To quote the Man from Mumbai, “by the laws of the family circle, ’tis written in letters of brass” that there can be no denial or diminution of a charitable deduction without an IRS motion for Boss Hossery summary J. So even when pointed dissents follow a denial of summary J all around in The David and Barbara Green 1993 Dynasty Trust, Mart D. Green, Trustee, et al., T. C. Memo. 2025-100, filed 10/2/25, there comes Judge Emin (“Eminent”) Toro to award IRS summary J in the usual barrelshoot.

The issue is the Notice of Partnership Adjustment at Exam. The Dynasts claim the electronic signature thereon doesn’t satisfy Boss Hossery. But this is preliminary, doesn’t show Exam is finished. Judge Eminent Toro goes through the 30-day Letter liturgy.

Taishoff says the bludgeoning the statute was supposed to prevent always takes place “preliminarily.”

That a workpaper from IRS shown to the Dynasts doesn’t name them, but the Sub S corporation in which they hold stock, doesn’t matter, as Reg. Section 1.6662-5(h) says initial penalties go to the entity first, even if later passed through to the shareholders.

And while the NOPA is supposed to state penalties separately for each item, that footfault doesn’t invalidate the notice; the parties will fight out the computations on the trial.

This is a common State courtier jibe, especially employed when the jiber has just lost the case and is soothing his (it’s generally “his”) seething soul with the second double Grey Goose Gibson. It might be the subtext of the dissents in The David and Barbara Green 1993 Dynasty Trust, Mart D. Green, Trustee, et al., 165 T. C. 7, filed 10/2/25. The Dynasts are the celebrated Hobby Lobbyists of corporate religiosity fame. They and the als have donated a bunch ancient texts (Aramaic, Hebrew, Greek, and Latin, dating from centuries Fifteen to and including Eighteen)(hi, Judge Holmes), for which they claim a $23 million deduction to The Museum of the Bible, a 501(c)(3) down the block from The Glasshouse. Stated basis therein is a cool $1.7 million, 165 T. C. 7, at p. 5.

They and IRS want summary J, unpacking the interplay between Sections 641, 642(c), and 681 with respect to unrelated business income of an electing small business trust (ESBT), and canvassing strict vs. substantial compliance with a couple Section 170 provisions, as modified by the Deficit Reduction Act of 1984, and IRS regs promulgated thereunder. Among other things, the appraisal with the Form 8283 stated that two other experts were in on the tackle, but the lead (who was the only signatory) said it was entirely his. IRS says that voids the appraisal, but the Hobby Lobbyists say substantial compliance, citing Belair.

Playing defense, since even if deduction is disallowed, the Hobby Lobbyists claim caselaw allows all but gross valuation misstatement chops to be waved off by good faith reliance,  they want summary J on good faith reliance on advice which they got from a major-league CPA firm. Moreover, the statute itself permits the deduction even if substantiation is sketchy. Section 170(f)(11)(A)(ii)(II) expressly provides that section 170(f)(11)(A)(i)—the rule denying the deduction on substantiation grounds—“shall not apply if it is shown that the failure to meet such requirements is due to reasonable cause and not to willful neglect.” So this is the peg on which the majority hangs its hat. Deciding reasonable reliance is always a question of who told what to whom when, what the taxpayer did, and what was too good to be true. No summary J.

“In short, the possible availability of the reasonable cause defense precludes partial summary judgment in favor of the Commissioner on the substantiation issue. And, because trial will be required on this issue (as well as the open valuation issues that the Commissioner’s own Motions highlight), we decline to decide summarily the remaining substantiation issues, which (depending on the outcome of trial) might not need to be decided at all. See, e.g., Chrem, T.C. Memo. 2018-164, at *25 (‘Barring settlement, these cases will need to go to trial on the assignment of income issue and the “reasonable cause” defense. Under these circumstances we deem it prudent, for two reasons, to deny in their entirety both pending motions for partial summary judgment. First, if [the taxpayers] prevail on the “reasonable cause” defense, it will be unnecessary for us to decide whether they substantially complied with the appraisal reporting requirements. Second, there could be some factual overlap between the two sets of issues.’).” 165 T. C. 7, at p.17.

