No, nothing about tariffs or international trade negotiation from me: this blog remains nonpolitical. My political views are expressed elsewhere. What interests me today is Judge Nega’s further explication of Section 6103(h)(4)(C) transactionality in Family Office Foundation, Inc., Docket No. 10779-23X, filed 2/23/26.

At issue is the relationship of FOF to certain persons or entities denominated as Strangers and Nonparties, and Promoter, the latter being the subject of a permanent injunction for organizing phony charitable contributions of overvalued assets to Promoter-created 501(c)(3)s, where contributor retained control of said assets. FOF wants a Rule 103 protective order.  Judge Nega goes for a redacted administrative record.

“Petitioner claims that the administrative records contains [sic] references to individuals that are ‘unrelated’ to this case and seeks to have the record sealed to protect the privacy of those individuals (and entities). As an alternative to sealing the entire record, petitioner requests that they be allowed to submit an unredacted record under seal to the Court and redact another copy of the record for public access.” Order, at p. 2.

IRS’ counsel agrees that the relationships of some of the referenced are too attenuated to fall within Section 6103(h)(4)(C)’s transactionality net, so those can be redacted from the public view. So that takes care of Section 6103(h)(4)(C).

But the protective order?

“In order to rebut the presumptive public right to free access to the facts, a party must come forth with appropriate facts to support claims of harm that would occur as a consequence of disclosure. 

“Historically, parties have met their burden to show claims of harm sufficient to seal records where patents, trade secrets or confidential information are involved. Id. at 921. A showing that the information would harm a party’s reputation is generally not sufficient to overcome the strong common law presumption in favor of access to court records.

“In this case, petitioner has not asserted any claims of harm beyond annoyance or embarrassment. Accordingly, petitioner has failed to rebut the presumptive public right of free access to the Court and we will not issue a protective order. See Willie Nelson Music Co., 85 T.C. at 925 (‘[M]erely asserting annoyance and embarrassment is wholly insufficient to demonstrate good cause.”). All of petitioner’s claims that the information of “Strangers” and “Nonparties” is confidential tax return information was only of any relevance to a section 6103 analysis of whether that tax return information may be disclosed in this proceeding—not to the analysis of whether an unusual Rule 103 protective order is warranted.” Order, at pp. 4-5. (Citations omitted, but get them; this is where most would-be sealers come unglued).

And before my ultra-sophisticated readers jump in with FRE 404(b) objections, incidentally upbraiding me for not mentioning same, Judge Nega got the point.

“Of course, as petitioner emphasizes, the fact that Promoter conducted many illegal transactions does not necessarily have anything to do with whether petitioner’s transactions complied with all relevant laws and does not control the tax implications of petitioner’s transactions.” Order, at p. 2.

Taishoff says watch the fallout from the SCEs, as those enmeshed therein bring on similar motions from blown-up Dixieland Boondockeries.

No, I’m not pitching a new cable TV reality show, although I’ll wager it could be a scream. No, here’s Judge Travis A. (“Tag”) Greaves scrapping a stip of facts on the eve of trial based on alleged facts not brought out at discovery. It’s Rule 91(e) on steroids; because IRS claims one (count it, one) sentence out of 40 ( count ’em, 40) paragraphs doesn’t tell the whole story, the whole new stip must be ready by next Friday, while trial starts Monday.

The case is Brown Bridge Newton 53, LLC, Brown Bridge 53 Manager, LLC, Tax Matters Partner,Docket No. 21274-21, filed 2/20/26.

The now-discarded stip said 53 got the property from a trust. IRS says it got other documents showing that one Jeff Grant (not my former boss, Baptist preacher, and self-help guru) got the property from the trust and conveyed it to 53.

So IRS asked 53 to elucidate, which they didn’t. IRS then asks to be relieved, to which 53 says IRS showed no grounds for relief.

Judge Tag Greaves says oh yes, IRS did.

“We have broad discretion in determining when justice requires that a stipulation be set aside. We have previously held that justice requires setting aside a stipulation when the evidence is contrary to the stipulation. Justice requires that we strike the first sentence of paragraph 40 of the First Stipulation of Facts and relieve respondent of this stipulation under Rule 91(e). The evidence set forth by respondent casts doubt as to whether [53] “acquired” the property from the … Trust, or whether the transaction should be viewed as a contribution from Jeff Grant. At the time that the parties stipulated to paragraph 40, respondent did not have in his possession the recently obtained evidence from third parties. Petitioners do not allege any prejudice resulting from striking this stipulation. As such, it would be unjust to hold respondent to a stipulation based on incomplete evidence. Instead, we will allow the parties to present their competing theories of the transaction at trial. Therefore, we will grant respondent relief from the first sentence of paragraph 40 of the First Stipulation of Facts. However, we will hold respondent to the second sentence of paragraph 40, which stipulates to the recorded deed.” Order, at p. 3. (Citations and name omitted).

