Morgan Run Partners, LLC, Overflow Marketing, LLC, Tax Matters Partner, T. C. Memo. 2026-112, filed 11/3/26, having had their approach clearance canceled by Judge Albert G. (“Scholar Al”) Lauber in my blogpost “More Air Than Port,” 4/1/26, comes around to try again.

Airport extension being off the table, and the Black ’08 having wiped out the proposed single family-mansion development for which the grantors had secured zoning approval, the property was sold to SCE dodgefloggers, who ginned up a set of numbers (see T. C. Memo. 2026-112, at p. 12, footnote 4) based on the collapsed single-family-mansion HBU, claiming a six-for-one writeoff.

Then they decided a distribution center would be better, so at trial they shifted strategy and claimed the distribution center was HBU. Even though the shift came six (count ’em, six) weeks before trial, Judge Scholar Al let the Morgan Runners try it.

IRS’ experts focused on single family because they prepared their reports pre-shift. Judge Lauber finds their reports and testimony on the money. The reason the prior developers cratered was the poor reputation of the local schools, which discouraged families.

All petitioners’ experts had checkered reputations in Tax Court, which Judge Scholar Al enumerates. The distribution center fails for inadequate local infrastructure. The enhanced single-family sales prices crater for the same reason as the prior developers’ efforts.

“The value that Morgan Run claimed for the easement on its … tax return was $26 million. We have determined that the FMV of the easement on the valuation date was $1,165,000. The claimed value thus exceeded the correct value by more than 2,000%. The valuation misstatement was thus ‘gross.’” T. C. Memo. 2p026-112, at p. 43. And there is no reasonable cause excuse for a gross valuation misstatement.

Taishoff says this case proves that the HBU of this property is as a Dixieland Boondockery tax dodge.