For the Chrem story, see my blogpost “Fair Is Foul – Maybe,” 9/26/18.

The dueling statutes and regs are also off the menu.

“As to the Motions related to the Trusts and the interplay among sections 641, 642, 681, 512(b)(11), and 170, after a careful review of the Motion papers, neither side has convinced us that it is clearly entitled to the rulings that it seeks. We therefore believe it prudent to defer resolving those issues until a full record for these cases is developed at trial and the matters concerning the substantiation issues are also resolved.” Idem., as my expensive colleagues would say.

CJ Urda, and JJ Kerrigan, Buch, Pugh, Ashford, Copeland, Jones, Greaves, Weiler, Landy, Arbeit, and Fung are down with this.

Judge Alina I. (“AIM”) Marshall isn’t. Hop to it, guys, she says (much more politely).

“Rule 121(a) provides that the ‘Court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The Court “shall”—not may.

“The parties chose to postpone a scheduled trial session in favor of waiting for answers to their complicated questions of law. They filed Cross-Motions for Partial Summary Judgment pertaining to Hobby Lobby’s compliance with the section 170(f)(11) and Treasury Regulation § 1.170A-13(c) substantiation requirements, ESBT petitioners’ entitlement to deductions under sections 642(c) and 681(a), and the determined penalties. The six Motions, along with attached memoranda, replies, and other related filings, exceeded 1,000 pages.

“The parties also filed four Stipulations of Facts exceeding 10,000 pages. On the basis of these extensive filings, the Court can decide multiple issues of law now.” 165 T. C. 7, at p.19.

Yeah, summary J is drastic when it deprives someone of a trial, but when everybody agrees on the facts so there’s nothing to try, why make them go through a trial where it’s at least possible that these legal questions will have to be answered anyway. Partial summary J clears the decks. JJ Guider and Jenkins sign on to this.

In her own dissent, Judge Jenkins says Chrem went off on a possible overlap between reasonable cause defense and a factual issue, assignment of income. Here there’s no overlap. The ESBTs here have 95% of the deduction, so the statutory-regulatory interplay is meaningful. In other cases, Tax Court decided substantiation first, good faith reliance afterward; let’s put the horse before the cart. And the Hobby Lobbyists haven’t put in affidavits or much else about the advice they got and what they did. Compliance and substantiation are the real deal, but because good faith reliance is a fact question, Judge Rose E. (“Cracklin'”) Jenkins would deny summary J on only that issue. JJ Nega, Way, and Guider, join her all the way, but Judge AIM Marshall only agrees about summary J and substantiation, not about trust issues.

Middle Department Inspection Agency, Inc., T.C. Memo. 2025-99, filed 10/1/25, asserts all manner of errors of fact and law, but Judge Courtney D. (“CD”) Jones finds the AO followed the IRM, so affirms the NFTL and NITL. The ambiguous language in the rejection of an OIC which pled special circumstances because the AO denied that “consistently underfunding the pension plan qualifies as a special circumstance because, ultimately, the pensioners were paid net payments without regard to the future payments they were entitled to/promised,” T.C. Memo. 2025-99, at p. 20, is stated in the context of ability to pay the Section 4971 underfunded defined benefit plan excise tax, not how such a plan is terminated.

There are 18 (count ’em, 18) underfunded years, $9 million in unpaid tax, and an OIC of $250K while MDIA admits to north of $2 million in assets.

MDIA’s trusty attorney leaves no ambiguity unaddressed, and every argument vociferated, but at close of play, MDIA is a profit-making business whose payment of tax would not impair the community, the tax laws are there to be enforced, and the AO’s conclusion that OIC is too low is sustained.

