Judge Emin “Eminent”) Toro reminds AirBnB, Inc. & Subsidiaries, 167 T. C. 9, filed 9/2/26, that legal experts called judges are standard equipment for Tax Court trials, and these legal experts are good at disregarding legal conclusions from nonlawyers (Taishoff says they’re not bad at disregarding legal conclusions from lawyers, too). 

Likewise Rule 143(g) doesn’t apply to pretrial discovery jousts, such as AirBnB and IRS are having with dueling Rule 103 motions.

“Rule 143 provides evidentiary rules for trials before this Court. It is found in Title XIV of the Tax Court Rules of Practice and Procedure, titled ‘Trials.’ The Rule itself is titled ‘Evidence,’ and Rule 143(a) explains how ‘[t]rials before the Court will be conducted.’ Moreover, Rule 143(g), by its terms, applies to ‘any party who calls an expert witness.”” 167 T. C. 9, at p. 5. (Footnote omitted, but it says captions of statutes can be used to clear up ambiguity). No trial here, yet.

IRS has two (count ’em, two) declarations it put in supporting its Rule 103 from what sounds like a professional expert. The dispute is about what features of a “clean room” should have for reviewing ultra-secret computer software; don’t confuse this with the clean room used for electronic parts manufacture. See my blogpost “Do Your Homework and Clean Up Your Room,” 4/15/13.

AirBnB can always put inn their own experts’ declarations in support of their motion or in opposition to IRS counsel’s.

And maybe so might could be the declarations AirBnB wants stricken pertain to industry practices, which are OK under Rule 143(g). “The bulk of Mr. Myers’s statements appear to concern his view of standard protective order practices in the expert witness industry, so they might be acceptable without a written report under Rule 143(g)(3) in any event.” 167 T. C. 9, at p. 6, footnote 8.

“The expert witness industry?” Judge Eminent Toro got that right.

I can’t count how many times I’ve applied the designation to Judge David Gustafson That Obliging Jurist. All of us practitioners have been before irascible types, seeing newbies shredded and even oldtimers pulped by scorn and sarcasm, where self-defense is worse than silence. Judge David Gustafson is the reverse, a true gentleman.

So there’s got to be a lot to get him to turn to that old poker sanction, and call the clock in Laidlaw’s Harley Davidson Sales, Inc., Docket No. 14616-14L, filed 9/1/26.

Now before all y’all shout as one voice “Didn’t that get finished in 2022?” yes, 9 Cir reversed and remanded in the famous “any time before supe loses supervisory powers” holding. But the case is still unresolved. IRS is willing to drop the liability and the Section 6707A chop, but Laidlaw’s claims they’re owed money and their counsel, the celebrated William J. (“Old Bill”) Wise, Esq., is sick. I’m sure we all wish Old Bill the swiftest recovery. So Laidlaw’s and IRS want more time.

Judge David Gustafson obliges, but calls the clock on this waltz of the decades.

“We will grant that extension, but we do not expect to grant any further extension. While we have immediate sympathy for counsel’s situation, this case and the fourteen cases related to it (filed in 2014-2019) have been long pending; the Commissioner’s concession has been long known; and the Court has a responsibility to bring these cases to conclusion. The pendency of a case is not cost-free to the Court, and the passage of time often makes a case more difficult to resolve, not easier. Moreover, extensions are granted when it is shown that the delay would better enable the presentation of the case, but not when a delay would simply leave the parties in the same circumstance in which they were at the time of the previous deadline, or in worse circumstance. We hope and assume that two more months will restore petitioner’s counsel to health and that he reasonably expects to be able to file his responses by that date; but sometimes the passage of time does not actually promote a party’s ability to conduct a case. If counsel will not be able to do the work necessary to bring these cases to conclusion, then he has the ethical responsibility to his clients and to the Court to cooperate in the retention of new counsel who can do so. We hope and assume that current counsel will be able to bring these cases to conclusion.” Order, at p. 2.

Practitioners representing the whistleblowing community may want to take a quick peek at Ch J Patrick J. (“Scholar Pat”) Urda’s order in Santo A. Dileo, Sr., Docket No. 3195-26W, filed 8/31/26.

Santo Sr. is pro se, so IRS wants a Rule 103 to cover any Section 6103(h)(4) disclosures they may have to make to Santo Sr. or his counsel.

