Unfortunately, Judge Cathy (“NCY = No Cognomen Yet”) Fung passes on applying the fuggedaboutit broadbrush of Loper-Bright Ent. to IRS Notice 2010-16, the change-of-address protocol, in Donna Davis, T. C. Memo. 2025-72, filed 7/10/25. She brushes off Donna’s trusty attorney’s attempt to brush off the famous protocol thus: “Because our decision in this case does not rely on Revenue Procedure 2010-16, we need not discuss the deference afforded to the IRS.” T. C. Memo. 2025-72, at p. 3, footnote 4.

I wish Judge NCY Fung had stirred a wee bit silt, as change-of-address jumpballs are a commonplace.

Donna’s got testimony but no paper. She even tried telephoning IRS to get her address change properly inputted but couldn’t get through the automated system. She shows the draft of a letter she says she sent IRS but can’t prove she mailed it. IRS has a properly completed PS 3877 and a tax return showing the address to which IRS sent the SND.

IRS wins; the SND was sent to the last known address, and Donna is out.

What deference, if any, Rev. Proc. 2010-16 gets remains a mystery.

Wash sales, where substantially identical securities are bought and sold within a 30 day window, generate no recognized deductible tax losses, per Section 1091. But IRS fails to go through the brokerage statement to verify if any of the losses claimed by Juan Carlos Wandemberg Boschetti, Docket No. 11045-24S, filed 7/9/25, were in fact generated from wash sales.

So Juan Carlos gets the Section 165(f) loss, as limited by Section 1211(b) to $3000. He does have to pick up the $85K in wages he didn’t report, claiming he folded them into his stock market losses (which he surely had but can’t deduct more than $3K thereof in year at issue); IRS magnanimously folds the chops.

Juan Carlos fails to articulate why the $3K limit is unconstitutional as he claims, and STJ Diana L. (“Sidewalks of New York”) Leyden can’t find any reason.

Juan Carlos does get a Taishoff “Good Try, Novelty Division.”

Tax Court judges don’t do tax prep; that’s why we have Rule 155 beancounts. The opinion sets out the appurtenant principles. Each party does the arithmetic in conformance therewith. If they don’t agree, they can only fight about numbers.

If one party is unhappy with the principles, they can seek reconsideration (Rule 161) or revision (Rule 162) but they have only 30 (count ’em, 30) days to do it. As this is Tax Court, of course the 30 day period starts to run from a different point under each Rule.

Of course, there is a right of appeal in regular cases, but that arises only after entry of the decision which incorporates one of the Rule 155 submissions.

Judge Alina I. (“AIM”) Marshall continues the CPE class she started a year ago in Kenneth Steven Tuma, Sr. & Deborah Ann Tuma, Docket No. 15553-18, filed 7/9/25. Part One of the lesson can be found in my blogpost “Cannot Be Proved Too Often,” 7/11/24.

Ken wants a stay while he appeals. IRS wants more time to do their numbers. As this is extension number four, Judge AIM cautions the parties they’re not getting any more after this one, despite Ken’s ill health and IRS’ innumeracy. But there’s no stay.

“If a party disagrees with the opinion, then it follows that the party will also disagree with the computation. He will disagree even with his own computation, since his computation must be based on an opinion that he thinks is incorrect. But nonetheless his task is to perform the computation according to that opinion. His task is not to perform a computation according to the opinion he thinks the Court should have issued – but rather, to perform a computation according to the opinion the Court did issue. If a party disagrees with the Court’s opinion (and with the decision entered in accordance with it), then that party’s remedy would be an appeal from the Court’s decision, see Rule 190 and I.R.C. §7482, after that decision has been entered.” Order, at p. 1.

So do the numbers.

Edited to add, 7/10/25: And note that the bond you’ll need to post per Section 7485(a)(1) will be based upon the computation with which you disagree.

Or, The $24 Million Misunderstanding

The now-extinct game show is revived in Arden Row Assets, LLC, Natural Aggregates Partners, LLC, Partnership Representative, T. C. Memo. 2025-71, filed 7/8/25. ARA claims they have a deal with IRS based on an exchange of letters, but IRS claims no, and Judge Goeke buys it.

Under the post-2017 partnership régime, only the partnership representative (hereinafter and generally, the “Rep”) can make deals. Reg. Section § 301.6223-1(b)(3) requires a partnership to have a designated individual where the partnership representative is an entity. Here the Rep, Kaynard (misdescribed as “Maynard” at p. 24; time for another corrected T.C. Memo.?), played no part in the exchange of letters that supposedly settled this nonsyndicated conservation easement. Individual partners can no longer settle out with IRS as they could under now-superseded TEFRA.

