondent’s Motion, over objection, remains preferable to restoration of this case to the trial calendar.’” Order, at p. 2.

Taishoff says all TMP wants to do is renegotiate the deal, or buy time before the partner-level computational adjustments hit the investors in this dodge (and the lawsuits start), or both.

No go.

I won’t be so bold as to assert that Judge David Gustafson reads this my blog. I doubt if he remembers that we met at the Tax Court Judicial Conference in Chicago eight (count ’em, eight) years ago. But he has taken up, with his usual diligence and obliging nature, the role of the Administrative Judge Tax Court ought to have.

Here’s a quote from my blogpost “Scrapbook 10/30/23. “Maybe the Ch J might adopt our State court procedure, whereby an administrative judge cracks the whip, requiring explanations why antiques are still in the shop, and bestirring the dilatory to stop dancing in the backfield, and move the football or eat the football.”

Judge Gustafson faces Robert Hersch & Katherine Hersch, Docket No. 13895-25, filed 10/23/26, head-on. “When the Tax Court ‘cuts’ a new trial calendar, it is appropriate for the assigned judge to look at the oldest cases on the calendar and to attempt to ensure that they are not allowed simply to languish. This case is one of the older cases on the calendar for the Tax Court’s upcoming session in Dallas beginning March 8, 2027. It concerns tax year 2019, for which the IRS issued a notice of deficiency more than three years ago on September 28, 2023 (Doc. 1, Ex. A).” Order, at p. 1.

After a trudge through the nearly-impenetrable procedural morass, Judge Gustafson observes that holding this case for eventual consolidation with a couple related cases (hi, Judge Holmes) involving later years won’t work because Section 6663 fraud chops in the relateds but not here.

So he directs the parties to stipulate whatever they can.

“It seems that this earliest case has had full consideration by Appeals, is unlikely to settle, and has had more than adequate time to be developed for trial. We would not expect to continue this case upon the vague ‘anticipat[ion]’ of a motion to consolidate, and we would not summarily grant any motion to consolidate but would evaluate it in light of the concerns expressed above.” Order, at p. 2.

Ch J Patrick J. (“Scholar Pat”) Urda doesn’t have to run the withering gauntlet of criticism that the late Judge Richard Posner of 7 Cir unleashed on poor Judge Wherry for “lame attempts at humor.” And I’m not saying Ch J Scholar Pat’s jibes are lame. But as a target for sarcastic laughter, Lontrac Enterprises, LLC, Lontrac Investors, LLC, Tax Matters Partner, T. C. Memo;. 2026-108, filed 10/22/26, bids fair.

It’s copybook Dixieland Boondockery, mining variation. The Lontracs have a piece of TN where a river runs through it and a scenic railway crosses it, which they had on the market for $2.9 million for five (count ’em, five) years without a nibble. Suddenly, a bunch of dodgefloggers decide that the rock the railroad dug up a century ago (metagraywacke) is worth millions, and syndicate the Section 170 SCE for $74 million in writeoffs, promising highrollers three-for-one.

Of course, one of petitioners’ experts takes the Fifth. No adverse inference, but his report gets tossed.

The valuation skirmish is a nonevent. The property produced no income, so DCF is pure speculation. And there’s plenty of comparables.

“We have found that the easement here was worth $500,000 on… the date of grant. The value reported on Lontrac’s return, i.e., $74,507,000, was 14,901% of the value we have determined. The valuation misstatement was, to put it mildly, ‘gross.’” T. C. Memo. 2026-108, at pp. 44-45. (Footnote omitted).

Koner disposes of Boss Hossery. No assessment has yet been made because Section 6213(a) automatic stay, so if RA and supe are still around, signoff can be obtained.

I’ll conclude with Ch J Scholar Pat’s summary.

“This case stands apart only for the sheer audacity of the numbers involved—the partnership here claimed a deduction of $74.5 million for an easement (i.e., a restriction on use) on property that had been sitting on the market for years, failing to find a buyer willing to pay $2.9 million. The stratospheric number was based on the claim that the property was suddenly very valuable as a mine although the rocks underlying the purported mining strategy were visible to the naked eye and the area was well mapped by the U.S. Geological Survey (USGS). Of course, the idea of mining was chimerical, simply a way to get at a wholly unmerited tax deduction.” T. C. Memo. 2026-108, at pp.1-2.

Some may think the cognomina I assign Tax Court judges are mere caprice. I assure you, that is not the case. In proof whereof, I offer Judge Jeffrey S. (“Schwer”) Arbeit’s order in Christopher Aubuchon, Docket No. 15097-24, filed 10/22/26.

Christopher (“Gentleman Chris”) Aubuchon, s/a/k/a Christopher Aubuchon, Ph. D., now makes his third appearance in this my blog, again displaying his genteel frivolity, against which Judge Schwer Arbeit warned him in terms described in my blogpost “The ‘Quintessential Tax Protester’ Is Back,” 9/16/26.

Gentleman Chris made a Rule 161 reconsideration motion, to which Judge Schwer Arbeit a couple days ago (hi, Judge Holmes) ordered IRS to respond. But on reading Gentleman Chris’ papers, Judge Schwer Arbeit lets IRS off, and lays a blast on Gentleman Chris.

“Petitioner asks that we distinguish his frivolous positions ‘from the independently presented evidentiary and procedural issues.’ But this is just artful rhetoric: he makes the same arguments we have already rejected. We won’t explain to him yet again why he is mistaken, and we won’t ask respondent to do so either.

“Another point. In our opinion, we imposed a $5,000 penalty under section 6673(a) for advancing frivolous or groundless positions. Petitioner now asks us to vacate that penalty. We decline to do so. As we have stated twice before, petitioner understands his tax liability. See Aubuchon, T.C. Memo. 2026-87, at *10. Nonetheless he continues to assert frivolous and groundless positions. Let this be his final warning: Next time the penalty will be higher. See Aubuchon, T.C. Memo. 2026-87, at *10 n.7. He is lucky we do not take the opportunity today to increase the amount.” Order, at p. 1.

Schwer means hard, as in “hard work.”