Judge Albert G. (“Scholar Al”) Lauber is a seasoned veteran of appraisal mix-and-matches, but Aloke Pal, T. C. Memo. 2026-93, filed 9/24/26, is simply a match.

Aloke switched money from his E*Trade IRA to his E*Trade stock trading account and back again. Of course Morgan Stanley, operator of E*Trade, filed a 1099-R. Aloke petitions the unreported income SND.

“In his Petition he asserted that “E*Trade has used all my 401k and pension [and has] reported false distribution[s] to IRS,” stating that he ‘want[s] his 401k and pension back.’ He asserted that he was a ‘victim of systematic hate/discrimination’ because he had filed whistleblower claims regarding Boeing’s ‘737 Max Program.’ He alleged that he had not received a Form 1099–R reporting any distributions for [year at issue] and that (in any event) he ‘did not recognize ACCT number on the 1099–R.’” T. C. Memo. 2026-93, at p. 3.

Judge Scholar Al helps Aloke out. He runs the account numbers for the IRA and the trading account, and verifies they match.

” The IRS may not rely solely on a third-party report of income, such as a Form1099, if the taxpayer raises ‘a reasonable dispute’ concerning the accuracy of the report. See § 6201(d). Petitioner has not done so. He has supplied no evidence to support his wild assertions that E*Trade stole his money and ‘reported false distribution[s] to IRS.’ The documentary record confirms the accuracy of Morgan Stanley’s reporting and clearly shows that petitioner’s assertions are baseless.” T. C. Memo. 2026-93, at p. 5, footnote 3.

“Petitioner has the burden of proof to show that respondent’s determinations of unreported income are ‘arbitrary or erroneous.’ See supra p. 5. He has supplied no evidence whatsoever to show that the stock transferred into his E*Trade brokerage account came from a source other than his E*Trade IRA. During trial the Court asked him where these shares could have come from, if not from his E*Trade IRA. He had no comprehensible response to that question.

“Petitioner’s submissions in his Posttrial Brief were not a model of clarity. His primary contention, as originally urged in his Petition, was that his retirement assets disappeared or were fraudulently taken by E*Trade. He did not supply an iota of evidence to support those assertions.” T. C. Memo. 2026-93, at p. 7. 

Of course Aloke claims reasonable cause for nonreporting the IRS distributions to avoid chops.

“In his Posttrial Brief petitioner contends that the ‘reasonable cause’ exception applies. He concedes that transfers were made into his Wells Fargo account, but he insists that he did not know where the transferred assets came from. We did not find this testimony credible. One may enjoy a large bank error in one’s favor when playing Monopoly, but this rarely if ever happens in the real world.” T. C. Memo. 2026-93, at p. 10.

Bradley L. Swain and Linda S. Swain, T. C. Sum. Op. 2026-9, filed 9/24/26, have a Third Amendment problem. They can’t pay their self-reporteds because their “Form 433–A indicated that petitioners’ adult son, adult daughter-in-law, and three grandchildren were living in petitioners’ household. Consequently, petitioners’ claimed expenses resulted in $46 of excess monthly income. Petitioners had not claimed any of those individuals as dependents on their returns. Nor did petitioners provide any explanation as to why the expenses of their adult son, adult daughter-in-law, and three grandchildren should be allowed despite the fact that petitioners had not claimed any of them on their returns.” T. C. Sum. Op. 2026-9, at p. 3.

Taishoff says nor did they provide evidence why none of those quartered on the Swains was incapable of providing any portion of their sustenance.

Judge Benjamin A. (“Trey”) Guider, III, finds Appeals checked the right boxes. People not claimed as dependents don’t count, and Brad and Linda never provided information on the term life policies they alleged they were carrying on themselves. Note IRM 5.15.1.11 (Nov. 22, 2021) allows such policies as necessary expenses.

One wonders who prepared those returns.