Ch J Scholar Pat obliges. And here’s a preview of what IRS will accept.

Practitioners may want to drag-and-drop, and tailor appropriately, so when they need to move for a Rule 103, they can lodge something that gets a “GRANTED” stamp.

Judge Elizabeth A. (“Tex”) Copeland thus grants summary J to IRS, despite the “high touch” designation from the subject matter classifier to the whistleblowing of Jeremy Berenblatt, T. C. Memo. 2026-77, filed 8/31/26.

When Jeremy blew seven (count ’em, seven) years after a couple of IRS CID SAs interviewed him, his Form 211 went to an SMC. “The classifier, considering only Mr. Berenblatt’s submission, determined that his claim potentially rated an H (high touch) designation.” T. C. Memo. 2026-77, at pp. 3-4. (Footnote omitted, but it says high touch means the case warrants assignment to a senior WBO employee and potential coordination with other IRS functions.).

IRS says they knew already about what Jeremy blew, he wasn’t a witness on any trial, what he gave IRS didn’t substantially aid in their billion-dollar recovery; the “but-for” argument isn’t enough, and Jeremy’s claim about how RAs handled form 11369 don’t add anything to what Judge Tex Copeland already found.

And a high touch is not a slam dunk.

“Mr. Berenblatt misunderstands the role of the classifier within the whistleblower regime’s overarching structure. A classifier is an employee of an operating division who functions as a gatekeeper. See IRM 25.2.1.3.1 (Mar. 10, 2023) (‘Classification’s role is only to determine if the information on the Form 211 warrants further review. It is not classification’s responsibility to determine whether a whistleblower is entitled to an award.”). Indeed, if we agreed with Mr. Berenblatt, there would be no need at all for the WBO; classifiers alone would be sufficient. Here, the classifier determined, solely on the basis of Mr. Berenblatt’s Form 211 submission, that Mr. Berenblatt’s claim warranted further review. However, that a claim is not prima facie unviable is not the same as saying that the claim is meritorious.” T. C. Memo. 2026-77, at p. 14.

IRS counsel are notorious devotees of the “Win Your Case at Discovery” gambit. But the trusty attorneys for Chad Burris & Julie Burris, et al., Docket No. 18712-22, filed 8/28/26, have been successfully slow playing IRS’ treasure hunt. For backstory, see my blogpost “Don’t Suppose You Can Depose – Indocumentado,” 4/29/26.

So IRS’ counsel unleash a barrage of motions seeking documents, admissions, and elucidations, which Judge Cary Douglas (“C-Doug”) Pugh grants in extenso. The wrangling “which has plagued this case” caused Judge C-Doug Pugh to continue the special trial session supposed to start on Monday.

Now said trusty attorneys have ten (count ’em, ten) days to pony up or show good cause at the trial next year why whatever they didn’t hand over should be allowed in.

For those of my readers who have led clean and sober lives, far from track and table, to “slow play” at poker is to bet weakly so as to entice an opponent into overvaluing his/her cards, springing a trap at the last. 

Here, IRS calls. And Judge C-Doug Pugh is waiting.

STJ Jennifer E. (“Publius”) Siegel has a 32 (count ’em, 32) page small-claimer. I’ll let Her Honor judge-‘splain.

“The simplest version of this small tax case Opinion is that petitioners are liable for the deficiencies determined by the Internal Revenue Service (IRS) for each of the four years before us because they failed to meet their burden of proof and establish entitlement to any of the deductions claimed. If that were the whole story, however, this Opinion would not be 32 pages long. There is also a fraud penalty at issue for each year, and that requires a few more pages to discuss what petitioners claimed on their tax returns and to make clear how the IRS proved fraud by clear and convincing evidence. But really, this Opinion is long because one of the factors we consider in evaluating fraud is the sophistication of the taxpayer. And Mr. Janangelo is a pretty sophisticated taxpayer; Mr. Janangelo is an auditor at the IRS.” Peter J. Janangelo, Jr. and Mary Ann Janangelo, T. C. Sum. Op. 2026-8, at p 2.

Mr. Janangelo is also a CPA and a member of the Bar of Our Fair State.

“Mr. Janangelo was employed full time at the IRS during the years at issue and, at the time of trial, had been for almost 20 years. In his capacity as a revenue agent for the IRS, Mr. Janangelo conducts audits and reviews tax returns. He belongs to the National Treasury Employees Union (NTEU) and has been a union steward.” T. C. Sum. Op.  2026-8, at p.2. (Footnote omitted, but it says he works for IRS, not OCC.) 

