Oh, Boss Hoss, what sins are committed in thy name! Judge Rose E. (“Cracklin'”) Jenkins finds that what we thought was “settled law” was undone as the Boss Hoss leaves the stable after 2 Cir picked the issue preclusion lock.

And where better to encounter this latest resurgence of The Jersey Boys’ Greatest Hit, the Chai-Graev double, than in Annamalai Annamalai & Parvathi Sivanadiyan, Docket No. 2398-23L, filed 8/11/26, the latest episode in this eleven (count ’em, eleven) year blogfeast?

Ever since Warner Ent., Inc., we thought issue preclusion barred any Boss Hossery defense to a chop where liability had been litigated, deficiency and chops assessed, and decision was final. See my blogpost “How Now?” 8/22/22.

Seemed to touch all the bases: same parties and privies (that’s nonparties bound by participating parties), could have been raised and litigated at trial or in motion papers, no supervening change in law.

Except.

Boss Hossery has separate statutory requirements which an AO at Appeals has to fulfill at a CDP, whatever happened on a trial or summary J. So said 2 Cir in Besicorp. v. Com’r, No. 23-296 (6/29/26). 

“Most salient here, the Appeals Officer must also ‘obtain verification from the Secretary [of the Treasury] that the requirements of any applicable law or administrative procedure have been met.’ Id. § 6330(c)(1). Only after satisfyingthese requirements and considering the arguments and evidence presented by the Service and the taxpayer may the Appeals Officer issue a ‘Notice of Determination’ upholding or rejecting the lien or proposed levy.” Besicorp, at p. 9. Whatever the parties pled or proved at trial or motion, the AO must find Boss Hossery de novo. 

Judge Cracklin’ Jenkins finds the record (this is obviously a CDP review) fails to show that Boss Hossery was raised or considered either in the order and decision or at the CDP from whose NOD Annamalai petitions. All the AO did when she found no Section 6761(b) sign-off in the file was get a memo from counsel that the order and decision precluded Boss Hossery. And in her and counsel’s defense, pre-Besicorp that was the law.

OK, so how now, this latest silt-stir?

“Given the state of the Administrative Record and the absence of any argument by respondent about the verification requirement, this Court does not conclude that the Second AO did not abuse her discretion in sustaining the levy with respect to the section 6663 penalty for the 2007 tax year despite not verifying compliance with section 6751(b). Unlike the Second Circuit…, however, this Court does not conclude that the Second AO’s failure to verify approval permits a conclusion that no approval was obtained. Accordingly, the Court will remand this case to Appeals for further review to determine whether the verification requirement can be met with respect to the 2007 tax year. If Appeals is not able to verify approval of the 2007 section 6663 penalty, respondent may fully address the import of that failure at that juncture.” Order, at p. 21. (Citation omitted).

This is Remand No. 2 in this case.

I can but again quote myself when I blogged Senior Judge Mark V. (“Vittorio Emanuele) Holmes’ dissent in my blogpost “Stir, Baby, Stir – That Silt,” 12/20/17.

“Oh brother, says Judge Holmes, you tried to bring peace, but like a much more exalted Authority you have brought not peace, but a sword. Section 6751(b) is a statutory one-off, a hapax legomenon as that classicist Judge Lauber and that Master of Tohubohu Judge Holmes put it. It’s intended to keep lower-level RAs and Examination types from bludgeoning settlements out of terrified taxpayers by threatening chops.

“But it doesn’t work.”

Except, that is, to stall once more a twenty (count ’em, twenty) year old Tax Court case.

I can think of few, if any, tactics that yield so much for so small an investment of time and effort. Before issue is joined, one should have as complete a picture of one’s client’s case as this imperfect world affords, and at least an inkling of the adversary’s likely lines of attack. Under Our Fair State’s Civil Practice Law & Rules, a statutory time limit for such motions is fixed, subject to judicial shortening. Rule 121(b) is broader, of course. Both hinge upon joinder (petition and answer served and filed).

As I’ve often said, summary J gives you discovery of what the judge thinks. It’s well to know if the lion will bite when you stick your little finger in its mouth, rather than your head.

Diversified Solutions Risk Management Inc, et al., Docket No. 16438-23, filed 8/10/26 is an attempt to reargue denied partial summary J, so it looks like wasted motion.

Except.

Judge Rose E. (“Cracklin'”) Jenkins definitively shuts down two (count ’em, two) legal arguments, substantive due process (trying to collect same deficiencies from two commonly owned entities) and separable transaction, but leaves a third (common ownership) untouched because insufficiently explained in the motion. So here’s a blueprint for one’s post-trial memo; what to preserve for appeal and what to stress.

