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’.

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 needs 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.