When MDIA went bankrupt, the owner kept the pension plan despite having been able to blow it off, and claims (though doesn’t prove) he paid all the covered retirees without missing a payment and bought some of them annuities, so Pension Benefit Guaranty Corp. signed off on the exit. T. C. Memo.  2025-99, at p. 10.

No good deed goes…but you know the rest.

Judge Elizabeth Crewson Paris has entered decision in AG Processing, Inc A Cooperative and Subsidiaries, Docket No. 23479-14, filed 9/30/25, a mere two days shy of eleven (count ’em, eleven) years after the petition was filed, and a merer (if there is such a word) eighteen days shy of six (count ’em, six) years after Judge Paris’ opinion, for which see my blogpost “A Hill of Beans,” 10/16/19.

The three (count ;’em, three) years at issue are 17, 16, and 15 years ago respectively. The two refunds involved were paid 17 and 16 years ago, respectively. For the third year at issue there was neither deficiency nor refund.

Those who were my readers at the time of the aforementioned blogpost still sentient may recall that the opinion ended with a Rule 155 beancount. Four (count ’em, four) days ago, IRS moved to entry of computation.

As a lawyer I admittedly cannot add, but if my calculator is correct (which I neither guarantee nor warrant) the beancount lasted from October 16, 2019 until September 25, 2025, just 21 (count ’em, 21) days shy of six years.

That must have been one heluva mountain of beans.

Once again the United States Congress intones Roger Christian’s 1963 invocation of dragstrip prowess. But don’t worry, readers,  Tax Court stands ready to tack it up.

United States Tax Court will remain open for business on Wednesday, October 1, 2025. Please check the Court’s website often for updates on Tax Court operating status and trial information.

Taishoff will also try to keep readers posted.

It’s only a couple days short of a year (hi, Judge Holmes) since Tonia L. Hartman, Docket No. 18106-24, filed 9/29/25, made her debut on this my blog. See my blogpost “Six Decades of Practice,” 10/2/24. It was Tonia’s debut as a protester; she apparently tried another one later (see infra, as my expensive colleagues would say), but one was enough for me.

A year ago I said “(I) understand the frustrations and anger; the present system is deeply flawed. But the cure is not effected by making a fruitless protest that only worsens your situation by invoking Section 6673, although STJ Panuthos spares the rod this time.”

Apparently Tonia doesn’t read, or if she does she doesn’t heed, this my blog, because CSTJ Zachary S. (“High-Rise”) Fried brushes off her protester jive without even quoting same, just citing Crain, Wnuck, and Waltner. Then he hits Tonia with a $2K Section 6673 chop, seasoned with a warning.

“In previous cases, filed at Docket Nos. 1713-24 and 9513-24, she has been warned that positions similar to the position taken in this case are groundless, and her arguments frivolous. We therefore will impose a penalty of $2,000 pursuant to section 6673(a)(1) on petitioner. We again warn her that if she does not abandon these misguided positions in future filings before this Court, a greater penalty may be imposed.” Order, at p. 3.

This post is music criticism, non-tax related, so readers looking for such can save their time now. For anyone else, the Metropolitan Opera has a reprise of the 2023 Ivo van Hove production. Briefly, last night showed unsatisfying sets and costumes, some truly fine performances, but ultimately disappointed me.

First, the good news. Ben Bliss’ Otttavio, less nerd-like characterization, great singing (an “Il Mio Tesoro” to remember); Federica Lombardi’s Donna Anna, acrobatic acting; Jannaï Brugger, a presenter at the Laffon Grands in March, a good advertisement for the Lindemann’s young artist program, a presence vocally despite a wardrobe failure of a costume. Hera Hyesang Park’s Zerlina deserves its own sentence; here’s a great star at the edge of enormous success. Big voice, great presence.