Finally, economic substance and economic reality must be left for trial. With trial coming up in a month, here is where to spend that precious trial prep.

I’ll always be a fan of summary J.

That’s ex-CSTJ Lewis (“Nom d’un nom d’un nom!”) Carluzzo’s characterization of the advice of their “old and sick” tax preparer when he told Ehimwenma E. Aimiuwu and Kehinde F. Aimiuwu, T. C. Sum. Op. 2026-7, filed 8/10/26 to “deduct the corporate expenses [of their C Corp] on the [individual] return because [C Corp.] had no income during [year at issue].” T. C. Sum. Op. 2026-7, at p. 2.

Eh and Ke fold all but a $49K charitable deduction which they want to move to their Sched A from the Sched C they filed.

Except.

“Petitioners now argue that the donation deduction claimed on the Schedule C should have been claimed as an itemized deduction on the Schedule A. However, they have presented no written evidence that satisfies the statutory scheme that permits such deductions. Nor have they presented anything that would support a finding that the donee is described in section 170(c).

“Regardless of how the donation deduction should have been taken into account in the computation of petitioners’ … federal income tax liability, it is their burden to establish their entitlement to it. Offering only petitioner’s testimony on the point, they have failed to do so. Respondent’s disallowance of the donation deduction is sustained.” T. C. Sum. Op. 2026-7. at p. 3.

As Eh was a college professor with several postgraduate degree during year at issue, and Ke was an information technology professional (T. C. Sum. Op. 2026-7, at p. 2), they would have run badly in the Section 6662(a) accuracy chops stakes, but for IRS folding those and the Section 6651(a)(1) add-on. T. C. Sum. Op 7, at p. 1, footnote 2.

Tax Court has issued its latest Rogues’ March, whereof one item is worth mentioning here.

Michael J. Avenatti of Stormy Daniels’ notoriety has been formally disbarred a mere five (count ’em, five) years after his nonreply to the OSC ordering his interim suspension became absolute.

Reminds me of Mark Twain’s story of the Mississippi riverboat that was so slow, when it sank it took the owners five years to hear about it.

The old saw that shoemakers’ children never have shoes may finally meet its match when David E. Du Val & Jane T. Smith, et al., Docket No. 22079-22, filed 8/7/26, comes to trial in October. Dave and Jane, and their fellow tax controversialists Mark Olander and Nancy Farwell-Olander (Olanders, collectively) are or were stockholders in Tax Resources, Inc. (TRI), a C corp that offered tax audit defense services. Order, at p.1.

Swapping their shares in TRI among a couple trusts (hi, Judge Holmes), moving TRI from C to Sub S, running the shares through an ESOP and finally parking them in LLCs, whose membership interests they unload to a 501(c)(3) in advance of a corporate redemption (sound familiar? Judge Cary Douglas (“C-Doug”) Pugh probably sighed as she read the dueling summary J motions) sets up both the reasonable cause defense if this charitable donation mix-and-match craters, and the how-much-control-did Dave-and-Jane-retain which would invoke such cratering. 

Davd and Jane and the Oleanders were managers of said LLCs. So what, reply Dave’s & Jane’s trusty attorneys. Members could amend the op agreement, and even if they didn’t IN (governing State law) reins in overeager managers who stray from straight and narrow.

All hands want summary J. Judge C-Doug Pugh punts.

“The parties’ cross Motions have not convinced us that we can resolve their dispute over control without resolving disputes of material fact. If we construe the facts in the light most favorable to petitioners, then we might conclude they did relinquish sufficient control over the LLC interests. Therefore respondent’s Motion must fail. Conversely, construing the facts in the light most favorable to respondent suggests that petitioners retained too much control over the LLCs’ assets, so petitioners’ Motion must fail. These arguments are best addressed in briefing in the context of a factual record developed at trial. Respondent’s claim that the transaction represented the anticipatory assignment of income similarly requires factual determinations regarding the substance of the transactions and the various steps. See Chrem v. Commissioner, T.C. Memo. 2018-164, at *14–15.” Order, at p. 4. (footnote omitted).

For the backstory on Chrem, see my blogpost “Fair is Foul – Maybe,” 9/26/28.

There’s the usual IRS Section170(f)(8) CWA nitpick, going even to the salutation in the CWA letter. And naturally IRS is all over the appraisal of the stock as being unqualified, but that’s certainly for trial. Judge C-Doug Pugh is too well-bred to give this nonsense a Taishoff “Oh, please!”