Sitaraman Jagannath, T. C. Memo. 2026-92, filed 9/24/26, authored two books and published 23 (count ’em, 23) articles, manages real estate, and has founded and run a 501(c)(3) to help immigrants, from whose bank account he took $590K via an “Over the Counter Withdrawal,” evidenced by a noninterest bearing promissory note from Sit’s real estate LLC, a disregarded entity, supposedly to help his daughter buy headquarters for her 501(c)(3). Except the daughter’s deal didn’t close for two years.

My grizzled, battle-hardened, ultrasophisticated readers have already shouted “Section 4958 excess benefit transaction and did he file Form 4720?” My answers: yes and no. True, IRS conceded section 4958(a)(2) excise tax of $20,000 regarding Mr. Jagannath’s participation as an organization manager in an excess benefit transaction, T. C. Memo. 2026-92, at p. 2, footnote 3.

Judge Christian N. (“Speedy”) Weiler notes Sit never claimed at trial that the $590K was a bona fide loan, T. C. Memo. 2026-92, p. 9, footnote 12. And the Forms 990 filed by the 501(c)(3) said the $590K was a loan to officer. Whoever prepared those forms handed the case to IRS. Except Sit did even better. ” Mr. Jagannath also contends that he never actually received $590,000 from [501(c)(3)]….. Specifically, he testified that he could not recall where the $590,000 went and whether there was a loan.” T. C. Memo. 2026-92, at p. 11.

I’ll spare you the rest. 

As for the Form 4720, see my blogpost “Nigeria Calling? – Part Deux,” 7/26/21, for the whole story.

Meantime, Sit gets hit for “excise taxes under section 4958(a)(1) and (b) of $1,327,500. We further hold that Mr. Jagannath is liable for section 6651(a)(1) failure-to-file additions to tax and section 6651(a)(2) failure-to-pay additions to tax.” T. C. Memo. 2026-92, at p.14.

So says ex-Ch J L. Paige (“Iron Fist”) Marvel to the trusty attorney for SGB Land Company, LLC, Docs Field of Dreams, LLC, Tax Matters Partner, Docket No. 8460-23, filed 9/23/26.

The end run in question is an attempt to insert into evidence a baseline documentation report by Dr K. and an appraisal by none other than the well-known Mr. W.  Are they “historic documents,” admissible for their existence but not for the truth of anything either says, or are they admissible per FRE 803(6) as business records?

“Ordinarily, under our Rules, these types of documents would be offered into evidence as expert testimony reports and subject to the requirements of Rule 143(g). At trial, the testifying expert witness would identify the document as his own, and we would mark and receive it into evidence as the witness’s testimony. However, per its Pretrial Memorandum, petitioner does not intend to call either Dr. K or Mr. W to testify at trial. Consequently, petitioner does not contend that these documents are expert witness reports. Instead, recognizing that the documents constitute hearsay otherwise, petitioner argues that they are admissible for the truth of the matter asserted under Rule 803(6) of the Federal Rules of Evidence, commonly known as the business records exception to hearsay.” Order, at p. 2 (Footnotes omitted, but they say experts’ written reports go in as direct subject to cross, and if these aren’t, everyone agrees they’re hearsay.) (Names omitted).

Problem is, they’re not trustworthy, which caselaw says is essential.

“These documents are devoid of vital information on the circumstances in which and for which they were created and, most importantly, the impact of those circumstances on the methodologies and calculations used. This is information that can only be provided by the authors. For example, respondent correctly points out that the appraisal report contains a spreadsheet that vaguely claims to draw from ‘cost estimate[s] provided by developers,’ but provides no clarification whatsoever on who those developers were or how they came up with the costs. Additionally, we do not have sufficient information on how Dr. K or Mr. W  were compensated for the production of these documents or their broader involvement with the transaction at issue, facts which necessarily color the reliability of the ultimate valuations used….” Order, at pp. 2-3. (Names omitted).

And here comes the safety valve.

“Rule 803(6)(E) of the Federal Rules of Evidence provides the exact kind of safety valve that trial court judges need to prevent the use of the business records exception to circumvent the traditional expert testimony rules.  Respondent has given us ample reason to rely on it here.” Order, at p. 3. (Citation omitted).

