Credit is due constant reader Bob Kamman, Esq., for pointing out a seemingly innocuous request by Ch J Patrick J. (“Scholar Pat”) Urda in Capitol Places II Owner, LLC, Historic Preservation Fund 2014 LLC, A Partner Other Than the Tax Matters Partner, Docket No.  16536-23, filed 6/12/26.

Unhappily, the DAWSON Genius Baristas have posted this order in a format wherefrom I cannot cut-and-paste, but possibly their reason in this case is made clear in the text.

Could someone have tinkered with the language of a Supreme Court opinion? Check out a trusted version of 464 US 386, at p. 391. Then compare with Order, at p. 1.

The refrain of the Mexican folksong first quoted at the head hereof may be the answer.

Two (count ’em, two) entries for the scrapbook today, one a recurring tale and one where a word of instruction is better than a slammed door.

I’m sure all my readers join me in wishing John R. Dee, Docket No. 12649-16 W, filed 6/12/26, a speedy return to good health. John was here two (count ’em, two) years ago; see my blogpost “Watching Fewer Sunsets in Ogden,” 8/14/24. Now John is protesting an IRS status report, apparently filed while John was sick. STJ Diana L. (“Sidewalks of New York”) Leyden recharacterizes John’s filings and tells IRS to reply to John’s motion to supplement the administrative record. Taishoff says it is unbelievable that ten (count ’em, ten) years after the petition was filed, there should be any question about what comprises the administrative record. Jarndyce v. Jarndyce has nothing on these guys.

Robert Grafton, Docket No. 18878-24, filed 6/12/26, thinks he prevailed when IRS folded pre-trial, so he refuses to sign a stiped decision. He claims the stip as drafted lets IRS off the hook for Section 7430 admins and legals and wants discovery. Ch J Patrick J. (“Scholar Pat”) Urda blows that off. How he does it is what I question. 

“As stated in respondent’s response to petitioner’s Motion, respondent has conceded the determinations made in the notice of deficiency on which this case is based. It thus appears that petitioner’s discovery request would pertain only to litigation costs and to potential actions brought outside of this Court, and would not be ‘relevant to the subject matter involved in the pending case,’ i.e., to the determinations made in the notice of deficiency.” Order, at pp. 1-2. (Citing Rule 70(b)(1)).

OK, but since Robert is pro se, how about a hint that if he wants Section 7430 relief, maybe so might could be he should check out the statute and Rule 231(a)(2)(C)?

I’ve often questioned why Tax Court Rules prohibit omnibus motions and multiplex EoAs. Judge Courtney D. (“CD”) Jones provides an answer in Staven A. Stover & Cynthia Stover, Docket No. 6836-24L, filed 6/11/26. Staven & Cynthia fire off a salvo under the heading of “Answer”: a Motion to Remand, a Motion to Supplement the Admin Record, a Reply to Respondent’s Answer, and a Cover Letter to Appeals.

There’s “omnibus” and then there’s “buckshot.”

Judge CD Jones is not having any of it.

“The Court has repeatedly advised petitioners that compound filings are improper; they do not conform to the Court’s Rules (see Docs. 30, 45). Petitioners must file motions directly with the Court in the manner prescribed by the Court’s Rules, which are available on the Court’s website. If petitioners wish to re-file the documents mentioned above, then petitioners must file each document separately in accordance with the Court’s Rules. Accordingly, the Court will strike petitioners’ Answer (Doc. 46).” Order, at p. 1.

Deer-in-the-headlights pro ses should check out the “Guidance for Petitioners” link on the Tax Court website, and e-mail the DAWSON Genius Baristas support crew (although Taishoff says don’t expect much).

Finally, Staven & Cynthia might try a LITC; that’s their best bet. 

Another compound that needs breaking is the term “Power of Attorney.” Judge James S (“Big Jim”) Halpern, confronted in Edward H. Fitzelle & Jane E. Croes,  Docket No. 13476-25L, filed 6/11/26 with Form 2848, designates an individual as a Power of Attorney; Form 2848 does not. Form 2848 designates a “Representative.” Form 2848 is a Power of Attorney, hence either a piece of paper or a concatenation of electrons. Forms of power of attorney other than Form 2848 designate an “Agent” or “Attorney-in-Fact.” Sometimes the last named is abbreviated as “AiF”. But all such forms are just that: forms. Why not just call a Representative a Rep, to distinguish that person from a Partnership Representative, or P-Rep?

I don’t want to spend nearly the amount of time that Judge Rose E. (“Cracklin'”) Jenkins had to spend on Mohammad Fawad Aryanpure and Malika Aryanpure, T. C. Memo. 2026-48, filed 6/10/26. Doc Mo and Doc Mal ran drive-up medical clinics of the urgent care variety. These are cash-on-the-barrelhead or active credit card operations. Doc Mo was skimming cash, depositing the day’s green one-for-you, one-for-me.

Unfortunately, trusty CPA was too trusting, disclaiming any auditory function and taking Doc Mo’s numbers at face value. Judge Cracklin’ Jenkins doesn’t buy Mo’s testimony. 