Nobody raised whether IRS trial counsel had authority to bind IRS via letter, T. C. Memo. 2025-71, at p. 23, footnote 13.

The IRS universal settlement deal for phony easements was announced in ‘I.R.S. News Release IR-2020-130 (June 25, 2020). On October 1, 2020, the IRS issued guidance setting forth the terms of the initiative. I.R.S. Chief Counsel Notice CC-2021-001 (Oct. 1, 2020). The IRS offered settlements that disallowed the easement deductions in their entirety and allowed deductions of out-of-pocket costs that investors incurred to participate in the easement transactions (investor out-of-pocket costs).” T. C. Memo. 2025-71, at p. 4.

Problem here was, the easement wasn’t syndicated. The promoters held all of it, and their LLC had done 15 deals; the LLC’s M-2 showed a combined capital contribution for all their unsyndicated deals of $24 million, but real out-of-pocket for this deal was $110K.

IRS mistook this unsyndicated for a syndicated, where the syndicatees put in real cash. When IRS offered to take the M-2 number in lieu of the syndicatees each proving their actual out-of-pockets as in syndicated deals, they mistakenly offered the same deal to this unsyndicated, who jumped on it. If taken, the promoters would have lost a $57 million deduction, but gotten a $24 million deduction.

Judge Goeke does some drilldowns into contract law to let IRS off the hook. True, the unsyndicated’s lawyer sailed a wee bit too close to the wind.

Chops go by the board, as this case is related to LakePoint, for which see my blogpost “‘Bad Faith, He Maun Definitely Fa’ That’ – Redivivus,” 8/29/23.

Taishoff says nobody comes away looking good here, except maybe IRS Oversight Committee member Kimberly Mattonen, Esq., who caught the strange disparity in numbers. She gets a Taishoff “Good Move.”

Takeaway- When offbeat numbers jump off the page, jump on them.

The Grassley Amendment, now ten years old, expressly restricted Tax Court to the Federal Rules of Evidence. So when matters involved in grand jury proceedings swim into ken, FRCrimP Rule 6(e) takes second place.

Judge Rose E. (“Cracklin”) Jenkins Judge-‘splains in Mohammad Fawad Aryanpure & Malika Aryanpure, Docket No. 17120-23, filed 7/7/25.

“Petitioners’ Motion also requests in camera review of the additional documents identified in Exhibit A, which petitioners contend may be solely amongst third parties and inappropriately identified by respondent as being subject to deliberative process privilege. Respondent’s Response argues that such documents are outside of the scope of the Court’s Order and that, in any event, petitioners waived any objections other than on the grounds of deliberative process privilege. The Response further argues that the documents are protected by attorney-client privilege and Rule 6(e) of the Federal Rules of Criminal Procedure, incorporating the arguments made in the Document Response.” Order, at p. 2.

FRCrimP Rule 6(e) bars disclosure of grand jury matters by specified persons, including IRS attorneys.

IRS says they don’t even have DOJ stuff.

“It also noted that respondent ‘is not in possession of the Department of Justice’s files to be able to identify with specificity individual documents that are not protected by Rule 6(e),’ making it unclear to this Court how the documents in question came to be in respondent’s possession.” Order, at p. 2.

Judge Jenkins orders all documents to be presented today. She’ll first check for privilege, and then hear argument about what unprivileged materials, if any, warrant Rule 6(e) protection.

Edited to add, 7/8/25: Judge Rose E. (“Cracklin'”) Jenkins reviewed the documents, and found “there is no ongoing grand jury proceeding that could be affected by disclosure. Furthermore, having reviewed the documents in question and observed their limited relevance to the issues in this case, the Court does not believe that even if there were an ongoing grand jury proceeding, disclosure of the documents would have affected it.” Order, 7/8/25, at p. 3. IRS, hand ’em over.

Twelve score and nine years ago our forebears brought forth on this continent a new nation, conceived in liberty, and dedicated to the proposition that all men are created equal.

Now we are again engaged in testing whether that nation, or any nation so conceived and so dedicated, can long endure. We are on no great battlefield, we cannot dedicate any place.

It is for us, rather, to be dedicated to the still unfinished work which those forebears have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us, that we today highly resolve that that this nation, under God, shall have a new birth of freedom, and that government of the people, by the people, for the people, shall not perish from the earth.

