It’s another taxpayer win over the goofy regulation (Reg. Section 1.183-2(b)) for Kenward F. Kolar, Jr., T. C. Memo. 2026-15, filed 2/9/26, although it’s closer than most. Of the 9 I(count ’em, 9) factors therein, Ken got 4 (count ’em, 4), IRS got 3 (count ’em, 3), with 2 (count ’em, 2) stuck in neutral.

Ken was a multi-generational TX rancher, but the ranch was in bad shape when he got it, and he had to work long and hard to try to get profitable cattlebreeding. Judge Kashi (“My or the High”) Way doesn’t let Ken conjoin his oil royalty income with the ranch, finding them too dissimilar, as is land appreciation, forcing Ken to pay tax on the oil royalties without the offsetting ranching deductions. But his wife’s separate bank account for the business and her careful recordkeeping make IRS concede the amounts of Ken’s deductions on the trial. Ken concedes the 6651(a)(1) and (2) late file and pay, and 6654 no estimated add-ons.

Ken’s a good witness on the trial. 

But I want to point out again that a separate bank account and good bookkeeping are keys. It’s the first thing Judge Way mentions that bear on the goofy regulation.

“During this period, Mrs. Kolar served as the bookkeeper for the Kolar ranch and kept records that the couple would report to their certified public accountant. The Kolar ranch had a checking account for ranch operations that was separate from the account used by Mr. and Mrs. Kolar for their household expenses. Mrs. Kolar had a multistep recordkeeping process. She maintained a check register along with a ‘category’ book for recording daily income and expenses. She also had a ‘weekly book’ which she would prepare and use to go over the numbers with Mr. Kolar. She then prepared a monthly Excel spreadsheet and a final yearend spreadsheet documenting Kolar ranch income and expenses.” T. C. Memo. 2026-15, at p. 4.

I note IRS claims that Ken got personal pleasure in teaching his son how to be a cowboy. Judge Way blows that away.

“Respondent also argues that Mr. Kolar’s son participates in ranching activity and that Mr. Kolar derives pleasure from being able to bond with his son in this way. We do not find this argument compelling. Mr. Kolar’s son was two years old during the year at issue, so it is unlikely that he participated in ranching activity in any meaningful way during that year. Moreover, we do not view training one’s children to farm and ranch in the hope that they will one day take over the family business as inconsistent with a profit motive. Indeed, it is often the case that family members, including older minor children, participate in the running of profitable small businesses. Viewed in this light, Mr. Kolar’s decision to have his son participate in ranching activities supports a profit motive.” T. C. Memo. 2026-15, at pp. 15-16.

Perhaps the young man, like Johnny Mercer’s “old cowhand from the Rio Grande,” learned to ride ‘fore he learned to stand.

No, not more Jarkesy motions. This blogpost concerns the buckshot pretrial motions in limine with which the parties bestrew the judge’s path immediately prior to trial, like those lovely flowerchildren preceding the bride at fancy weddings. Only this process is much less attractive to eye and ear. I’ll come to Jarkesy shortly.

Judge Christian N. (“Speedy”) Weiler is the recipient (or should I say victim?) of eleven (count ’em, eleven) such motions in Habitat Green Investments, LLC, MM Bulldawg Manager, LLC, Tax Matters Partner, et al., Docket No. 14433-17, filed 2/6//26. I’ve been blogging this vintage Dixieland Boondockery since 2020.  I’ve paid good money for rum younger than this case.

Now all y’all can read the eight (count ’em, eight) pages of Judge Speedy Weiler’s well-wrought prose your own selves. Perhaps you’ll then come to the same conclusion I did. If not, favor me with an explanatory comment. In either case, spoiler alert.

Judge Speedy Weiler denies six (count ’em, six) motions with prejudice, four (count ’em, four) without prejudice, plus one split-decision (can testify as to fact but not opinion, and Judge Speedy Weiler will sort it out on the trial).      

This is where Jarkesy comes in. Until the Supremes say otherwise (or the CCAs play mix-and-match), there are no jury trials in Tax Court. Hence no juries to be misled by “those whose beard and paunch are great of size” pontificating at length, unchecked by fact. The judge’s daily grist is sorting out such as these, and Judge Speedy Weiler wants his whack at them.

