Judge James S (“Big Jim”) Halpern is a stickler. The law is his guiding light, and steadfastly does he steer his course thereby. But today is a rarity. While he doesn’t vacate a stipulation, he pulls up a corner and tweaks it, in George E. Joseph, 2020 T. C. Memo. 65, filed 5/19/20.

George was an eye doctor with his eye on the prize, running Sub Ss and LLCs all over Northern Texas. He was a wee bit casual about filing returns, so IRS did a few for him, at no extra charge. And threw in some heavy duty chops for lagniappe.

George claims that the number to which he and IRS stiped double-counted about $18K in capital gains. He also claims that there is a mistake in the basis he had, because some deductible depreciation he was entitled to didn’t show up in that number either.

IRS agrees about the double counting, not the depreciation. The caselaw is very strict, and I’ve been over this a lot. Absent fraud or mutual mistake of fact, stips don’t get set aside. Even mistakes of law don’t do it, maybe. See my blogpost “The Busted Stipulation,” 1/20/12.

“…the record in the case before us makes clear that the stipulated amounts count the same capital gain twice. The double counting is not an unproven allegation but an established fact. To remedy that obvious error, we will disregard the parties’ stipulation that petitioner recognized $17,998 of capital gain for 2013….” 2020 T. C. Memo. 65, at p. 30.

Both parties agreed the number in the stip was wrong. They also agreed what number was right. No need to do discovery or to retry the case.

Deductible depreciation is another story.

George gave no numbers to support his depreciation claim, although he claims it is a “simple calculation.” And he knew from IRS’ request for admissions that depreciation and the amount of capital gains were on the table before he stiped. So this means “we would have to reopen the record ‘to determine how the gain was computed,’ which would involve ‘the production of additional documents and testimony’ from petitioner’s accountant and perhaps from petitioner himself. 2020 T. C. Memo. 65, at p. 32.

Not after trial.

But Judge Big Jim isn’t through. George has some deductions, defectively documented, that Judge Big Jim might be able to Cohanize, and thereby shave a couple bucks (hi, Judge Holmes) off George’s hefty deficiency.

Except. There’s a splash across the bows that isn’t a porpoise catching its breath.

“But petitioner did not invoke Cohan in his initial brief. And petitioner’s specific circumstances give us grounds to decline to rely on Cohan to estimate the amount of … deductible expenses that he failed to substantiate. As the Court of Appeals for the Second Circuit observed in Cohan v. Commissioner, 39 F.2d at 543, not only did the taxpayer in that case fail to keep account of his travel expenses; he ‘probably could not have done so.’ That observation suggests a limit on Cohan’s scope, under which estimating unsubstantiated expenses would be inappropriate when proper recordkeeping is feasible and can reasonably be expected. In fact, the Court of Appeals for the Seventh Circuit has recognized just such a limitation, identifying a trend under which Cohan, ‘while not * * * repudiate[d] * * * entirely, is * * * not invoke[d] * * * where the claimed but unsubstantiated deductions are of a sort for which the taxpayer could have and should have maintained the necessary records.’ Lerch v. Commissioner, 877 F.2d 624, 628 (7th Cir. 1989), aff’g T.C. Memo. 1987-295. Thus, we might justifiably decline to apply Cohan because petitioner could have kept adequate records. We do not take his failure to do so as the result of inevitable exigencies in the practice of ophthalmology.

“Respondent, however, accepts that we ‘may utilize Cohan to estimate some of petitioner’s expenses’.” 2020 T. C. Memo. 65, at pp. 40-41.

In this Technologic Age, when your FitBit measures how much you breathe each minute, and your smartphone takes your temperature hourly, and these synched-in doodads upload your whole life to the cloud and above, don’t count on the prehistoric technology of Cohan to bail you out. Or the IRS to continue to play nice.

I venture no opinion whether it was Æschylus or his son Euphorion who put the original of those words in Prometheus’ mouth. The classical scholars on Tax Court bench are much more qualified than I.

But they certainly fit those who are locked out of Tax Court, and yet must file wet ink paper. STJ Diana L (“The Taxpayer’s Friend”) Leyden sums it up in Tavares Dunn, Docket No. 712-19SL, filed 5/19/20.

Tav is about to be tossed for failure to prosecute. But his reply to IRS’ motion was due after lockdown struck, so he gets another chance. He can also use eFiling.