I’ll spare you the rest, barring two points for audit.

“Mr. Janangelo argues that he is not required to substantiate any expense under $75, no matter what the category. He cites no authority for this proposition.” T. C. Sum. Op. 2026-8, at pp. 15-16.

Notwithstanding Section 446, requiring cash basis taxpayers to recognize income and expense when paid, ” Mr. Janangelo argued that the IRS should have been more flexible during his audits, explaining that his own audit practice working for the IRS is to allow a deduction, even if claimed for  the wrong year. Mr. Janangelo’s practice as a revenue agent may be to allow such deductions, but the Court’s role is to apply the law as written to the facts put in evidence. The Janangelos find support in neither.” T. C. Sum. Op. 2026-8, at p. 18

I do not recommend either position.

Jeremy Berenblatt, T. C. Memo. 2026-75, filed 8/27/26, is an unending source of blogfodder. Y’all will recollect Jeremy blew on a digital options dodge seven (count ’em, seven) years after IRS interviewed him. So far no dough for Jeremy, but his trusty attorneys (whom I’ll call the Scotts) are in there pitching, trying to supplement (or maybe complete: the rules overlap) the administrative record, and have Judge Elizabeth A. (“Tex”) Copeland take 14 (count ’em, 14) judicial notices.

Problem is Dania Beach. Jeremy and the Scotts, says Judge Tex Copeland, are firmly aground. City of Dania Beach v. FAA, 628 F.3d 581 (D.C. Cir. 2010)) is the barrier. The three-way test is “1) if the agency ‘deliberately or negligently excluded documents [from consideration] that may have been adverse to its decision,’ (2) if background information was needed ‘to determine whether the agency considered all the relevant factors,’ or (3) if the ‘agency failed to explain administrative action so as to frustrate judicial review.’ City of Dania Beach, 628 F.3d at 590.” T. C. Memo. 2026-75, at pp. 11-12.

Jeremy wants IRS’ notes from his interview. Even if that happened years before his Form 211, maybe they can be included on the “all relevant factors” front. But that’s not a catch-all; it only includes material to explain complex technical issues. IRS was already on the trail of the dodgefloggers. And Jeremy put what he had told the IRS in his Form 211, so the Ogden Sunseteers had the whole story.

Jeremy’s own file wasn’t attached to his Form 211. Anyway, it’s not adverse to the OS decision, doesn’t provide relevant technical background, nor does omission frustrate judicial review.  As for IRS e-mails that he wants, they were created after he petitioned so could never have been considered in evaluating his blow. As for deliberately or negligently excluded, they had to exist when the decision was made.

There’s a lot of argy-bargy about in camera review of grand jury testimony, T. C. Memo. 2026-75, at pp. 16-20, but I leave that to the technicians. F.R. Crim. P. § 6(e)(3)(E)(i) is well outside my wheelhouse.

As for the 14 judicial notices, they also founder on Dania Beach. “As a threshold matter, Mr. Berenblatt does not detail how his requested adjudicative facts fit into the City of Dania Beach framework. Moreover, none of Mr. Berenblatt’s 14 RAFs are facts generally known within the jurisdiction or capable of accurate and ready determination. RAFs 1, 2, 3, 4, 7, 10, 11, 12, 13, and 14 describe the course of the prosecution of the… promoters and relate to Mr. Berenblatt only obliquely, if at all. They therefore cannot properly be considered adjudicative facts in the first instance. Moreover, to the extent that the RAFs incorporate inferences and speculation, they are not facts at all.” T. C. Memo. 2026-75, at p. 22.

No, you don’t have to suffer to prove you have a profit motive. But it helps if you worked hard and got hurt. Just ask Sydney L. Gutierrez-Chapin, star of Frank L. Chapin, Deceased, and Sydney L. Gutierrez-Chapin, et al., T. C. Memo. 2026-76, filed 8/27/26. The late Frank (that’s Frank CPA) and Sydney had a tangled trail over the six (count ’em, six) years at issue, so I’m not going to summarize all the ground Judge Vasquez covers.

But two (count ’em, two) points in his opinion are worth a look.