Doc Mal gets off the Section 6663 fraud chops, but Doc Mo goes down for all four (count ’em, four) years at issue. But both owe the deficiencies, as the returns were fraudulent and SOL is out for fraud.

Although Judge Christian N. (“Speedy”) Weiler acknowledged that “(P)etitioners reasonably relied on Mr. L’s advice as he had been their tax accountant for some 30 years and they had no reason to question the advice he was providing,” William P. Wells and Ruth E. Wells, T. C. Memo. 2026-49, filed 6/10/26, at p. 14, (name omitted), I have little doubt Mr. L has received, or will soon receive, The Phone Call.

See my blogpost “The Phone Call,” 4/15/14.

This time it’s a busted Dixieland boarding school rather than boondockery, but it’s the usual story. The busted school operators sell to friendly parties who do a roundy-round transfer and claim a $4.42 million deduction on what they sold to the friendlies for $200K.

The carryover charitable deductions (three years’ worth) are in the IRS Leupold, and Mr. L.’s advice how to paper this is where the red dot shows.

“He just needs to write a letter on [donee] letterhead acknowledging and thanking [box-checked LLC donor] for the generous gift of the Campus property as of December 30, 2016. It would be really good if he says he understands that the Campus has a current appraised value of $4,420,000. That is all that it needs.” T. C. Memo. 2026-49, at p. 4.

As my readers face-palm and chant “Section 170(f)(8)(B)(ii),” I note Judge Speedy Weiler covers the waterfront on integration of documents to form a CWA, and what elements a CWA must contain. And no, you cannot argue that reading between the lines would let IRS figure out that no goods or services were provided; track the statutory language.

Taishoff says, whether you have 30 years’ or 30 minutes’ experience, when a million-dollar deal is on the menu look up the statute and follow it. Or be prepared for The Phone Call.

Here’s another horse hobby loss case for my former colleague Peter Reilly, CPA. Keith Schumacher and Rhonda Schumacher, T. C. Memo. 2026-47, filed 6/9/26, are long-time horse breeders and collectors of performance points and lariat points. They ran SQH, their horsebreeding business, since 2001 without making a single year’s profit therefrom.

Judge Elizabeth A. (“Tex”) Copeland barrel-races through the nine (count ’em, nine) factors of the “goofy” regulation, Reg. Section 1.183-2(b), giving six (count ’em, six) to IRS, two (count ’em, two) to the Schumachers, and one neutral.

While I’ve often touted maintaining a separate checking account for side hustles to show businesslike operation, even a separate checking account for SQH (with the same bank as their personal account) doesn’t save the Schumachers.

“Although the Schumachers maintained a separate checking account for SQH, in practice the SQH account functioned as an extension of their personal checking account. Many horse-related expenses were paid from their personal checking account. When the SQH account ran dry, the Schumachers ponied up to replenish it from their personal checking account. These practices are inconsistent with maintaining accurate books and records. It is also telling that [trusty EA preparer] relied heavily on the Schumachers’ handwritten notes and statements by Dr. Schumacher rather than SQH business account bank statements when preparing their returns.” T. C. Memo. 2026-47, at p. 10.

But the Schumachers escape the five-and-ten chops because trusty EA preparer never warned them about the goofy regulation’s pitfalls or the horsebreeding Section 183(d) safe harbor, accepted their handwritten notes and never checked the bank statements, and neither Schumacher had any tax exposure or expertise.

Taishoff says note that trusty EA preparer also did the accounting work for Doc Keith’s heavy-duty veterinarian practice, T. C. Memo. 2026-47, at p. 7. I’ve noted that when one provides professional services both to a substantial business client and to one of its top brass personally, one is hesitant to pass personal-side bad news to brasshat, lest brasshat seek a more sympathetic and flexible pro, taking the substantial client with her/him. Just sayin’.

Bernard J. Donachie, coaming late to the party in Smith Mill Rock, LLC, Mulhern Jasper Exploration, LLC, Tax Matters Partner, Docket No. 13132-22. filed 6/8/26, says “there are ‘active watchdog investigations’ into the IRS appraiser who worked on the case during the examination and ‘significant procedural deficiencies regarding the Government’s expert valuation.’” Order, at p. 2.

It’s another stiped-out Dixieland Boondockery, wherein none of the partners save the TMP participated in litigation or settlement, until Bernie comes in during the 60-day Rule 248(b) nonparticipant last chance, brandishing his 2.2759232% interest in Mulhern Jasper, which makes him an indirect partner in Smith Mill Rock.

Judge Travis A. (“Tag”) Greaves is willing to look and see if Bernie has a clear and convincing reason why he’s late and that he has something to show the settlement isn’t reasonable.

Spoiler alert: He doesn’t and he doesn’t.

It took Bernie a year-and-a-half to figure out he was sent the wrong appraisal. And he got a bunch e-mails (hi, Judge Holmes), even though he claims he didn’t get some (everybody else did). And yeah, he’ll have some tax to pay, but that’s what happens when you take a minuscule interest in a deal with someone else’s finger on the button.Ultimately, whatever happened at Exam with the watchdog, the past isn’t even prologue as deficiency trials are de novo.