IRS’ clichéd Boss Hoss piscine Hoss barrelshoot gets summary J, but that’s all Judge C-Doug Pugh wrote.

Not quite, says Judge Christian N. (“Speedy”) Weiler, SIH Partners LLLP, Explorer Partner Corp., Tax Matters Partner, 167 T. C. 8, filed 8/6/26, could make $2.4 million on their portfolio swap with their Firm Hedge against downside markets and a bunch Swiss equities (hi, Judge Holmes). These dudes are macro highrollers. Judge Speedy Weiler tracks their machinations through Section 246 and regs stock marketry with Morgan Stanley, to try to get a reduced 15% tax rate out of the Swiss taxing authorities, 15% US Qualified Dividend treatment, and a heavy-duty foreign tax credit.

Turns out SIHP beats IRS’ form-over-substance argument. The deal survives Section 246(c)(4)(C) diminished risk of loss, due to IRS’ experts’ less than stellar testimony. Techies, see 167 T. C. 8, at pp. 20-25. And SIHP dodges the Reg. Section 1.246-5(c)(1)(iii) substantial overlap test. The Hedge and the Swiss aren’t substantially similar or related property. So far.

Now I’ve no doubt my jaggedly-sophisticated readers are yelling with one voice “Hang on, Squire, what about Reg. Section 1.246-5(c)(1)(vi), the Anti-Abuse Reg?”

No fear, chaps, Judge Speedy Weiler is all over that one.

“The Anti-Abuse Rule comprises three elements: (i) the taxpayer has eliminated his economic risk of his stock holdings by holding a position that ‘virtually track[s]’ its stock holdings, (ii) that position is held ‘as part of a plan a principal purpose of which is to obtain tax savings,’ and (iii) the tax savings obtained by the taxpayer are ‘significantly in excess of the expected pre-tax economic profits’ of holding the position.” 167 T. C. 8, at p. 30. (Footnote omitted, but it says all three are essential, and “significantly in excess” is a quantifying aspect; just saving tax doesn’t invoke the Rule). And virtual tracking doesn’t slow SIHP down either. “… the Virtual Tracking Test acts as a check to determine whether there is any hidden (or virtual) overlap between the entirety of a position, or the entirety of stocks reflected in the position, and a taxpayer’s stock holdings, or a portion of the taxpayer’s stock holdings and other positions of the taxpayer.” 167 T. C. 8, at p. 32. But SIHP’s expert’s attempt to hold that to a strict numerical formula craters; Judge Speedy Weiler finds “…the regulation to be broad in application and determine Treasury intended for it to serve as a catch-all for potential abuse. If petitioner’s arguments were correct, the Anti- Abuse Rule would seem to never apply in circumstances where a taxpayer has passed the Substantial Overlap Test. The preamble to the final regulations makes it clear that this is not the case. If the Anti-Abuse Rule applies, a position that reflects the value of two or more stocks (including a portfolio) is treated as SSRP even if those stocks and the taxpayer’s stock holdings do not substantially overlap. See T.D. 8590, 1995-1 C.B. at 16. Considering SIHP also held short positions in the Swiss Equities under the Transaction, we determine these two positions are reasonably expected to virtually track under the Anti- Abuse Rule. See Treas. Reg. § 1.246-5(c)(1)(vi)(A).” 167 T. C. 8, at p. 32.

 But that profit is what ultimately torpedoes SIH. After an extensive mix-and-match of dueling experts, Judge Speedy Weiler delivers the bad news.

“Having determined that the expected pretax profit ranges between $0 and $2.4 million, while the corresponding estimated tax savings are some $25 million, we determine that the value of the tax savings is significantly in excess of the expected pre-tax economic profits. See Treas. Reg. § 1.246-5(c)(1)(vi)(B). We therefore determine the Anti-Abuse Rule of Treasury Regulation § 1.246-5(c)(1) is applicable to the Transaction and that, on the basis of the evidence presented, the Transaction fails to comply with the Anti-Abuse Rule. We hold that SIHP’s position in the Swiss Equities is SSRP.” 167 T. C. 8, at p. 40. Hence no US 15% QDI tax, and the foreign tax credit founders on Section 910(a) and (k)(1) because the Swiss stuff is SSRP.

Note: A “Bialystok” is a deal that creates a tax loss with minuscule or no economic effect, named after the hero of “The Producers.”