Now the bad news. I’ve been a fan of Ryan Speedo Green since 2015, when I saw him as Rochfort in Anna Bolena in Vienna. His last-season Carnegie Hall recital triumph in Mussorgsky’s Songs and Dances of Death reminded me of Sherrill Milnes’ Onegin. But last night he was a half-beat behind Nézet-Séguin, who was having his own issues with Mozart’s score (more about that infra). HIs voice seemed shrouded, his characterization seemed all bully (one wondered how he attracted even a fraction of the Spanish mille é tre). His Champagne Aria made me cringe: this is Giovanni’s moment to sparkle, but there was nothing there beyond the notes, smothered at that. Back to the woodshed. I’m also a Nézet-Séguin fan, but he lost me. The tradition is Mozart was a stickler for expression in his music, but N-S suppressed many of the finest points. He got right that Mozart wanted his allegros played swiftly. In short, too much Nézet-Séguin, not enough Mozart, in one of his most brilliant scores. The Met orchestra is world-class, and deserves better.

The OKs. Commendatore Adam Palka checked all the boxes, as did Leporello Adam Plachetka, whose slow start (a lackluster Catalogue Aria, more catalogue than aria) made me nervous, but finally came alive in Act II.

The sets looked like last season’s Romeo and Juliet recycled; why must the Met play a great scenic opportunity in what looks like a Robert Moses slum clearance housing project?

The staging was unworthy of comment: only the artistry of the performers saved it from the done-to-death film noir fogbank that has enveloped so much of contemporary operatic staging.

Contemporary costumes work for contemporary opera, but Don Giovanni is nothing if not a child of its time; poor Dannaï Brugger, who looks well in period costume, was wearing the sort of 1950s ladies’ suit that came out of a Lane Bryant (of infamous memory) clearance sale. The Giovanni-Leporello clothing swap loses all meaning when both are wearing dress suits. You cannot do grand opera when everyone looks like casual Friday.

The singers saved a disappointing evening.

The 1931 Harry Barris – Gordon Clifford classic that catapulted Bing Crosby to all-time greatness echoes through the unending barrage of IRS’ partial summary J motions to assure Boss Hossery in the Dixieland Boondockery scuffles.

Just one example: Harviell Lowlands, LLC, Harviell Lowlands Investments, LLC, Partnership Representative, Docket No. 5750-23, filed 9/26/25.

Judge Jeffrey S. (“Schwer”) Arbeit has this one.

“…petitioner filed notice of concession in response to respondent’s motion for partial summary judgment… maintaining that respondent addressed the issue of whether he has demonstrated compliance with the written supervisory approval requirements under Internal Revenue Code (‘I.R.C.’) § 6751(b) for the following penalties identified in the Notice of Final Partnership Adjustment issued to Harviell Lowlands, LLC: I.R.C. §§ 6662(c), 6662(d), 6662(h), 6662A.” Order, at p. 1.

Among Harviell’s trusty attorneys I note a constant reader of this my blog, who has decided not to fight a losing battle by trying to enforce Congress’ miserably-drafted attempt to protect taxpayers from bludgeoning by over-zealous RAs against a judicial system that has systematically gutted whatever minuscule force it was intended to have.

I’ve written a lot about sealing documents in Tax Court because it’s an evergreen. Many a petitioner comes to grief there, and not a few practitioners. I’ve seen motions seeking sealing do more harm than just riding head-down under cover of all the other pleadings and other documents.

Weidong Zhang, Docket No. 15356-20W, filed 9/25/25, being a whistleblower, gets special treatment. Section 6103, the guardian of taxpayer information, lifts the shield when needed for judicial or administrative proceedings pertaining to tax administration in Section 6103(h)(4).

Judge Rose E. (“Cracklin'”) Jenkins sets forth the safeguards when IRS hands over third-party or nonparty Section 6103 information to petitioners for trial prep.

“(w)henever petitioner intends to provide for trial preparation to any person(s) any Protected Documents, petitioner must first provide a copy of this Order to any such person(s), inform such person(s) that he or she must comply with the terms of this Order, and obtain on a copy of this Order the name, the business or home address of such person(s) at which service of process can generally be made during business hours, and the signature(s) of such person(s). Petitioner shall retain the signed copy of this Order until one year after the decision in this case becomes final within the meaning of section 7481(a). After petitioner has complied with the first sentence of this ordered paragraph, petitioner may provide for trial preparation to any person(s) described in the first sentence any Protected Documents.” Order, at p. 2.