My good friend Peter Reilly, CPA, will want to add James D. Sullivan and Colleen M. Sullivan, T. C. Memo. 2026-13, filed 2/5/26, to his collection of successful Section 183 taxpayer wins.

True, Colleen’s mulching operation fails for want of documentation and for evidence that she abandoned the business when her mulching machine proved unsafe.

“With respect to Leaf-Cutter, Ms. Sullivan’s mulching business, we readily find that the Sullivans have failed to carry their burden of establishing that the activity was engaged in for profit. The Sullivans testified that the business was both established and terminated because of safety concerns….” T. C. Memo. 2026-13, at p. 14.

But their real estate development business and JD’s software operation survive.

JD had plenty of software development experience, spent his own money developing it (even dipping into his retirement money), kept a separate bank account, studied literature on the area he was working, cut expenses when revenue didn’t come in, and hired experts. Though the work satisfied his intellectual curiosity, his testimonial candor carried the day.

He and Colleen also had plenty of real estate development experience. They built and rehabbed homes in MN and MT  and MA, mostly with their own labor, and sold them. They lived in a tent for years in ME while trying to build a housing development and a new personal residence, showering at the YMCA until they got the water put in.

Judge Courtney D. (“CD”) Jones gigs them for poor bookkeeping, allocating too many expenses to the housing development and not enough to the lot where they intended to build their personal residence, but she Cohans that out.

Interestingly, IRS never challenged the amounts of their claimed deductions, only the profit motive. So they mostly win the software and real estate developing, and only get mulcted for mulch.

Another attack on the routine IRS Section 6751(b) summary J motion fails in Mossy Flats Property, LLC, Otemanu Land Holdings, LLC, Partnership Representative, T. C. Memo. 2026-14, filed 2/5/26. The Mossy Flatsers claim the supe who signed the RA’s Penalty Lead Sheet wasn’t his direct supe that day. 

Judge Jeffrey S. (“Schwer”) Arbeit won’t buy it.

” The record shows that SRA B was RA M’s immediate supervisor on April 2, 2023, when she approved his initial determination to assert penalties against Mossy Flats. SRA B’s signature appears on the penalty approval form, where her title is listed as ‘Team Manager– Group 1244.’ And both RA M and SRA B averred under penalty of perjury that SRA B was RA M’s immediate supervisor. Petitioner has failed to show there is a genuine dispute for trial.” T. C. Memo. 2026-14, at p. 6. (Citations omitted).

Merely claiming that the declarations of SRA B and RA M in support of IRS’ motion are “self-serving” doesn’t raise a question of fact. “…petitioner provides no explanation for its assertion that the declarations are inadmissible under Rules 121(c)(4) and 143(a). In fact the declarations appear entirely consistent with Rule 121(c)(4), which provides that declarations used to support a summary judgment motion must (1) be made on personal knowledge, (2) set out facts that would be admissible in evidence, and (3) show that the declarant is competent to testify on the matters stated. (Rule 143(a) simply provides that trials before the Court are conducted in accordance with the Federal Rules of Evidence.).” T. C. Memo. 2026-14, at p. 7. Taishoff says see also Section 7453.

Supervisors routinely move in and out. But there’s no evidence SRA B didn’t supervise RA M when he pulled the trigger on the Mossy Flatsers.

For the backstory on the remand that triggered Vitaly Nikolaevich Baturin, T. C. Memo. 2026-12, see my blogpost “A Bad Day for the Russians,” 4/8/22.

Once 4 Cir shipped VitNik’s case back to Judge David Gustafson, there were three (count ’em, three) more stips of fact, after which Judge Gustafson decided he didn’t need no trial (Judge Gustafson is too well-bred to apply the opprobrious adjective that Alfonso Bedoya y Díaz de Guzmán^[ never said).