There was a T. C. Memo. today, Brenton E. Williams and Octavia P. Williams a.k.a. Octavia Pearl, T. C. Memo. 2026-91. It was Octavia’s story and the aftereffects of a hurricane, but it turns on documentation, of which petitioners have none. No novel concepts here.

Toscano Holdings, LLC, Toscano Investments, LLC, Tax Matters Partner,  T. C. Memo. 2026-90, filed 9/22/26 (Here’s lookin’ at you, Kid, to the GoMD) says they got a raw deal at Appeals, so wipe the FPAA that knocked their Dixieland Boondockery down from $38 million to $6 million.

Judge Elizabeth Crewson Paris says the past is prologue, she won’t rewrite it, and Toscano can go to trial de novo. 

Toscano first refused to extend SOL so Exam could take a second look, then six (count ’em, six) months later offered to extend, but by then Exam had sent the file to Tech to craft the FPAA. Then after Toscano petitioned the FPAA, they got remanded to Appeals. The first Appeals hearing was postponed to avoid impacting the criminal trial of W the appraiser (who was acquitted on all counts). Then the hearing took place, with which Toscano finds fault.

Judge Paris won’t invalidate the FPAA. Toscano can go to trial and fight the one real question, valuation.

Once again, Greenberg’s Express rolls on.

Two (count ’em, two) years ago I asked whether pleading reliance on Section 6662(e)(3)(B)(i) objectivity was a good tactic. “Whether this is a good tactic remains to be seen,” I wrote in my blogpost “A Note of Sympathy,” 11/14/24. It did work for Amgen back then, according to Judge (then STJ) Jeffrey S. (“High-Rise”) Fried, and it works now for Eaton Corporation & Subsidiaries, Docket No. 2607-23, filed 9/22/26, a special day hereabouts.

Judge Albert G. (“Scholar Al”) Lauber recalls Judge High-Rise Fried’s analysis, and goes along with it, though of course not citing it as precedent, which it can’t be. But note well, practitioner: you can use the reasoning in an order as persuasive and mention the order.

IRS wants privilege waiver on all Eaton’s attorneys and CPAs, as Eaton asserts Section 6662(e)(3)(B)(i) as basis for their good-faith reliance argument to avoid net Section 482 adjustment chops. Eaton specifically does not mention experts, saying they relied on an objective test. IRS agrees, and Judge Scholar Al says it’s “100%” objective, but it still shows state of mind, and that brings in everything.

Judge Scholar Al doesn’t agree that asserting good faith reliance means all privileges are waived.

“We addressed a similar question in a discovery Order issued in Amgen, Inc. v. Commissioner, No. 15631-22. The IRS argued that the taxpayer, by advancing defenses to penalties, had implicitly waived privilege over various documents. We noted that an implied waiver of privilege may occur where the party claiming the privilege raises an issue as to its own knowledge, intent, or state of mind. T.C. No. 15631-22 (Order served Nov. 11 [sic], 2024, at 7). But the taxpayer there, in asserting penalty defenses, ‘ha[d] not pleaded any specific allegations relating to its own knowledge, intent, state of mind, or the reasonableness of its actions.’ And the taxpayer did not ‘rely on privilege[d] communications’ as a basis for its penalty defenses. Ibid. We accordingly ruled that no waiver of privilege had occurred.” Order, at p. 2.

Judge, the issue date of Judge Fried’s order was 11/14/24; 11/11/24 was Veterans’ Day, a public holiday in the District of Columbia. I trust Tax Court was closed, appropriately.

