Bernard J. Donachie, coaming late to the party in Smith Mill Rock, LLC, Mulhern Jasper Exploration, LLC, Tax Matters Partner, Docket No. 13132-22. filed 6/8/26, says “there are ‘active watchdog investigations’ into the IRS appraiser who worked on the case during the examination and ‘significant procedural deficiencies regarding the Government’s expert valuation.’” Order, at p. 2.

It’s another stiped-out Dixieland Boondockery, wherein none of the partners save the TMP participated in litigation or settlement, until Bernie comes in during the 60-day Rule 248(b) nonparticipant last chance, brandishing his 2.2759232% interest in Mulhern Jasper, which makes him an indirect partner in Smith Mill Rock.

Judge Travis A. (“Tag”) Greaves is willing to look and see if Bernie has a clear and convincing reason why he’s late and that he has something to show the settlement isn’t reasonable.

Spoiler alert: He doesn’t and he doesn’t.

It took Bernie a year-and-a-half to figure out he was sent the wrong appraisal. And he got a bunch e-mails (hi, Judge Holmes), even though he claims he didn’t get some (everybody else did). And yeah, he’ll have some tax to pay, but that’s what happens when you take a minuscule interest in a deal with someone else’s finger on the button.Ultimately, whatever happened at Exam with the watchdog, the past isn’t even prologue as deficiency trials are de novo.

That’s the per cur opinion in Rochelle v. Commissioner, 293 F.3d 740 (5 Cir, 2002), affirming Judge Vasquez’s “excellent opinion (concurred in by nine other judges), which we adopt.” 293 F. 3d at p. 741. So Ch J Patrick J. (“Scholar Pat”) Urda, adding 5 Cir to the jurisdictional limit side of the Section 6213(a) balance sheet, tosses Shedrack Aforigho, Docket No. 2956-26, filed 6/5/26. 

Except.

Taishoff says, while in no way denigrating Judge Vasquez or his nine (count ’em, nine) distinguished colleagues, that was 24 (count ’em, 24) years ago, and pre-Boechler, pre-Culp, pre-Buller, and pre-Oquendo. So a certain quantum of hydrogenated oxygen has gone over the cliché since.

Of course, we may have a 5 Cir reaffirmance of Rochelle, just as 11 Cir resuscitated Pugsley; I confess that one still rankles, but it hardens me so that, as a much finer writer than I put it, “I have been too familiar with disappointments to be very much chagrined.”

Whether it was William Blake, Aldous Huxley, or Jim Morrison who first said it, Jodell Sample, Docket No. 4394-20, filed 6/5/26, didn’t know spouse Doc Joe Sample would be unable to pay their stated tax bill for year at issue, but did know that said year’s Form 1040 MFJ substantially understated that bill.

Hence Judge Mark V. (“Vittorio Emanuele”) Holmes, without a single dissed partitive genitive, checks out Rev. Proc. 2013-34, IRS’ revised innocent spousery checklist, and finds he could have forgotten about what Jodell knew about whether Doc Joe Sample would pay. 

For the backstory that led up to this Rule 161 reconsideration, see my blogpost “The Innocent Spousery Slalom,” 11/17/25.

“We thought it more likely than not that Ms. Sample was reasonable in thinking that Dr. Sample would be able to pay the smaller amount shown due on the return, even when added to the Samples’ other existing tax debts. That is a different question than whether she knew or had reason to know that the [year-at-issue] tax return understated the couple’s tax liability. And it is not the same question as Ms. Sample paraphrases in her motion—whether Ms. Sample ‘reasonably believed that her husband would take care of their income tax liabilities.’

“On reconsideration we also note that the Revenue Procedure’s discussion of knowledge in underpayment cases may not even apply—the first sentence of the relevant paragraph conditions its applicability: ‘In the case of an income tax liability that was properly reported but not paid . . . ,’ Rev. Proc. 2013-34 § 4.03(c)(ii), and Ms. Sample concedes in her motion that the Samples’ [year-at-issue] tax return did not properly report their income.

“That means that the Court should have at least underweighted, and perhaps altogether ignored, Ms. Sample’s lack of knowledge at the time she signed the [year-at-issue] return that Dr. Sample would let the unpaid tax shown on that return remain unpaid.” Order, at pp.2-3. (Emphasis by the Court).

And before my ultrasophisticated readers yell with one voice “Loper Bright the Rev. Proc.,” the parties conceded the Rev. Proc.’s applicability on the trial. Order, at p. 1.

A word of explanation of Judge Holmes’ cognomen for those who tuned in late. See my blogpost “Code 2, Code 1,” 4/29/21.

That must be how Alvie N. Paschall and Patricia C. Paschall, T. C. Memo. 2026-46, filed 6/4/26, must feel after Judge Cary Douglas (“C-Doug”) Pugh sustains IRS’ $33K underreporting hit due to the bonus cryptocurrency Alvie got when he let his crypto be used in proof-of-stake transaction during year at issue. 