VitNik never raised his Section 1441 withholding argument in Tax Court nor at 4 Cir, and anyway withholding doesn’t equal liability.  VitNik was supervised and subject to evaluation. Had the laboratory not hired him, they would have hired someone else. Any IP or product he generated belonged to the laboratory, not him. The project started before he was hired and continued after he left. Nonresidency doesn’t provide nontaxability. And VitNik signed an employment agreement explicitly subject to the terms of the laboratory’s administrative manual, pursuant to which his employment was contingent upon results.

But the ultimate question is “Did the grantor receive a substantial quid pro quo from the grantee’s work?”

“Revenue Ruling 80-36, 1980-1 C.B. at 368, states the general principle that tax exemption ‘does not extend to professional researchers receiving compensation for performing research services,’ a generality that includes Dr. Baturin. The Revenue Ruling explains that a researcher may be exempt from tax where he is paid for effort ‘in the pursuit of a specific research goal,’ where his ‘work is not subject to direction or supervision by any other person, and [he] is entitled, but not required to publish the results of the research,’ and where ‘[n]o other person has any right to the product of [his] research,’ id., but none of that describes Dr. Baturin. Rather, in the words of the Revenue Ruling, we hold that Dr. Baturin was ‘performing valuable research services under the supervision of the grantor [i.e., Jefferson Lab] that are primarily for the benefit of the grantor of the payments,’ a circumstance in which the payments are subject to tax.’ id.” T. C. Memo. 2026-12, at p. 17.

I invite comments to these my bloposts; I rarely refuse, delete, censor or edit them, though I reserve the right to do any or all thereof at any time and from time to time, without notice.

Readers, be advised that I do not give legal advice. To the extent any commenter does so, that commenter acts at his/her/their own risk. By the mere fact of permitting posting a comment, I do not endorse any thereof. Anyone relying on any such comment does so at his/her/their own risk.

As always, before taking or refraining from taking any action after reading anything, be it blogpost or comment, on this my blog, consult with an independent, licensed professional. 

That appellation has been vacant nearly seven (count ’em, seven) years since STJ Robert N. Armen retired. I must admit I haven’t been casting around for a successor to the title; I hadn’t thought to poll my readers.

So herewith an apology. Kindness overlooked is kindness diminished, and in a world conspicuously lacking that I should not participate in its further diminution.

So I nominate Judge Elizabeth A. (“Tex”) Copeland for that distinction. I proffer Retha R. McCoy, Docket No. 9279-23L, filed 2/5/26 in support.

While sustaining the Supplemental NOD (NITL for civil tax debts, not restitution and not previously levied), Judge Tex Copeland offers Retha hope that her home won’t be sold from under her.

“She has stated that she owns her home but has few other assets, and she is worried about being made homeless if the IRS takes her home. We note that there are additional steps the IRS must take in foreclosing on a person’s principal residence. To levy (take) Ms. McCoy’s principal residence, the IRS would need to get the approval in writing of a United States District Court judge or magistrate. See I.R.C. § 6334(e). To do this, the IRS would need to show that it has no other reasonable way to collect Ms. McCoy’s debt, and that it followed all the applicable laws and procedures relevant to the levy. See Treas.Reg. § 301.6334-1(d). Ms. McCoy would have a chance to try to show otherwise. See Treas. Reg. § 301.6334-1(d).

“Going forward Ms. McCoy may find it helpful to contact a low-income taxpayer clinic in New Jersey or New York for advice, such as: Rutgers Federal Tax Law Clinic, Newark, NJ, at 973-353-1685; Northeast New Jersey Legal Services LITC, Jersey City, NJ, at 201-792-6363; or Legal Services of New Jersey Tax Legal Assistance Project, Edison, NJ, at 888-576-5529.” Order, at pp. 6-7.

And this even though Reba isn’t exactly an injured innocent.

I’m not changing Judge Copeland’s cognomen here, but I want to note her sympathy. 

And Retha, call Sandy Freund, Esq., at Rutgers.

Eighty percent of Tax Court petitioners are self-represented.

When I consider the wasted time and clerical and judicial brainpower caused by good-faith Tax Court  pro ses, to say nothing of the (possibly) greater amount squandered on bad-faith gameplayers and dodgers, I shake my head. Whatever the expense of an Office for the Self-Represented, such as many courts, State and Federal, already have, I cannot understand why US Tax Court hasn’t the same.