“Reduced to its essentials, respondent’s argument seems to be that a taxpayer is precluded from raising a defense to a transfer-pricing adjustment unless it waives privilege over all communications relating to that issue, even though the taxpayer does not intend to rely on those communications as a basis for its defense. The taxpayer would thus face a dilemma: it would have to waive privilege as a condition of exercising its right to assert a penalty defense, regardless of the nature of the defense it seeks to assert. In practical effect, this would impose a huge burden on taxpayers’ ability to secure privileged advice from their lawyers and tax advisors. This does not strike us as an appealing argument. It is especially unappealing on the facts of this case, where the penalty defense Eaton seeks to raise is 100% objective and in no way implicates its state of mind.” Order, at pp. 2-3. (Footnote omitted, but it says the order I blogged back on 4/6/15 raised a general good faith reliance defense, not the Section 6662(e)(3)(B)(i) defense, so doesn’t apply. See my blogpost “Never Call Retreat,” 4/6/15.)

Chaps, read my blog. I cover all this good stuff.

Their key witness, who could save Albert L. Hawk & Kelley G. Hawk, Docket No. 13467-25, filed 9/21/26, north of $1.7 million in deficiency, chops and interest, refuses to testify except remotely. Al & Kelley’s trusty attorneys already tried for a remote testimony or a deposition, but Judge Albert G. (“Scholar Al”) Lauber wasn’t having it the first time, nor this time on reconsideration. Key witnesses need to be live and in person.

I spent a good deal of time in an earlier post about diligent follow-up by client and trusty attorney. True, with much less than a million USD in play, one rapidly hits a paywall, especially when there’s no payday at the end of the trail. But when one gets north of the seventh figure, a proper regard for both ends of your green silken wallet mandates a certain largesse. Like a round-trip first-class ticket, premium room, and a couple slap-up dinners. (Hi, Judge Holmes)

Here, the key witness (I’ll call him The Englishman) resides in the UK and paid Al some $4 million. Al claims this is a loan. The Englishman provided affidavits and documents at Exam in support. But now he refuses to cross the pond.

Those with a mind debased by years of practicing law might suspect The Englishman is suffering from Hamlet’s Complaint, that “sicklied o’er with the pale cast of thought” thing. Or maybe Bert Kroner’s munificent pal Mr. H (see my blogpost “Imaginary Friend?” 6/1/20.

When your case depends upon a key witness, the kind of follow-up I earlier described is just the prologue. If any doubt remains, be prepared to settle. Fast.

Whistleblower cases held back awaiting DC Cir’s jurisdictional pronunciamentos are now gushing through the sluice gates of DAWSON’s Creek as stays lift on motion or sua sponte. Here are two (count ’em, two). 

Julie Anne Carlson, Docket No. 35898-21W, filed 9/21/26. Judge Christian N. (“Speedy”) Weiler says  Pratt, Kennedy, and Shands all require an administrative or judicial action commenced or enhanced by what the blower provided. Merely sending the Form 211 to a classifier in an operating division is not an administrative action. But maybe Julie Anne catches a break, as Judge Speedy Weiler says since she has screenshots of CA State Controller’s public website showing IRS taking Target money to prove she told IRS to go fish, but she raised the collection issue in an amended petition post-rejection, so her petition is dismissed without prejudice as premature and speculative, and she can try again.

W. Stewart Connard, Docket No. 4159-22W, filed 9/21/26, got two (count ’em, two) looks at his blow, one after referral to a LB&I classifier, and the second after he wrote to IRS and IRS Deputy Commissioner for Services and Enforcement, who sent the stuff to a LB&I subject matter expert. The expert said IRS already knew about the problem, but the blow contained no specific details and they couldn’t audit every partner in the deal. No audit, no collection, no award.

More to come.

Finishing the play begin by Mojahad (“Mo”) H. Butta, for which see my blogpost “Bring That Discipline,” 8/5/26, Kings Road Property, LLC, Kings Road Manager, LLC, Partnership Representative, 167 T. C. 11, filed 9/21/26, picks up an IRS fumble and runs it back to survive a motion to dismiss by establishing equitable tolling.

Judge Ronald L. (“Ingenuity”) Buch tells the story.

The Kings Roadsters’ trusty attorney No. 2 (replacing trusty attorney No. 1 with a duly filed Form 2848 which timely made it to the CAF) wondered where the FPA had gone. She carefully calculated all the Section 6235(a) timeslots, called IRS well before the cutoff, but IRS’ agent said “there had been no activity on the Kings Road account and that no notices had been sent out since [the] power of attorney was put on file in August of 2024.” 167 T. C. 11, at p. 5. Trusty attorney then checked with client, who verified no FPA.