“If petitioner has mailed a response the Court will not be able to read it because the Court is closed and cannot access mail sent to it.” Order, at p. 1.

I’m not claiming Tav is, or is not, an injured innocent, nor is STJ Di. But that’s not the point.

The point is that petitioners, worthy or unworthy, get a stay of collection when they petition a SNOD (Section 6213(a)), or a NITL NOD (Section 6330(e)). But there is no petition unless and until Tax Court gets it. So if the petition has to be wet ink snail mailed, Tax Court right now isn’t getting it. And a petition or amended petition can’t be e-filed, because the procedures in Rule 34(a) for e-filing haven’t been put in place.

I know I’m tiresome. But until someone can show me that my point is incorrect, I’ll keep at it.

Judge Morrison has a redacted order and decision (hereinafter “order”) in Whistleblower 8001-14W, filed 5/19/20, that brings back the mellifluous sound of the late great Harry Belafonte, singing the song he and Jack Rollins wrote back in 1954.

It seems 8001-14W claimed the entire [blacked-out] was included in the claim. 2600 of whatever they were.

“…a Senior Tax Analyst with the Whistleblower Office, referred petitioner’s whistleblower claim to the IRS [blacked-out] Division. The referral letter enclosed the documents that had been given by petitioner to the Whistleblower Office to that date. In the referral letter C stated: the Whistleblower Office had determined that petitioner’s claim met the procedural requirements for submitting a claim, the determination did not mean that an administrative or judicial action must be taken to address the tax noncompliance alleged by petitioner, and ‘[t]he decision to proceed with an examination or investigation is solely under the jurisdiction of the Compliance functions.’” Order, at pp. 2-3. (Name omitted).

A sample taxpayer was selected, and someone sent an audit letter with an IDR. Whoever got whatever, and something happened.

“In [blacked-out], Revenue Agent [blacked-out] met with (1) [blacked-out] and (2) [blacked-out] in the IRS Office of Chief Counsel. The conferees concluded that due to legal issues, evidentiary problems, and agency resources, it would be futile to pursue the issues that petitioner had raised about the sample taxpayer.

“On [blacked-out] Revenue Agent [blacked-out] met with his manager, [blacked-out], agreed that the examination of the sample taxpayer should be closed without changes.

“In [blacked-out] made the following statement at [blacked-out].” Order, at p. 5.

And I think we can stop here, with Harry singing. “And the confusion made the brain go ’round.”

Here Be Dragons

Here’s a heads-up. Form 12257, Summary Notice of Determination, Waiver of Right to Judicial Review of a Collection Due Process Determination, and Waiver of Suspension of Levy Action, is an IED that blows up twice, and Abigail Richlin, 2020 T. C. Memo. 60, filed 5/18/20, gets nailed both times.

Abi’s trusty attorneys argue that the 12257s Abi signed at Appeals are contracts (they aren’t; only IAs, Section 7122 closing agreements, and OICs are). While IRM says Appeals can’t revoke a NOD, 12257s aren’t NODs.

Then they argue equitable estoppel. No, because Abi didn’t change her position in reliance; long before she went to Appeals, she spent the sales proceeds from her separate property, leaving deceased ex-spouse’s estate to pick up the tax, notwithstanding the pre-nup and her testimony on the divorce trial.

The question was certain estimateds paid by late spouse from trust he controlled. Appeals erroneously twice allowed them for Abi, who signed a 12257 each time, and never put forth collection alternatives, even though her Letter 12153s said she couldn’t pay. She stood pat on her trusty attorneys’ reading of the divorce decree.

Except Judge James S (“Big Jim”) Halpern isn’t buying.

Even though Appeals got the facts wrong, the pre-nup controls. Reg. 1.6654- 2(e)(5)(ii)(A) says the parties filing MFJ can whack up payments as they agree. And they did.

Family lawyers, watch those divorce decrees and separation agreements. And all lawyers, watch those 12257s; they can be boobytraps.

Edited to add, 9/23/21: Trusty attorneys appealed to 9 Cir a year ago August. I’m not sanguine about the outcome. I don’t as a rule follow appeals, so, if you’re interested, try PACER or watch the trade press and the blogosphere.

Edited to add, 8/28/25: Though I don’t as a rule follow appeals, I did this time. Abigail lost, as I expected. 