Two (count ’em, two) cases in point.

Scott M. Balotin and Ellen M. Balotin, Docket No. 9174-25P, filed 2/4/26, is only tangentially about a passport grab, because IRS reversed the certification and told DoS, so Judge Goeke moots that out. The penalty abatement case is mooted out because a stiped decision in another case says the don’t owe any penalties for that period. Interest abatement must await trial because petitioners claim they filed Form 843, but IRS says they haven’t got it. Nevertheless, IRS agreed to the stiped decision, so let IRS show why the proffered Form 843 shouldn’t be considered as an administrative request for abatement of interest. Finally, Ellen’s innocent spousery claim. “Petitioners have not established that Ms. Balotin filed or made an administrative request for innocent spouse relief with the IRS. Also, they have not produced a Notice of Final Determination relating to Ms. Balotin’s request for innocent spouse relief. Nor have they asserted that they filed or made an administrative request or received a Notice of Final Determination. Accordingly, we do not have jurisdiction to determine whether Ms. Balotin is entitled to innocent spouse relief….” Order, at p. 2.

Couldn’t a clerk sort this out?

Next, Andre Pierre Harris, Docket No. 15845-25, filed 2/4/26, is apparently the sort of thing STJs see every day. There’s a petition with no attachments, which IRS moves to dismiss, to which there is a response that agrees, from someone claiming authority but not producing proof. I’ll let ex-Ch STJ Lewis (“My Kind of Name”) Carluzzo explain. “The Court notes that the pattern of allegations in the petition in this case, more or less, is identical to the pattern of allegations made in petitions in hundreds of other cases filed in this Court that involved taxpayer/petitioners who were apparently ill-advised. We accept, if only in the absence of anything that establishes otherwise, B’s authority to have appeared at the hearing on petitioner’s behalf but otherwise reject many of the answers that she gave in response to questions by the Court.” Order, at p. 1. (Name omitted).

“Hundreds of ill-advised taxpayer/petitioners” clogging the system to the detriment of those with meritorious claims.

Judge Travis A. (“Tag”) Greaves and I are lucky that Gary C. George and Robin A. George, T. C. Memo. 2026-10, filed 2/3/26, is appealable to 8 Cir, and that Judge Richard A. Posner of 7 Cir is no longer alive to berate both of us for “lame attempts at humor” (see my blogpost “There Goes the Neighborhood,” 9/3/13).

So no, the headline first hereinabove written at the head hereof is not political (perish the thought). Gary and Robin are shareholders in a multi-level industrial chicken breeding business ending in a Sub S. And the issue is passing through the Section 41 additional research credits.

Judge Tag Greaves has got a flock of chicken-and-egg one-liners. He also tells us a lot more about the breeding of small broilers and big broilers, their lives and diseases, than I for one wanted to know. Gary and Robin do win a bunch qualified research credits (hi, Judge Holmes) , but their failure to document baseline research limits them to the 6% Section 41(c)(5)(B), Reg. Section 1.41-9(c)(1) cutdown.

Judge Tag Greaves has thoroughly reviewed the Section 41 landscape. It’s a must-read for specialists, and eyeglazing for the rest of us.

Diego E. Salazar, T. C. Memo. 2026-9, filed 2/3/26, wants interest and accuracy penalties abated, but he signed an IA. Even though he says he signed “under protest and with full reservation of rights,” including “seeking a future abatement,” T. C. Memo. 2026-9, at p. 5, Judge Albert G. (“Scholar Al”) Lauber says that bars him from contesting in Tax Court.

Diego had his chance to contest at the CDP and the Supplemental, but didn’t. Moreover, he got the IA (with an unexplained $8 per month reduction) with no Form 433-A or backups. The SO invited him to submit Form 843, Claim for Refund and Request for Abatement, but he never did so, T. C. Memo. 2026-9, at p. 4. 

His complaint about the crooked preparer who got him into this mess doesn’t cross the Section 6404 threshold, T. C. Memo. 2026-9, at p. 4.

And IRS conceded equitable tolling of Diego’s late petition.