Trusty attorney petitioned timely, according to her arithmetic. IRS says they did mail, and the Kings Roadsters are late.

No, says Judge Ingenuity Buch. 

Even though there’s an evidentiary jumpball between Kings Roadsters’ past and present attorneys and USPS records, Judge Ingenuity Buch declines the invitation to hold a hearing.

The question is whether Kings Roadsters equitably tolled the 90 day cutoff in Section 6234(a). The old TEFRA learning was that no equitable tolling applied, at least at partnership level, because of the multi-tiered knock-on effect inherent in applying partnership level determinations at partner level. For more about this than you wanted to know, see my blogpost “Boechler, Meet TEFRA,” 10/21/25. But that’s not the case under the single-shot BBA approach; Congress wanted to streamline, and they did. See 167 T. C. 11 at p. 9, footnote 4.

And the Kings Roadsters and their trusty attorney No. 2 were on this case like white on rice.

” Kings Road, through its counsel, diligently pursued its rights. Kings Road followed up with its attorney and its staff to check whether the FPA had been received. See Holland, 560 U.S. at 653–54 (holding that a litigant diligently pursued his claim when he followed up multiple times with his attorney to ensure the petition was timely filed). Importantly and notably, Kings Road’s counsel did more than merely watch the mailbox. Kings Road’s counsel obtained an IRS transcript of accounts to see whether an FPA had been mailed. It did not show the issuance of an FPA. Kings Road’s counsel also contacted the IRS after the deadline for the Commissioner to mail an FPA had passed to inquire whether one had been mailed. Cf. Dotson, 30 F.4th at 1270 (holding that a litigant’s attorney’s failure to search for the existence of a denial letter or inquire into the status of administrative claims by contacting the previous law firm, USPS, or the Government’s trial counsel was a ‘garden variety claim of excusable neglect that d[id] not constitute extraordinary circumstances warranting equitable tolling’). Even after being told by the IRS that no FPA had been mailed, Kings Road filed a petition with this Court. And the deadline chosen by petitioner’s counsel was reasonably calculated by using the only date in her possession, the date the NOPPA was issued.

“Kings Road also satisfies the second element required to establish equitable tolling: Extraordinary circumstances outside of its control prevented Kings Road from filing on time. See Menominee, 577 U.S. at 256–57. Kings Road did not receive an FPA, and the record shows that the FPA packages sent to both Kings Road and its partnership representative were returned to the Commissioner undelivered. The Eleventh Circuit has recognized that ‘inefficiencies of the United States Postal Service may be a circumstance’ beyond a litigant’s control. Sandvik, 177 F.3d at 1272. We do not intend to suggest that the returned mail, alone, is sufficient to give rise to equitable tolling; in this case, there are additional circumstances surrounding the untimeliness of Kings Road’s Petition that prevented the filing of a timely petition. Kings Road’s counsel called the IRS two months after the FPA was sent and was told no notice had been sent. The Eleventh Circuit has equitably tolled relevant statutes of limitations when there has not been ‘deliberate concealment’ but when ‘the claimant nevertheless has been misinformed.’ See Jackson, 506 F.3d at 1356–57. Although there are no facts to indicate that the FPA’s issuing date was deliberately concealed by the Commissioner, Kings Road was misinformed by the IRS when it was told a notice had not been sent, whereas in fact it had been sent months earlier. And Kings Road filed a protective petition relying on a reasonably calculated deadline, unaware that the Commissioner had mailed the FPA nearly a month earlier than his deadline for doing so. Kings Road has demonstrated that extraordinary circumstances outside of its control kept it from timely filing its Petition. See id. at 1357.” 167 T. C. 11, at pp. 10-11.