The Jersey Boys get the tough ones, and Lord S. Pope, 2020 T. C. Memo. 62, filed 5/18/20*, is no exception. IRS refunded Lord his overpaid withholding, but denied his child care and child tax credits. That’s $7800, and Lord wants a refund.

But he won’t get it from Tax Court. These aren’t refundable credits, they’re withholding credits.

Judge Albert G (“Scholar Al”) Lauber has this one.

“Section 6212(a) authorizes the IRS to send the taxpayer a notice of deficiency, and section 6213(a) grants this Court jurisdiction to make a ‘redetermination of the deficiency’ determined by the IRS. A ‘deficiency’ is defined as the amount by which the tax imposed for the year (i.e., the correct amount of tax) exceeds ‘the amount shown as the tax by the taxpayer upon his return’ plus any ‘amounts previously assessed * * * as a deficiency.’ Sec. 6211(a)(1). Section 6211(b)(1) in turn provides that ‘the tax imposed * * * and the tax shown on the return shall both be determined * * * without regard to credit under section 31.’ Section 31, captioned ‘Tax withheld on wages,’ provides: ‘The amount withheld as tax [by an employer] under chapter 24 shall be allowed to the recipient of the income as a credit against the [income] tax.’ Sec. 31(a)(1).

“Because the correct tax for the year and the tax shown on the return are both determined ‘without regard to the credit under section 31,’ withholding credits (and overstatements thereof) are necessarily excluded from ‘deficiencies’ as defined by section 6211(a)(1). And because our jurisdiction as relevant here is limited to ‘redetermination of the deficiency’ determined by the IRS, we lack jurisdiction to redetermine an adjustment to withholding credits.” 2020 T. C. Memo. 62, at p. 6. (Citation omitted).

Section 6201(a)(3) says that withholding credits can be assessed like arithmetic mistakes, thus no SNOD and no jurisdiction in Tax Court. And while the statute also says the overstated withholding credit may be assessed like a deficiency, here the overstated withholding was summarily assessed six months before IRS issued the SNOD.

But was what IRS gave Lord a SNOD? There’s a two-part test from Dees, a case I did not blog (but see my blogpost “Is It or Isn’t It?” 3/6/18).

First, does it look like a SNOD (remember, there’s no required form a SNOD must take, just tax, year, and call TAS)? Next, if ambiguous, the party seeking to establish Tax Court jurisdiction must show that IRS did establish a deficiency and that the party seeking jurisdiction wasn’t misled by the ambiguous document.

Well, here there was no refundable credit, so no deficiency, and the Letter 4800C, Questionable Credit 30 Day Contact Letter that Lord got wasn’t a SNOD. IRS says it is “the initial contact for the Automated Questionable Credit Program on fraudulent wages, withholding, or noncompliant credits.” 2020 T. C. Memo. 62, at p. 3.

Lord wasn’t misled, because he petitioned.

Section 6512(b)(1), the overpayment jurisdictional grant, requires a deficiency, and there’s none here. Section 6512(b)(1) is not basis for a stand-alone overpayment case.

Tough loss. On a pro bono yet.

*Lord S Pope 2020-62 5 18 20

“High up in the North in the land called Svithjod, there stands a rock. It is a hundred miles high and a hundred miles wide. Once every thousand years a little bird comes to this rock to sharpen its beak.

“When the rock has thus been worn away, then a single day of eternity will have gone by.” Hendrik van Loon, The Story of Mankind, 1921.

I feel a kinship with those little birds. When I make suggestions for more user-friendly Tax Court rules and procedures, I feel as if I am trying to wear away that rock in Svithjod, just like those little birds.

Notwithstanding my apparently futile efforts, I have for my text today Judith I. Napoleon and George Napoleon, Deceased, Judith I. Napoleon, Successor In Interest, Docket No. 981-20, filed 5/18/20*.

Judith petitioned a SNOD, but was the sole signer. Her trusty attorney then appeared, and Judith moved to change the caption and sub in for the late George. Motion granted.

Ch J Maurice B (“Mighty Mo”) Foley also told Judith to file a ratification of petition as successor-in-interest.

Judith did so this past Friday. “Judith I. Napoleon electronically filed a Ratification of Petition …. …Judith I. Napoleon further electronically filed a Certificate of Service in connection with her … ratification of petition.” Order, at p. 1.