As near as i can tell, a proof-of-stake means the staker puts up his own crypto to to validate other punters’ crypto transactions. If he gets it right, he gets more crypto; gets it wrong and he loses. But see T. C. Memo. 2026-46 at p. 3, as Judge C-Doug Pugh battles through without expert testimony, which she laments, at pp. 2 and 8.

I lament even more, for I understand almost none of this. 

Howbeit, crypto is property, can be sold for cash, hence is Section 61 money’s worth. No constraints on Alvie selling in year at issue. That he never got the misaddressed Form 1099-MISC for the bonus is nothing to the point. The bonus is not like a stock dividend, because no proof that the bonus was distributed across the board in proportion to the punters’ holdings, whether or not they put up their crypto to validate others. 

Neither was it created by Alvie’s labor.

“Stakers do not create anything by themselves. Instead, the staked tokens validate transactions on the blockchain. In exchange for validation, the cryptocurrency’s protocol grants stakers additional tokens. The fact that these tokens may be newly created is immaterial because the stakers are not the ones who created them. Further, petitioners were not owners or operators of a staking pool; unlike the baker or writer, they lacked the power to decide whether (and when) the property was created.” T. C. Memo. 2026-46, at p. 10.

And IRS didn’t rely on Rev Rul. 2023-14, nor does C-Doug Pugh, so no need to get Loper Bright involved.

Taishoff says both this blogpost and Judge C-Doug Pugh’s opinion really need expert input. Perhaps my ultrasophisticated readers would care to weigh in after reading both.

I’m sure neither party to Estate of Randy M. Harrigan, Deceased, Kyle Harrigan, Executor, Docket No. 7245-25S, filed 6/3/26, is so ill-bred as to add the adjective that Alfonso Bedoya never said in the most-misquoted sentence from that 1948 classic. And Ch J Patrick J. (“Scholar Pat”) Urda would never think of saying such a thing.

But he does seek to toss Kyle’s petition, because although Kyle was duly appointed ex’r of Randy’s estate, he was disappointed less than a year later. Hence when Kyle petitioned after he was disappointed, there was no one with authority to petition.

So Ch J Scholar Pat tosses the Proposed Stipulated Decision that Kyle and IRS hammered out. And he orders the parties to show cause why the whole case shouldn’t be tossed for want of jurisdiction.

OK, so far no biggie; there are dozens of cases like this.

Except.

Ch J Scholar Pat offers the parties an out.

“The Court notes that, although it appears that we lack jurisdiction of this case, the parties are free to enter into an administrative resolution in accordance with the terms set forth in the above-referenced Proposed Stipulated Decision.” Order, at p. 1.

Taishoff says that’s well and good, but if disappointed Kyle has no authority to represent the estate in Tax Court, what authority has he to enter into any enforceable resolution on behalf of the estate with anyone anywhere?

No, not the hedge fundie’s rake-off. Judge Emin (“Eminent”) Toro has mortgage interest to deal with in Henry O. Igboke & Clara Igboke, Docket No. 12275-24, filed 6/3/26, in an off-the-bencher. Henry & Clara had some mortgage woes in a prior year, from which they refinanced out, paying accrued interest with proceeds from the new loan.

But apparently the accrued interest, though Section 163(h) qualified residence interest, was too much to deduct against that year’s income, so Henry claims the overage in year-at- issue.

First problem: the IRC doesn’t allow that.

Second problem: Henry  “…has been a certified public accountant for more than 30 years and regularly prepares tax returns for his clients. He knows how the federal income tax rules work, including those for the home mortgage interest deduction.” Transcript, at p. 4.

Third problem: On the trial, Henry proffers two documents to substantiate his deduction, namely, a substitute Form 1098 and a letter from the servicer of the old mortgage which Henry & Clara refinanced in the prior year. But “[prior mortgage servicer]’s recordkeeper could not find copies of either document in [prior mortgage servicer]’s records. Even more troubling, the alleged Substitute Form 1098 for [year-at-issue] appears to be an altered photocopy of the [prior year] Form 1098 from [prior mortgage servicer]. All the numbers on the purported [year-at-issue] form are identical to those from [prior year], including the interest paid and loan balance. But, on the purported [year-at-issue] form, the [prior] year has been replaced with [year-at-issue], and there appear to be irregular photocopier markings around the year. An [prior servicer] legend has been added at the top of the form, along with a banner that reads ‘Mortgage Interest Statement – Substitute Form 1098.’

“Further, the … letter that [prior servicer] allegedly sent the Igbokes is inconsistent with the Igbokes’ claimed deduction for [year-at-issue]. If the Igbokes had paid $31,635 in interest to [prior servicer] for [year-at-issue in addition to the $18,411 they paid to [current servicer] for that year, they would have been entitled to deduct $50,046 of mortgage interest on their [year-at-issue] return. At trial, Mr. Igboke provided no explanation for why the Igbokes claimed a lower amount on their [year-at-issue] return. Moreover, the Transaction History provided by [prior servicer] refutes Mr. Igboke’s claims and shows no payments of any kind after [prior year]. Transcript, at pp. 11-12.