That’s the per cur opinion in Rochelle v. Commissioner, 293 F.3d 740 (5 Cir, 2002), affirming Judge Vasquez’s “excellent opinion (concurred in by nine other judges), which we adopt.” 293 F. 3d at p. 741. So Ch J Patrick J. (“Scholar Pat”) Urda, adding 5 Cir to the jurisdictional limit side of the Section 6213(a) balance sheet, tosses Shedrack Aforigho, Docket No. 2956-26, filed 6/5/26. 

Except.

Taishoff says, while in no way denigrating Judge Vasquez or his nine (count ’em, nine) distinguished colleagues, that was 24 (count ’em, 24) years ago, and pre-Boechler, pre-Culp, pre-Buller, and pre-Oquendo. So a certain quantum of hydrogenated oxygen has gone over the cliché since.

Of course, we may have a 5 Cir reaffirmance of Rochelle, just as 11 Cir resuscitated Pugsley; I confess that one still rankles, but it hardens me so that, as a much finer writer than I put it, “I have been too familiar with disappointments to be very much chagrined.”

Whether it was William Blake, Aldous Huxley, or Jim Morrison who first said it, Jodell Sample, Docket No. 4394-20, filed 6/5/26, didn’t know spouse Doc Joe Sample would be unable to pay their stated tax bill for year at issue, but did know that said year’s Form 1040 MFJ substantially understated that bill.

Hence Judge Mark V. (“Vittorio Emanuele”) Holmes, without a single dissed partitive genitive, checks out Rev. Proc. 2013-34, IRS’ revised innocent spousery checklist, and finds he could have forgotten about what Jodell knew about whether Doc Joe Sample would pay. 

For the backstory that led up to this Rule 161 reconsideration, see my blogpost “The Innocent Spousery Slalom,” 11/17/25.

“We thought it more likely than not that Ms. Sample was reasonable in thinking that Dr. Sample would be able to pay the smaller amount shown due on the return, even when added to the Samples’ other existing tax debts. That is a different question than whether she knew or had reason to know that the [year-at-issue] tax return understated the couple’s tax liability. And it is not the same question as Ms. Sample paraphrases in her motion—whether Ms. Sample ‘reasonably believed that her husband would take care of their income tax liabilities.’

“On reconsideration we also note that the Revenue Procedure’s discussion of knowledge in underpayment cases may not even apply—the first sentence of the relevant paragraph conditions its applicability: ‘In the case of an income tax liability that was properly reported but not paid . . . ,’ Rev. Proc. 2013-34 § 4.03(c)(ii), and Ms. Sample concedes in her motion that the Samples’ [year-at-issue] tax return did not properly report their income.

“That means that the Court should have at least underweighted, and perhaps altogether ignored, Ms. Sample’s lack of knowledge at the time she signed the [year-at-issue] return that Dr. Sample would let the unpaid tax shown on that return remain unpaid.” Order, at pp.2-3. (Emphasis by the Court).

And before my ultrasophisticated readers yell with one voice “Loper Bright the Rev. Proc.,” the parties conceded the Rev. Proc.’s applicability on the trial. Order, at p. 1.

A word of explanation of Judge Holmes’ cognomen for those who tuned in late. See my blogpost “Code 2, Code 1,” 4/29/21.

That must be how Alvie N. Paschall and Patricia C. Paschall, T. C. Memo. 2026-46, filed 6/4/26, must feel after Judge Cary Douglas (“C-Doug”) Pugh sustains IRS’ $33K underreporting hit due to the bonus cryptocurrency Alvie got when he let his crypto be used in proof-of-stake transaction during year at issue. 

As near as i can tell, a proof-of-stake means the staker puts up his own crypto to to validate other punters’ crypto transactions. If he gets it right, he gets more crypto; gets it wrong and he loses. But see T. C. Memo. 2026-46 at p. 3, as Judge C-Doug Pugh battles through without expert testimony, which she laments, at pp. 2 and 8.

I lament even more, for I understand almost none of this. 

Howbeit, crypto is property, can be sold for cash, hence is Section 61 money’s worth. No constraints on Alvie selling in year at issue. That he never got the misaddressed Form 1099-MISC for the bonus is nothing to the point. The bonus is not like a stock dividend, because no proof that the bonus was distributed across the board in proportion to the punters’ holdings, whether or not they put up their crypto to validate others. 

Neither was it created by Alvie’s labor.

“Stakers do not create anything by themselves. Instead, the staked tokens validate transactions on the blockchain. In exchange for validation, the cryptocurrency’s protocol grants stakers additional tokens. The fact that these tokens may be newly created is immaterial because the stakers are not the ones who created them. Further, petitioners were not owners or operators of a staking pool; unlike the baker or writer, they lacked the power to decide whether (and when) the property was created.” T. C. Memo. 2026-46, at p. 10.

And IRS didn’t rely on Rev Rul. 2023-14, nor does C-Doug Pugh, so no need to get Loper Bright involved.

Taishoff says both this blogpost and Judge C-Doug Pugh’s opinion really needs expert input. Perhaps my ultrasophisticated readers would care to weigh in after reading both.