Given the pace of Tax Court litigation, that holding period could be a very long time.

A docket search shows Weidong Zhang is pro se. Judge Jenkins doesn’t state who Weidong Zheng might have engaged to help with trial prep. If any is not covered by Section 7525 confidentiality or litigation prep privilege, I wonder what cover they have.

Judge Albert G. (“Scholar Al”) Lauber stiches up the career of ex-PA-Senator Vincent J. Fumo, T. C. Memo. 2025-97, filed 9/24/25, as “Senator R2–D2” (T. C. Memo. 2025-97, at p. 22) gets hit both for unreported income on his 1040, and for Section 4958 excess benefits he got from the 501(c)(3) he created.

Most of the information in this case comes from the criminal trial in USDCEDPA, wherein Sen. Fumo went down on 137 (count ’em, 137) counts “including mail fraud, wire fraud, obstruction of justice, conspiracy to obstruct justice, and violation of section 7206(2) for willfully aiding or assisting in filing false tax returns.” T. C. Memo. 2025-97, at p. 4.

Sen. Fumo padded his payroll, aided by the chief clerk of the PA Senate who routinely accepted whatever senators said. And while the cash didn’t go into Sen. Fumo’s pocket, what it bought was valuable.

“By diverting excess compensation to his staff, petitioner garnered more than ‘political capital.’ He sought to assure—and he in fact obtained—unquestioning loyalty from his staff, especially when the going got tough. He incentivized his employees’ compliance in rendering personal services that directly benefited him and his political allies. And he ‘bought their silence’ about improper or illegal behavior in which he was engaging, including the use of Senate resources for his political Campaigns. These benefits plainly had economic value. And while the fair market value of these benefits might be hard to calculate in isolation, petitioner has not shown that it was ‘arbitrary or erroneous’ for the Commissioner to use the excess compensation he engineered for his staff as an index of the value he received from them.” T. C. Memo. 2025-97, at pp. 44-45.

There’s a lot more. His ostensible staff, paid for by the taxpayers, were his personal servants, the taxpayers paid for his travel, tools, farm equipment, cars, cellphones, and girlfriends, and the 501(c)(3) paid for the rest, though he was careful to trash all the records.

Of course, some of the staff actually worked in appropriate situations, and Judge Scholar Al carves these up as best he can. If any reader works for a corrupt politician and needs a template for dividing the padded staff wages, read T. C. Memo. 2025-97, at pp. 46-61. And any of you who practice in the criminal fraud arena will find this useful too.

As for the money given to family, friends, and political allies, that’s still income to Sen. Fumo, as he could choose where to divert what he stole.

The Section 4958 excess benefit excise tax is extensively dealt with. I leave that to Mr. Paul Streckfus, the EO expert, to discuss.

As for Section 6663 chops and the open fraud SOL, Sen. Fumo has enough badges to qualify for eagle status. Wiping your e-records goes a long way. And Sen. Fumo failed to file Form 4720 to report his excess benefits.

“The Form 4720 is admittedly an exotic species: The obligation to file this return––unlike the obligation to file (say) Form 1040––is far from common knowledge. Petitioner maintains that he had reasonable cause for his failure to file because he lacked any concept of the terms ‘constructive income’ or ‘disqualified person.’ He assertedly had ‘no inkling that he may have obtained a taxable . . . benefit’ during the years at issue.

“We are not persuaded. Petitioner was an attorney, a bank chairman, and a highly sophisticated actor. He caused his Senate staff to create [the 501(c)(3)] as a tax-exempt charity, and it was operated out of his office. He is charged with knowledge of the basic rules governing the operation of public charities.” T. C. Memo. 2025-97, at p. 89.