Ch J Mighty Mo: “A ratification of petition may not be electronically filed, but must instead be filed in paper form and bear the original signature of Judith I. Napoleon as decedent’s successor in interest. See Tax Court Rule 26(b)(1).” Order, at p. 1.

And the electronic filings are stricken.

OK, but how is Judith to do this filing? She can snail mail or PDS the documents, but as Tax Court is closed (and has been since mid-March), what happens if no one is present to receive them? The press release of 3/23/20 says mail will not be delivered to Tax Court. Various orders from various judges and STJs state that the mailings will be returned to sender, who can then re-mail them when Tax Court reopens, with the original envelopes to establish date of initial rejected mailing enclosed therewith.

I most respectfully suggest that this is wasteful. We just had Judge Gale point the way. “While petitioners’ electronic filing of the ‘Expert Report of B’ as an attachment to petitioners’ Report filed March 30, 2020, violates Rule 143, we nevertheless conclude that compliance with the mailing requirement is infeasible with mail delivery suspended.” See my blogpost “The Octavia Rules,” 4/1/20.

And lest anyone think that was an April Fools’ joke, they can look it up.

Compliance with the mail rule is admittedly infeasible.

Rule 34(a) as amended provides the solution: “A petition may be filed electronically under the electronic filing procedures established by the Court, or a petition may be filed by properly mailing or hand delivering it to the Court.”

So establish the procedures. They can be temporary for the duration of the pandemic, or until further order of the Court. I suggest having the filing electronically, with the original to be sent to Tax Court when it reopens. But almost anything is better than double mailing.

And thinking about lone birds and eternity, there are all kinds of Bar associations, with foci on geography (States, counties, cities), ethnicities, genders, and even courts and areas of practice. There’s a USCFC Bar Association and a Federal Bar Association. But there is no United States Tax Court Bar association.

Why not? One bird amounts to nothing. A flock is different. Enough birds, and even the Rock of Svithjod might have to yield a lot sooner.

*Judith Napoleon 981-20 5 18 20

.

It’s been attributed to Mark Twain that “No one’s life, liberty or property is safe while the Legislature is in session.” Whoever said it, it goes double for Congress.

That Obliging Jurist, Judge David Gustafson, has another conundrum, although this time he’s on the receiving end. Doris Ann Whitaker, Docket No. 4899-18, filed 5/15/20, is in pitiable state. She filed MFJ, but being a high-school dropout working as a nurse’s aid (sic; see Order, at page 1; I think you meant “nurse’s aide,” Judge), she thought that meant she was responsible only for her own tax, and was overwitheld.

Alas, she was wrong. She was also on the hook for $3700, being tax, interest and penalties for deadbeat, drug-addict spouse.

Doris wants innocent spousery, but since her case doesn’t fit into IRS ‘ “…sensible grid of criteria (see Rev. Proc. 2013-24), the IRS determined, in a ‘Final Determination’ (Doc. 1, attachment), that Ms. Whitaker is not entitled to relief under section 6015. Ms. Whitaker then filed her petition, asking this Court to review that determination pursuant to section 6015(e)(1).” Order, at p. 2.

Doris didn’t help herself by failing to respond to a document request or an IRS motion to toss for want of prosecution. Doris wanted a continuance for health problems.

Nevertheless, as this is Judge Gustafson, whose obliging nature goeth not merely the twain but pulls a mini-Marathon, “(W)ith the Court’s encouragement, counsel for the Commissioner stated that the case is susceptible of being resolved by summary judgment, and we ordered a schedule for the filing and briefing of that motion. The Commissioner filed a motion for summary judgment that argues that ‘there remains no genuine issue of material fact for trial’.” Order, at p. 2.

Well, MFJ means joint. Except.

“She apparently knew that her husband had income, but she did not know that she was filing a return of the sort that must report his income. Her education and resources may have contributed to that misunderstanding.” Order, at p. 2. So maybe this is a fact. Howbeit, Judge Gustafson asks both parties to ponder this in their future filings.

And while they’re pondering, Judge Gustafson does some pondering his own self.