Of course, Kings Roadsters’ trusty attorney No. 2 doesn’t stop. She claims the FPA is invalid due to defective mailing (bungled address), SOL has run, and her clients’ $30.5 million Dixieland Boondockery is home free.

My kind of attorney. Go for the green off the tee into the wind on a par-five, 575 foot hole. She has four (count ’em, four) arguments.

Even if the PS 3877 was dodgy, IRS did show enough to prove mailing. A misdesignation of PRep’s suite number on the address of the FPA that didn’t get there is the same on the NOPPA that did get there, so not enough to invalidate. As for prejudice due to not filing a Section 6226 push-out election, Kings Roadsters never tried, not even filing a protective one.

Their defective delegation argument also founders. The signer of the FPA was wearing enough hats to satisfy Judge Ingenuity Buch.

With an eleven (count ’em, eleven) million-dollar deficiency, plus chops and interest, Kings Road and trusty attorney no. 2 (who, upon information and belief, the source whereof is the appearance list of the ten (count ’em, ten) attorneys for Kings Road, is a reader of this my blog), followed up with commendable diligence.

Trusty attorney No. 2 gets a Taishoff “Good Job, First Class, with Swords and Diamonds” and a Taishoff “Good Try, Second Class” for the attempted knockout of the FPA.

I’ll come back to the diligent followup when a big deficiency is on the table in a subsequent blogpost.

I should be pleased that Section 6751(b) Boss Hossery furnishes so much blogfodder and such ample opportunity for scouting (pejorative: look it up) the wretched drafting of the statute. But the enormous waste of judicial resources and litigants’ effort is headshaking material. The statute doesn’t accomplish what Congress intended; even if it could, the ensuing jurisprudence has made it worse than useless. 

Here we go again. Harvey Birdman & Diane Birdman, Docket No. 28897-10, filed 9/18/26, make their third appearance in this my blog. Harv & Di are leads in six (count ’em, six) cases, all old Section 932 Virgins, Congress’ unguided largesse to Our Insolvent Islands in the Sun.

IRS wants Boss Hoss summary J only as to Harv & Di, but trusty attorneys list all six docket numbers in their opposition papers, earning a reproof from Judge Cary Douglas (“C-Doug”) Pugh. Order, at p. 1, footnote 1.

But IRS’ paperwork is far from exemplary. I won’t attempt to condense, much less set forth in full, the Penalty Approval Form, more particularly bounded and described at Order, at p. 2. It tops Bud Abbott and Lou Costello’s celebrated “Who’s-On-First?” routine.

Judge C-Doug Pugh manages to rescue the Section 6663 fraud and the Section 6662(b)(1) negligence chops from under the hooves of this staggering Boss Hoss, incidentally reiterating everything wrong with the statute.

“The statute requires approval ‘in writing’—it does not prescribe a particular form that writing must take. See § 6751(b)(1); Belair Woods, 154 T.C. at 17. Likewise, this Court has consistently declined to prescribe a particular format or style for a supervisor’s written approval under section 6751(b). See, e.g., Palmolive Bldg. Invs., 152 T.C. at 86 (2019) (citing Deyo v. United States, 296 F. App’x 157, 159 (2d Cir. 2008) (requiring ‘only personal approval in writing, not any particular form of signature or even any signature at all’)); Belair Woods, 154 T.C. at 17. Because petitioners fail to raise a material factual dispute regarding supervisory approval of the section 6663 fraud and section 6662(b)(1) negligence penalties, we will grant respondent’s motion in part.” Order, at p. 4.  (Footnote omitted, but it says deposing the RA adds nothing to her declaration for the purposes of this motion; presumably petitioner can get their whack at trial, see Order at p. 4.)

One final reproof to petitioners’ trusty attorney, and this is one we had ding-dinged into our heads in Civil Procedure One (thanks Dean Warren). ” We note that Mr. D’s declaration contains many pages of legal argument. We address his legal argument as if it were contained in petitioners’ Opposition brief because it is argument only and not factual support. We caution counsel that arguments do not belong in declarations.” Order, at p. 2, footnote 3. (Name omitted).