If you don’t know what that means, consider yourself lucky. If you do, consider the plight of Cody J. Bertram and Nicole Bertram, Docket No. 1265-25S, filed 7/3/25. Cody was on TDY in FL when the SNOD was mailed to his last known address in TX; Nicole was having serious health issues at the time.

The petition was 90 (count ’em, 90) days late.

Ch J Patrick J. (“Scholar Pat”) Urda: “…we note that the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. sections 3901 et seq., postpones or suspends certain types of civil deadlines for eligible military service members. That statute, however, does not apply to extend the period for timely filing a Tax Court petition. See 50 U.S.C. § 3936(c) (the SCRA does not extend periods of limitation prescribed by or under the internal revenue laws of the United States). We further note that I.R.C. section 7508(a)(1)(C) extends the time to file a Tax Court petition in response to a deficiency notice if an individual is in military service in a combat zone or contingency operation. However, this provision does not appear to apply to Mr. Bertram’s temporary military duty assignment.” Order, at p. 2.

Equitable tolling fails, as Cody and Nicole are in 5 Cir.

We finally get a post-BBA 2015 full-dress T. C., JM Assets, LP, A-A-A Storage, LLC, Partnership Representative, 165 T. C. 1, filed 7/2/25, with Judge Ronald L. (“Ingenuity”) Buch getting the OK from 17 (count ’em, 17) of his colleagues.

M was selling off real estate and IRS was increasing Section 1231 recapture of depreciation. IRS wants partial summary J that the NFPA (Notice of Final Partnership Adjustment) was timely per Section 6235. “The Commissioner relies on Treasury Regulation § 301.6235-1(b)(2), which defines the period the Commissioner has to issue the FPA in the event a partnership requests a modification of an imputed underpayment pursuant to section 6225(c).” 165 T. C. 1, at p. 3.

Spoiler alert! IRS loses!

IRS audited, proposed changes, M riposted with a Form 8980 modification request, IRS bought all M’s requests, but then changed its mind and hit M with the NFPA with all the old increases, plus chops.

M claims IRS is too late with the NFPA, per Section 6235(a)(2). IRS says yeah, we goofed, but we’re timely.

Judge Buch lays out the new procedures in 165 T. C. 1, at pp. 8-9. First there’s a notice of proceeding to the Representative, who alone appears and can bind all partners. After audit, the Notice of Proposed Partnership Adjustment (NOPPA). Rep has 270 days to request modifications via Form 8980 with attachments; see 165 T. C. 1, at p. 9, Footnote 3, for a list of modifications. IRS eyeballs any modification requests and issues a Notice of Final Partnership Adjustments (FPA). Rep must petition within 90 days to USTC, Court of Claims, or USDC.

When a modification request of imputed underpayment under section 6225(c) is timely made, IRS must mail FPA no later than 3 years after the date that is 270 days . . . after the date on which everything required to be submitted to the Secretary pursuant to such section is so submitted. IRS has promulgated Reg. Section 301.6235-1(b)(2), which says date everything submitted is 270 days when partnership can request modifications; M says the statute says it’s when they actually submitted everything, as long as it’s less than 270 days after the NOPPA.

It’s time for the Supremes’ gift of discipline to tax law. Cue Loper-Bright.

“As applied in this case, there is a direct conflict between the statute and the regulation on which the Commissioner relies. Section 6235(a)(2) provides the period for when the Commissioner can make an adjustment for a partnership in the event a modification request for the imputed underpayment is submitted to the Commissioner. The plain text of that statute states that date is ‘270 days . . . after the date’ everything required for a complete modification request under section 6225(c) ‘is so submitted.’ I.R.C. § 6235(a)(2). The regulation interprets that date to be 270 days after ‘[t]he date the period for requesting modification ends.’ Treas. Reg. § 301.6235-1(b)(2)(i)(A). As is made evident in this case, those are different dates, and the regulation must give way to the statute.” 165 T. C. 1, at p. 13.

IRS claims statute gives broad authority to promulgate regulations. Yeah, says Judge Buch, but not to rewrite the statute that gives IRS that authority. And M never filed the Form 8981 waiver, shortening the 270-day cutoff. But M didn’t want to waive, and nothing in the statute says a waiver filing is necessary to shorten the 270-day cutoff.

IRS blew the cutoff.