Or maybe “Don’t Stipulate, Expostulate” better sums up Judge Cary Douglas (“C-Doug”) Pugh’s take on the Rule 91(f) motion for OSC to accept proposed facts and evidence launched by Meta Platforms, Inc. & Subsidiaries, Docket No. 16081-25, filed 8/6/25. Said motion was the preliminary bombardment by Meta & Subs before sending its motion to preclude IRS from making periodic adjustments under section 482 for the years at issue in this case over the top.

IRS followed up on Judge C-Doug Pugh’s opinion a year ago, more particularly bounded and described in my blogpost “Facebook Faceoff – Draw (Sort Of),” 5/22/25, by bringing in some more years, even while the Rule 155 beancount had not yet concluded.

Judge C-Doug Pugh spends a lot of time finding fault with the Meta & Subs’ edited version of facts and documents. “Selective quotes and summaries are not consistent with the spirit of Rule 91.” Order, at p. 2. But in the meantime and without waiting, Meta & Subs moved to preclude, And IRS responds.

True, 9 Cir (where Meta & Subs are Golsenized) requires citations to the admin record to “pinpoint” what the parties contend, but the Court doesn’t need a stip to figure that out if the parties cite to the record in their preclusion motions.

And they did.

“The parties could and indeed did cite [Judge Pugh’s 2025 opinion] and incorporate documents relevant to their respective legal arguments by attaching them as exhibits to their Preclusion Motions. Because the stated purpose of the proposed stipulation was to facilitate judicial consideration of the Preclusion Motions, and the parties have proceeded without one, petitioner’s Motion effectively is moot.” Order, at p. 3.

And of course the parties can try, or agree, to put in the whole record of the case including the 2025 opinion. Judge C-Doug Pugh won’t require it. And they can even agree to put in documents not part of that record or move to include such as they do not agree. But no summaries; let it all hang out.

Thirteen (count ’em, thirteen) lawyers for Meta & Subs, twelve (count ’em, twelve) for IRS, and this is the result. SMH.

Scott M. Balotin & Ellen M. Balotin, Docket No. 3848-26P, filed 8/6/26, show great promise for more blogfodder even than their prior appearances in this my blog; in proof whereof, see my blogposts “Slamming the Backdoor,” 8/17/23, and “The Eighty Percent,” 2/4/26.

This time they’re pro se, claiming IRS is playing the Matty Dean Vigon cat-and-mouse gambit, denounced by that Obliging Jurist Judge David Gustafson in my blogpost “Crafty – Akin to the Weasel,” 7/24/17, with Section 7345 seriously delinquent tax debt (SDTD) certs to DoS and then decertifying. No SOL on SDTD certs, right?

Yes. Except.

Scott filed a CDP and then petitioned (late, but maybe equitably tolled) a negative NOD.

Judge Goeke: “IRS’s three certifications do not indicate that the IRS will recertify petitioners in violation of section 7345. When a certification is found to be erroneous, the IRS shall reverse the certification and notify the State Department ‘as soon as practicable.’  §7345(c)(2)(D). That occurred in this case. The IRS timely issued the first reversal after petitioners requested the CDP hearing. The IRS recertified Mr. Balotin after the 30-day period for filing a petition for review of the Notice of Determination expired. Then, it reversed the certification less than one month after petitioners’ [sic] filed the untimely petition in the CDP case. The IRS complied with its obligations under section 7345.” Order, at p. 3.

Yes, Ruesch says reversing a SDTD cert to moot a petition and then recertifying is a voluntary cessation no-no, just like successive imposition of Section 6702 chops followed by withdrawal, but only if there is a reasonable expectation that IRS will recertify the taxpayer, and interim relief or events have completely eradicated the effects of the certification.  Scott, unlike Dean Matty Vigon, precipitated the cert withdrawals with his CDP request and subsequent petition. IRS followed the statute. And Scott can petition successive SDTD certs; Dean Matty Vigon was barred by the Section 6330(b)(2) one-CDP-per-year constraint from petitioning successive NFTLs and NITLs.

In another millennium, On the Hill Far Above, when I had a lot fewer wrinkles, a lot less fat, and a lot more hair, I stood smoking a pipe (“How quaint” my native-born Texan granddaughters would say) in a smoke-filled cardroom. In memory I see Jersey Ed, Slater, Barry, and Joel, and one of them slapping his cards on the table and exclaiming “Who dealt this mess?” even if he himself had dealt the bridge hand. It’s been sixty years and more, but I remember.

