The trusty attorney for Jon B. Novak, T. C. Memo. 2026-52, filed 6/17/26, gets a Taishoff “Good Try, Third Class” for her run-the-checklist attack on the filing of the NFTL, but Judge Rose E. (“Cracklin'”) Jenkins heaves the IRM at her, taking down her petition.

The date when the NFTL was prepared is irrelevant. While the RO may tell the taxpayer that s/he is considering rejection of the CA, s/he may not tell taxpayer that the CA will be rejected until the CDP is concluded. And Jon got all the breaks. 

“The Internal Revenue Manual (IRM) instructs IRS employees that although the intention to recommend rejection of an installment agreement should be communicated to a taxpayer, actual rejection of agreements must not be conveyed before independent administrative review. IRM 5.14.1.4(11) (Mar. 31, 2023). It also instructs that enforcement action may not be taken while installment agreements are pending. Id. However, it also specifically provides that NFTLs generally should be filed in connection with installment agreements to ensure the government’s interest is protected. See IRM 5.14.1.4.3(1)(a) (Dec. 23, 2022); see also IRM 5.14.1.4.3(2) (noting that NFTLs may be filed while installment agreements are pending and during the rejection process); IRM 5.12.2.6(1) (Oct. 14, 2013) (providing that an NFTL should generally be filed if the aggregate unpaid balance of assessments is $10,000 or more). It instructs that taxpayers should be advised in advance about the plan to file an NFTL and given an opportunity to make full payment. IRM 5.14.1.4.3(1)(b). The RO followed the protocol set forth in the IRM by conveying the intent to reject the installment agreement before the rejection was actually effected, as well as by indicating that an NFTL would be filed and providing petitioner an opportunity to fully pay his liabilities before that. It is generally not an abuse of discretion to follow IRM guidelines. Cf. Mission Organic Ctr., Inc. v. Commissioner, Nos. 6937-23L, et al., 165 T.C., slip op. at 10 (Dec. 16, 2025). Petitioner had an opportunity to avoid the NFTL filing by fully paying the liabilities, and he had the opportunity to dispute the NFTL filing after the fact through the CDP process. He also had the opportunity to request withdrawal of the NFTL, potentially invoking section 6323(j)(1)(C), given his claim that the NFTL impeded his ability to liquidate assets to pay his liabilities. See IRM 5.12.9.4 (Sep. 6, 2019); see also Form 12277, Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien. Accordingly, petitioner’s rights were not nm violated.” T. C. Memo. 2026-52, at pp. 10-11. (Footnote omitted).

For the Mission Organic’s story, see my blogpost “Expensive Pottery,” 12/16/25.

Judge Christian N. (“Speedy”) Weiler is the judge for the job in Adrian D. Smith and Nancy W. Smith, et al., T. C. Memo. 2026-50, filed 6/16/26, as he unveils the tax treatment of these various Mideastern research projects of these world-famous architects.

Key points: Loss of potential profits on premature termination do not render research unfunded; payment for work to date is sufficient. Merely meeting commonly-agreed standards is insufficient; detailed specifications, itemized criteria, and. numerous checkpoints (like 1,000 pages of specifications) which must be met are necessary for unfunded Section 41’s ultra-guided largesse. Pre-Loper Bright cases deferring to Chevron are still good law, and Judge Speedy Weiler follows them. The architects do get the lower Reg. Section 1.41-4A(d)(3) substantially retained rights to the research credits in four (count ’em, four) of the six (count ’em, six) exemplars.

The independent investor test for reasonableness of compensation to researchers is the test under Section 174, even though a carryover from Section 162 learning. Here, however, the record is too scanty for Judge Speedy Weiler to do the numbers. Taishoff says, settle this out guys, talk among yourselves.

Contract drafting is the key. Specialists should read and heed, especially when amending or terminating. And choice-of-law clauses only work when contract terms are ambiguous, so be prepared to show chosen law definitely impacts the written contract (and if chosen law does, why the contract wasn’t drafted accordingly).

A Taishoff “Good Job” to the Smith-Gill trusty attorneys for rescuing as much of this desert storm as they did.

Rule 161 reconsiderations are rare beasts, but when both petitioner and respondent (IRS) agree the judge got it wrong, even so strong-minded a jurist as ex-Ch J Kathleen (“TBS= The Big Shillelagh”) Kerrigan gives heed. 

Ex-Ch J TBS tossed Robert S. Koenigsberger & Dilek I. Koenigsberger, Docket No. 12537-10, filed 6/16/26 (no misprint, this case is antique) back in November, 2023, when they sought overpayment relief for the enhanced Section 6662 accuracy chop they claim they paid, because the Ks still owed tax, interest and penalties. Turns out the Ks were in one of those depreciated currency partnership dodges, but a partner other than the TMP settled out for a 10% Section 6662(a) chop back in 2009.

Now the Ks want to settle out the whole deficiency and the 10% chop just like the former partners did, just a wee bit late.

“After the Court issued its Order, petitioners made an additional payment for [year at issue]. The parties also stipulated that petitioners have paid the entire amount of tax, penalty, and interest that would be due if respondent’s determinations in the notice of deficiency and notice of computational adjustment are sustained. Additionally, petitioners submitted a refund claim in response to the notice of computational adjustment.” Order, at p. 2.

Obviously, this is under the now-defunct TEFRA régime. Chops were partnership items, hence affected items as to partners, so couldn’t be litigated at partner level, even if included in a SND. No Section 6512(b) overpayment jurisdiction unless compliance is had with Reg. Section 301.6611-1(b) , namely, “the entire tax liability (including any interest, addition to tax, or additional amount is satisfied.” Order, at p. 3.

Well, it has, belatedly.

But aren’t Rule 161s post-trial? Generally (love that word) but see Bedrosian, 144 T. C. 10, and my blogpost “Mox Nix,” 3/17/15.

Changed circumstances, so ex-Ch J TBS tosses the former toss and leaves the parties to clean up.

And a Taishoff “Good Job” to the Ks trusty attorneys for getting the client to pony up what has to be a heavy-duty amount and getting IRS to agree.

I’ve quoted Rudy Kipling’s advice to the infantry before now, but it was pointed at developing facts. Now it’s pointed at getting those facts into the administrative record. Even in non-record rule cases, treat the record as your sole chance to make your case.

That’s Judge Mark V. (“Vittorio Emanuele”) Holmes’ advice to Richard A. Garber, Docket No. 11630-25W, filed 6/15/26.

Richard wants to supplement (not complete, as Charles Jeane’s hardlaboring clerks rename Richard’s motion) the record with a deposition not yet taken of a former agent (RA? SA?). This former agent might know something about what IRS collected from Target by way of fines or forfeitures. And there’s a press release from the US attorney for NDNY that Richard wants in.

Problem is, Richard hasn’t got the right stuff. Speculation about what the former agent might know, and no firm connection between press release and what use IRS made of Richard’s information aren’t enough.

“Someone who wants to add evidence to the administrative record in the form of a deposition has to make a ’significant showing’ that the requested deposition would reveal material in the IRS’s possession ‘indicative of bad faith or an incomplete record.’” Prescott v. Commissioner, T.C. Memo. 2025-121 at *6 (internal citations omitted).” Order, at pp. 1-2.

For Tom Prescott’s story, see my blogpost “Three on a Match,” 11/19/25.

But IRS did collect some money from Target. So Judge Holmes directs Richard “to review the administrative record, and then try to link the information that he provided to what was collected.”  Order, at p. 2. 

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’.