“However, when we set up the schedule for summary judgment … we did not have in mind the relatively recent amendment reflected in section 6015(e)(7). Prior to that amendment, we would have expected that, if we discern a disputed issue of fact in a motion for summary judgment, we would then deny the motion and hold a trial at which we would decide that disputed issue of fact. But now section 6015(e)(7) directs that the Secretary’s ‘determination made under this section shall be reviewed de novo by the Tax Court and shall be based upon– (A) the administrative record established at the time of the determination, and (B) any additional newly discovered or previously unavailable evidence.’ This might mean that we already have before us in the current record all of the evidence that we should review to decide the case—but we do not know that. The Commissioner’s declaration… does not state whether the documents it contains are the full administrative record.” Order, at pp. 3-4.

Even so, does Section 6015(e)(7) mean that, when handling a Rule 121 on-the-papers, if there’s a disputed fact question the Court should decide it then and there?

But wait.

“However, only one party (the Commissioner) filed a motion. We have the discretion to construe an opposition to a summary judgment motion as a cross-motion for summary judgment, but only where ‘the court provides adequate notice to the parties and adequate opportunity to respond to the court’s motion’, 11 James Wm. Moore et al., Moore’s Federal Practice ¶ 56.10[4][a][I] (3d ed. 1997), and here we gave the Commissioner no such notice that we would treat Ms. Whitaker’s opposition as a cross-motion.” Order, at p. 5. So IRS’ summary J motion is denied, without prejudice. Only let IRS certify as to the completeness of the admin record before the Court, or supplement what’s there if it isn’t complete. And move for summary J based on the certified record.

Oh, and Doris can “…file (1) any objections she has to the administrative record that the Commissioner has filed, and (2) a response to his motion and a cross-motion for summary judgment.” Order, at p. 5.

Except I’m sure Judge Gustafson knows the immediately foregoing hereinabove paragraph (as my high-priced colleagues would say) might as well be written in Old High Glagolithic buchstabe as far as Doris is concerned.

So he tells Ms. Servoss and her minions to send Doris “ another copy of the ‘clinic letter’” she already got, and please to get help from a LITC. Or call Judge Gustafson.

He’ll turn off the headlights.

Judge Albert G (“Scholar Al”) Lauber won’t back down. True, his order in High Point Holdings, LLC, High Point Land Manager, LLC, Tax Matters Partner, Docket No. 10896-17, filed 5/15/20, was more likely than not drafted and in the hot teletubbying hands of the hardlaboring clerks, formerly at The Glasshouse, when 11 Cir unloaded on Judge Pugh in Oakbrook the other day.

Maybe High Point has no golf course. Or perhaps that game is infra dig. to one who holds a Master of Arts degree from Clare College, Cambridge.

Howbeit, PBBM and the Coalholders are front-and-center. For PBBM, which did have a golf course (look out, Tax Court, fore!), see my blogpost “Thanks a Lot, Judge,” 10/11/16, and pick up on 5 Cir affirming, PBBM-Rose Hill, Limited; PBBM Corporation, Tax Matters Partner, No. 17-60276, 8/14/18.

For the Coalholders, who had no golf course but only a couple old strip-mined Tennessee hollers (hi, Judge Holmes) and cellphone towers, see my blogpost “Diamonds Are Forever,” 10/28/19.

High Point loses on perpetuity, of course; no post-granting split of extinguishment cash, defective savings clause, and all that.

So we shall see if 11 Cir or 5 Cir. wins the jumpball if High Point appeals, because just maybe the Supremes get to weigh in, and do a conflict-amongst-the-circuits silt-stir.

Stirring times indeed.

Please credit my colleague Peter Reilly, CPA, Forbes’ intrepid blogger, and please do not blame him for this dreadful pun, for giving me the scoop on Champions Retreat Golf Founders, LLC v. Commissioner, No. 18-14817 (11th Cir. 2020).

As always, for the backstory see my blog, herein “Not Endangered, Except the Benderdinker,” 9/10/18.

The Elevenses, apparently avid followers of “the ‘umblin’ game,” ruled as follows. “Without the golf course, this easement would easily meet these criteria. Because the Code does not disqualify an easement just because it includes a golf course, we reverse the Tax Court’s decision and remand for determination of the proper amount of the deduction.” Decision, at p. 2.

I’ll let my readers decide if the Elevenses’ ruling was for the birds, namely, “…eastern whip-poor-will, brown-headed nuthatch, red-headed woodpecker, and prothonotary warbler. The expert saw a wood duck with fledglings, suggesting on-site breeding. The Commissioner’s expert saw a wood stork—a federally listed endangered species—though he opined it was just passing through.” Decision, at p. 10.