So I want to give a Taishoff “Good Try, Second Class” to the trusty attorneys for Scott L. Reed and Stacy N. Reed, T. C.  Memo.  2026-64, filed 8/5/26, for rescuing even the Allowed Deductions, Exhibit A, (T. C. Memo. 2026-64, at pp., 41-45) and staving off even a modicum of the unreported income IRS heaped on their clients’ heads. They have to fold the chops, though.

Scott and Stacy (that’s Doc Stacy, the allergist/dermatologist) were a trifle casual with recordkeeping and documenting their multifarious business activities, ranging from real estate consultancy for AR historic preservation (vanishing) tax credits, used wood rescuing, medical clinic, and helping a cousin buy some real estate.

Judge Emin (“Eminent”) Toro expends fifty (count ’em, fifty) pages, including but in nowise limiting the generality of the foregoing (as my expensive colleagues would say) tables showing saved and lost deductions, to unscramble this Farinata Indiana. For a judge with no accounting credentials Judge Eminent Toro well-proves his impressive legal résume.

 And IRS’ counsel were no slouches, either. Though the ice was sometimes thin and the sun at noon above, they pressed on.

Ex-Ch J L. Paige (“Iron Fist”) Marvel takes up the birch rod from the Supremes and lays about the BBA partnership régime with a will, as the 90-day filing deadline in Section 6234(a) is relegated to claim-processing, non-jurisdictional status in Big Apple Tompkins Realty LLC, Mojahed H. Bhutta, Partnership Representative, 167 T. C. 7, filed 8/5/26. Pro se Mo gets a Taishoff “Good Job” for his spirited rescue of his 452 (count ’em, 452) days late petition from a Final Partnership Adjustment under the post-BBA schema.

Ex-Ch J Iron Fist is no slouch when she takes up the Supremes’ Herculean stable-cleansing of Congress’ jurisdiction-vs-claim-processing muddle. She brings discipline with bushels of somber reasoning and copious (and I mean copious) citation of precedent, 28 (count ’em, 28) pages’ worth.

We have Belagio Fine Jewelry (see my blogpost “It Isn’t?” 2/24/26), North Wall Holdings, LLC (see my blogpost “Boechler, Meet TEFRA,” 10/21/25), Frutiger (see my blogpost “Boechler, P. C. Meets Innocent Spousery,” 3/11/24), and our old friend Hallmark Rsch. Collective, Judge David Gustafson’s magnum opus that went two-for-five in the CCAs (if you include Judge Courtney D. (“CD”) Jones’ view of 5 Cir (see my blogpost “Pugsley’s Child,” 4/15/26).

At the end, it’s where the 90-day cutoff happens in Section 6234(a) that tilts the balance; the heavy-duty jurisdictional stuff appears in Section 6234(b) and only implicates USDC and USCFC actions, not pore l’il ol’ Tax Court.

“By itself, section 6234(a), which provides the filing deadline, clearly contains a permissive grant for a partnership to file a claim but not a grant of jurisdiction. Compare § 6234(a), with Auburn Reg’l Med. Ctr., 568 U.S. at 154 (concluding that the phrase “may obtain a hearing” does not speak in jurisdictional terms). Although it is not required, the statute does not contain the word “jurisdiction.” See Bowles, 551 U.S. at 208–13. But see Buller, 160 F.4th at 269 (finding significant that section 6213(a) did not include the word ‘jurisdiction’ in the relevant portion of the statute); Oquendo v. Commissioner, 148 F.4th at 832. It simply lists the venues in which a partnership may file after receiving a timely FPA and within the 90-day deadline. There is no language beyond mere reference to the courts of review that speaks to the Court’s authority to hear a case, just “mundane statute-of-limitations language.” Wong, 575 U.S. at 410. Section 6234(a) does not even go as far as section 7436(b)(2) in providing the consequences of an untimely filing. See Belagio Fine Jewelry, 162 T.C. at 252.” 167 T. C. 7, at p. 16.

Of course, that the 90-day Section 6234(a) language is not jurisdictional doesn’t mean Mo and the Big Apples are safe.

“Respondent has established that he properly issued and mailed the FPA to Big Apple and to Mr. Bhutta, and that Big Apple did not timely file this Petition. However, considering the relevant text, context, and history of section 6234(a), we conclude that Congress did not clearly state that the 90-day filing deadline is jurisdictional. We therefore are not deprived of jurisdiction because of Big Apple’s untimely filing, and will deny respondent’s Motion. We reserve judgment on whether the 90-day deadline is subject to equitable tolling until the parties raise this issue in an appropriate manner.” 167 T. C. 7, at p. 28.

I make the morning line on IRS winning a Rule 40(b) failure to state a claim motion 8 to 5.