The late Frank and Sydney both grew up on farms and tended animals. At home in ID, they were quarter horse and Appaloosa breeders, ropers and racers. My colleague Peter Reilly CPA knows this story well. 

But here’s the kicker (and I mean kicker): “As with cattle, in the spring, petitioners monitored the horses ready to foal around the clock, including four to five times at night, and moved the horses with foals to separate areas. Petitioners have overseen the births of over 100 colts.

“Other responsibilities on the ranch included cutting, baling, and stacking hay. In addition to the field work, petitioners repaired the fencing and various buildings on the land. The physical labor needed to maintain the ranch took a considerable toll on petitioners. Additionally, both petitioners sustained injuries at different times from falling off or being kicked by horses.” T. C. Memo. 2026-76, at p, 8. 

And notwithstanding personal bankruptcy, the late Frank and Sydney stayed in the barn and in the saddle. True, the late Frank and Sydney were a trifle casual with their paperwork and stayed the course when others would’ve bailed. IRS folded some deductions if Judge Vasquez found the late Frank and Sydney had a profit motive.

Judge Vasquez says pain equals gain. “Section 183 does not require that taxpayers operate their ventures with perfect business acumen. Petitioners’ persistence in the face of hardship may reflect unusual business judgment, but it does not belie an honest profit motive, which we find petitioners to have established.” T. C. Memo. 2026-76, at p. 23.

Remember, the late Frank was a CPA. So how about bookkeeping?

“Respondent contends that petitioners are liable for the section 6662 penalties because they failed to keep, maintain, and produce organized records relating to their business income, expenses, net operating and capital losses, and Schedule F activity, resulting in their need to reconstruct numerous documents. Mr. Chapin prepared their 2009, 2010, 2011, and 2012 returns using working trial balances, balance sheets, and profit and loss statements. All income was recorded, regardless of the account in which it was deposited, including any cash received, and Mr. Chapin allocated expenses among personal expenses, expenses incurred in the accounting practice, and expenses incurred in their farming activity. He then reconciled each account every month. Petitioners kept their receipts, including those for personal expenses and organized them in ledger categories. To the extent that petitioners failed to effectively present that evidence at trial, we believe that petitioners’ age and the passage of time were significant contributing factors. Accordingly, we find that petitioners are not liable for accuracy-related penalties on the underpayments relating to respondent’s adjustments to income and disallowances of Schedules C and E deductions not subject to section 274(d).” T. C. Memo. 2026-78, at pp. 30-31.

Unhappily, Sydney “fell woefully short of the stringent requirements of Section 274(d)” and loses those deductions. 

Once again I advert to that 2018 success for my daughters’ childhood friend, as The Great Chieftain of the Jersey Boys tries to exit a couple cases (hi, Judge Holmes). But there’s another attorney on the case, and untangling isn’t so easy.

Judge Rose E. (“Cracklin'”) Jenkins judge-‘splains in Open MRI and Imaging Rochelle Park, Inc., Docket No. 5433-22, filed 8/26/26.

“…counsel for petitioner Frank Agostino filed a Motion to Withdraw as Counsel (Doc. 43). In the motion, Mr. Agostino notes that although CH ‘also remains listed on the docket as counsel for Petitioner,’ he ‘on information and belief, is no longer in contact with Petitioner.’ Accordingly, Mr. Agostino states that ‘Petitioner would not continue to be represented by counsel in fact’ after his withdrawal.” Order, at p. 1. (Name omitted).

Of course, both petitioner and respondent object to the motion.

Judge Jenkins sets up a schedule for CH to make his position known. Meantime, serve the petitioner with all papers.

Btw, trial on in less than 90 days.

That’s the latest Dixieland Boondockery deal in Judge Albert G. (“Scholar Al”) Lauber’s division. I don’t undertake to blog, much less evaluate, every dodge settlement; there are far too many and the cottage industry has too many players. But practitioners should have some notion of the going rate, however attenuated, to help them decide whether to hold or fold.

Howbeit, Sand Investment Co., LLC, Inland Capital Management, LLC, Tax Matters Partner, Docket No. 7307-19, filed 8/25/26, got a Sched K, line 13(d) other deduction of $15 million; their charitable contributions (50%) were cut from $80 million to $50K. There were a basis adjustment and other assets revalued. And they got a 10% gross valuation misstatement chop under I.R.C. § 6662(h). No other chops.

Good deal? I report, you decide.