Remember, Reg. 1.170A-14(d)(3)(i) wants the protected area to stay wild and let the endangered or threatened to continue using same.

There’s lots of threatened squirrels, and the Elevenses lay into Tax Court for their disregard of the denseflower knotweed, Decision, at p. 13. The Elevenses wax eloquent about said knotweed: as I do not have allergies of the sort the knotweed might kick up, I cannot state with Chaucer that it is a species in “which vertu engendred is the flour.” But here’s the story: “Moreover, the relevant question is not so much whether chemicals from the course may harm the knotweed, but whether the easement improves the chance that the knotweed will be preserved. The answer is yes for two reasons: first, because the obligation to use best environmental practices would not exist without the easement; and second, because unrestrained development of the land where the knotweed is located would pose a greater risk than the golf course.” Decision, at p. 14.

To cap it off, the Elevenses chastise Judge Pugh’s apparent ruling that a bird should be seen if not heard. “The court also ignored a bird that was heard but not seen. The court did not explain how a bird could be heard if not present on or at least near the property.” Decision, at p. 15.

In 11 Cir, the bird is the word. They really don’t care about the Benderdinker; not Word One anent the same.

Reversed and remanded, to try the valuation issue.

In consequence whereof, I shorten the odds on Judge Mark V Holmes’ “try the valuation and forget perpetuity games” dissent in Oakbrook winning on appeal to 6 Cir from 3 to 1 to 6 to 5. Get your money on before Las Vegas and the parimutuels take it off the boards altogether.

Many thanks again, Mr. Reilly. To you and to all my readers, stay safe, stay strong!

No, the title hereof is not a typo; today we have conjoined promoters of accountable tool plans, Bruce W. Lemay, 2020 T. C. Memo. 57, and Allen R. Davison, 2020 T. C. Memo. 58, both filed 5/14/20, being hit for Section 6700 promoting bogus dodges chops.

A tool plan is a purportedly an accountable employee expense reimbursement plan, per Section 62(a)(2). If the employee purchases tools for use in the course of employment, for which the employee receives reimbursement from the employer, the reimbursement is not taxable as wages. Also, the employer need not collect or pay over FICA/FUTA/ITW. Primary industries where this would sell were “heating, ventilation, and air conditioning industry, as well as the automotive and trucking industries.” 2020 T. C. Memo. 58, at pp. 14-15.

Of course, legitimate accountables require substantiation and repayment to employer of any overpayments. Anything else is disguised wages, and taxable accordingly. Those who promote phonies get chopped heavily.

Bruce, insurance guy, started to check out these plans, and found they were a wee bit dodgy. He teamed up with old friend Allen, lawyer and CPA, and started selling these plans. But they claimed 35% of employee’s wages was reimbursement, had employees claim old tools, new tools, tools not used in employment, took original prices (not FMV) and didn’t account for depreciation, and never reimbursed employers.

Allen and Bruce went to some legit accounting and law firms, and were told their deal didn’t fly. Allen and Bruce never told their customers. Allen and Bruce get enjoined by IRS, and chopped.

IRS wants to levy, but hold off actually grabbing until the Forms 6118 refund claims Bruce and Allen filed get sorted out, even though more than the statutory six months have passed and neither Bruce nor Allen sued.

There was no prior opportunity to contest liability, so Bruce and Allen get de novo, burden of proof on IRS, preponderance of evidence the standard. IRS must show “…(1) organized (or assisted in the organization of) or participated (directly or indirectly) in the sale of an interest in an investment plan or arrangement, or any other plan or arrangement and (2) made material statements concerning the ‘tax benefits’ to be derived from that plan or arrangement that petitioner knew or had reason to know were false. See sec. 6700(a).” 2020 T. C. Memo. 58, at p. 48. (Footnote omitted).

While “plan or arrangement” isn’t defined in the statute, courts have read the term broadly to include any kind of tax-cutting dodge. And this tool business sure is.

Allen and Bruce both had the education, and the shoot-downs from the accounting and legal firms they talked to, to know their deals were shady. IRS doesn’t have to prove any particular person relied what Brice and Allen told them, but only that the truth would have had an impact on a reasonable taxpayer’s decision to do this deal.

IRS wins.