“Factually, there is no genuine dispute that JM Assets submitted everything required to be submitted under section 6225(c) on February 14, 2023. That was the date JM Assets submitted Form 8980 to request modification of the imputed underpayment. At no time after that did JM Assets submit further information, nor did the Commissioner request additional information. And the Commissioner approved the modification request. Taken together, these facts establish that JM Assets submitted everything required to be nsubmitted with its initial submission. Under section 6235(a)(2), the Commissioner had 270 days from receipt of that submission to issue an FPA. The date that is 270 days from February 14, 2023, is November 11, 2023, a Saturday. Thus the 270-day period lapsed on Monday, November 13, 2023. See I.R.C. § 7503. The FPA issued on December 1, 2023, was untimely.” 165 T. C. 1, at p. 14.

IRS tries a goal-line stand, seeking to amend the answer to allege substantial understatement of income, triggering 6SOL. M says it did disclose the sale terms on its Form 6252 filed with its return. IRS says the understatement arose from the Section 1231 recapture. But misstating cost or basis isn’t an understatement; see Home Concrete and my blogpost “Colony Lives,” 4/26/12. No amendment to answer.

Once again, the famous words of Judge Cardozo echo in Tax Court. IRS threw to the wrong base, sending the SNOD for Moxon Corporation, 165 T. C. 2, filed 7/2/25, to an address other than last known address. Hence Moxon owes no tax, as it had no chance to contest liability and SOL had run.

But Moxon was a partner in AD Global, a TEFRA-era dodge, wherein the TMP stiped out the Section 6662(h) 40% gross valuation misstatement chops. Moxon is fighting a NFTL and a NITL for the chops, as IRS conceded collecting the tax.

But after somber reasoning and copious citation of precedent, Judge Goeke finds that while deficiency procedures and proceedings apply to affected items, now-repealed Section 6230(a)(2)(A)(i) takes chops out of the mix.

“…petitioner was obligated to report the tax at issue on its [years at issue] tax returns and was obligated to pay that tax at the time required by Congress. That petitioner generated tens of millions of dollars in purported losses through AD Global, failed to comply with its reporting and payment obligations, and then was fortunate in that respondent mailed the SNODs to an incorrect address does not mean that petitioner ‘was never obligated to pay [the taxes] in the first place.’ Petitioner’s argument on this point is based on a fiction and is unconvincing.” 165 T. C. 2, at pp. 14-15.

As with SOL, the government’s remedy may be gone, but the right remains.

Moxon owes the chops; while IRS’ blunder lets Moxon walk on paying the tax, it’s still owed, and the chops stick.

Judge Travis A. (“Tag”) Greaves, master of discovery, marries the 1982 Mel Gibson – Sigourney Weaver romadrama to Reg. Section 1.170A-13(c)(5)(iv)(F) in Carters Lake Land, LLC, f.k.a. Sassafras Point II, LLC, Piedmont Private Equity Manager, LLC, Tax Matters Partner, et al., Docket No. 1034-21, filed 7/2/25, lead case in a consolidated Dixieland Boondockery.

IRS served a blockbuster subpoena duces tecum (paper, not person) on appraisal firm Integrity, claiming their employee, whom I’ll call DM, wasn’t a qualified appraiser.

IRS wanted documents for years immediately prior to acquisition, acquisition, easement granted, and easement reported. Integrity claims this involves tons of documents, all of which its trusty attorneys need to scan for privilege and relevance, even after IRS offers a couple restrictive search terms (hi, Judge Holmes).

Integrity is down with providing documents relating to the three (count ’em, three) consolidated petitioners.

“Details regarding DM’s appraisal work, the clients he served, and Integrity’s relationship to petitioners are relevant to the issue of whether DM meets the definition of a qualified appraiser under section 170(f)(11)(E). This Court will allow respondent some latitude in its investigation to establish the relationship between petitioners and Integrity, ensuring the development of comprehensive legal arguments. The value and need for this information weigh against the motion to quash.” Order, at p. 5.

Except.

“Respondent’s request implicates potentially privileged information over a period of nearly four years. We disagree with respondent that such an extensive period is needed to determine whether someone is a qualified appraiser. Treas. Reg. section 1.170A-13(c)(5)(iv)(F) provides the relevant period — “the taxable year”. We will limit the temporal reach of the subpoena to the taxable year at issue. Integrity shall provide the relevant documentation for [taxable year at issue].” Order, at p. 6.

For the checklist for qualification and disqualification of an appraiser for Section 170 charitable giving, see Order, at p. 5.