Confronted with these inconveniences, Henry claims former servicer told him he could carry forward the prior year’s overage. “Mr. Igboke says he relied on this advice from [prior servicer] despite his 30 years of experience as a CPA and [prior servicer] ‘s lack of authority to create tax rules.” Transcript, at p. 12.

IRS wins.

Another granite-mining Dixieland Boondockery founders in Rising Rock Partners, LLC, Robert Schill, LLC, Tax Matters Partner, T. C. Memo. 20-260-45, filed 6/2/26. It’s conjoined for trial and briefing with Edgar F. Yost, III and Deborah A. Yost; yes, that Ned Yost, the man with the two (count ’em, two) World Series rings.

But the granite-mining discounted cash flow appraisals crater, as the locals in Meriwether County, Jawjuh, don’t want granite mines in their rural hideaway. Anyway, forecasting  the results of a successful operation over 17 (count ’em, 17) years, even if the zoning objections could be met, is too speculative. The comparable sales (including Ned Yost’s own sale to the syndicators) set up a 40% gross overvaluation chop.

Judge Christian N. (“Speedy”) Weiler lists all the usual cases that have featured in the SCE saga, most of which I’ve blogged and the trade press has waded through exhaustively.

Also today we have the return of Sammy, trusty attorney, whom we saw last month in my blogpost “Five, Seven Eight, Fourteen,” 5/8/26. Now Sammy represents Mize Farm, LLC, Design, Inc., Tax Matters Partner, Docket No. 8979-23, filed 6/2/26 (Happy Palindrome Day!). Last year Judge Ronald L. (“Ingenuity”) Buch denied the Mizers their SCE write-off in an off-the-bencher, for which see my blogpost “Luke 18:14,” 12/1/25. Now Sammy wants to try Jarkesy and postponement of interest per Section 170(h).

Problem is, neither was argued until the Rule 155 beancount, which Judge Ingenuity Buch says no can do. Anyway, interest computations are not on the Rule 155 menu.

And a Petitioner

Just a handy hint to Inga and Rex, and their colleagues at IRS, about Tax Court’s response to the CCAs’ mix-and-match responses to Boechler, P. C. As the latest score is 3 (count ’em, 3) pro-Boechler (2 Cir, 3 Cir, and 6 Cir) and one against (11 Cir, following Hallmark Rsch. Collective), we can certainly expect more.

So if your petitioner, like John F. Walsh III, Docket No. 16158-25L, filed 6/1/26, is Golsenized to 10 Cir, which has thus far stood above the fray, Ch J Patrick J. (“Scholar Pat”) Urda will Judge-‘splain how to make your motion to toss.

“This Internal Revenue Code (I.R.C.) section 6330(d)(1) case, not yet set for trial, is before the Court on respondent’s Motion for Judgment on the Pleadings…. Given the relief sought in the Motion, that is dismissal, and the ground for that relief, that is that the Petition was not filed within the 30-day period of limitations prescribed by I.R.C. section 6330(d)(1), respondent’s Motion will be recharacterized and treated as a motion to dismiss for failure to state a claim upon which relief can be granted. See Rule 40, Tax Court Rules of Practice and Procedure.” Order, at p. 1.

And since Ch J Scholar Pat is nothing if not fair, he has a handy hint for John F. as well.

“If an objection is filed, petitioner should explain why he was unable to file the Petition within the above-referenced 30-day period.” Order, at p. 1. Nudge nudge, wink wink, equitable tolling.

Judge David Gustafson is obliging on steroids and a gallon Red Bull (hi, Judge Holmes). After unloading a meticulously pen-and-ink-edited off the bencher (see my blogpost “Obliging? He’ll Correct the Transcript,” 4/20/26), Judge Gustafson revisits the eScribe’s œuvre, and hands out the Matthew 23:4 treatment in Carl Lawrence Collins, Docket No. 2643-17, filed 5/29/26. 

In 25 (count ’em, 25) pages, Judge Gustafson edits IRS’ edits.

Copyediting is a lost art in this age of digitization and artificial everything, but Judge Gustafson is resolutely keeping it alive.

Last year I referred to the colonial policeman who arranged for justice against a contemptible character who mistreated a woman. See my blogpost “The Daily Grist,” 10/2/25. Now I wish he were real, and able to deal with Adam Shryock, T. C. Memo. 2026-44, filed 5/28/26.

As is often the case, a footnote tells the story. Judge Jeffrey S. (“Schwer”) Arbeit tells it.

“Petitioner also engaged in illegal activities. He solicited monetary donations from the public purportedly for breast cancer research. Several states deemed that [petitioner’s wholly-owned C Corp] and petitioner engaged in deceptive trade practices; when he continued engaging in those practices, he was held in contempt. He concealed his income-producing activities by paying personal expenses from the account of his wholly owned corporation. Finally he was convicted in federal court after pleading guilty to willfully failing to file his 2011 return. The facts in the record thus easily carry respondent’s burden of proving fraud by clear and convincing evidence.” T. C. Memo. 2026-44, at p. 9, footnote 5.