Taishoff says why toss the whole thing for one sentence? Deem the sentence “impertinent,” use a Rule 52 Motion to Strike, and go on with the trial.

“The thing everybody knows cannot be proved too often.”

I can’t find the source just now, but I think it was Shaw’s music criticism. If any reader can help me, please comment below.

Howbeit, Judge Rose E. (“Cracklin'”) Jenkins sets the parties right by giving them a chance to think over their claim that their settlement agreement moots their deficiency case in Estate of Kevin N. Kalkhoven, Deceased, Kimberly Kalkhoven, Executor, Docket No. 31338-21, filed 2/20/26.

“… the parties filed a Motion to Dismiss on Ground of Mootness (Doc. 37). In the motion, the parties state that they have entered into a closing agreement, and that ‘there remains no dispute between the parties.’ … the Court issued an Order (Doc. 39) holding the Motion to Dismiss on Ground of Mootness in abeyance and directing the parties to file a status report.” Order, at p. 1.

Yes, Section 7121(b) means what it says. Absent fraud or malfeasance, closing agreements are final and courts have nothing more to say.

Except.

Section 7459(d) also means what it says. Dismissing a petition otherwise than for want of jurisdiction means entering decision in the amount stated in the SND.

Whereupon, the parties confabulate and “(I)n the Status Report, the parties state that they ‘have agreed that the Court should deny the joint Motion to Dismiss and that a decision consistent with the Closing Agreement should be entered into this case.'” Order, at p. 1.

They also ask for 45 (count ’em, 45) days to submit the proposed stiped decision, and get it.

A Taishoff “Well Played” to Judge Jenkins.

Taishoff says I thought maybe the petitioner was self-represented, and maybe the IRS had the rookies on this case. A quick docket search proved me wrong. The petitioner was represented by as heavy a bunch hitters (hi, Judge Holmes) as can be found. The IRS team is hardly less illustrious.

The leader of the petitioner’s team has expressed what I wish I had been. “I have the good fortune to lead a group of tax lawyers who not only enjoy mastering the intricacies of the tax code, but who also communicate in plain English and look for practical ways to help clients achieve their objectives.”

Let all practitioners say “Amen!”

And remember, a good practitioner is always learning.

“I didn’t have time to write a short one.” This celebrated sentence from Mark Twain doesn’t fit Judge Albert G. (“Scholar Al”) Lauber’s 66 (count ’em, 66) page epic stitching up North Donald LA Property, LLC, North Donald LA Investors, LLC, Tax Matters Partner, T. C. Memo. 2026-19, filed 2/19/26.

For while he does the standard blow-by-blow ringside call of this off-the-shelf Dixieland Boondockery, he gives us the takeaway up front.

“On its Federal income tax return for [year at issue], North Donald claimed for this donation a charitable contribution deduction of $115,391,000. It asserted that the ‘before value’ of the farmland—its value before being encumbered by the easement—was $439,492 per acre. It thus took the position that the land had appreciated by more than 14,000% in 21 months.” T. C. Memo. 2026-19, at pp. 1-2.

“We conclude here, as we did in J L Minerals, LLC v. Commissioner, T.C. Memo. 2024-93, at *3, that the valuation of the conservation easement ‘was an outrageous overstatement,’ wholly untethered from reality. Employing the comparable sales method, as backstopped by the price actually paid to acquire the property… we find that its ‘before value’ was $2,975 per acre and that its ‘after value’ was $2,300 per acre. The delta between these figures—the reduction in value attributable to the easement—is $675 per acre. The value of the easement—and hence the allowable charitable contribution deduction—is thus $175,824 ($675 × 260.48 = $175,824).

“North Donald claimed $1,157,469 of ‘other deductions’ on its [year at issue] return. This sum included a $1,055,000 ‘consulting fee’ paid to the promoter that marketed the conservation easement to investors and $50,000 paid to a law firm that served as a ‘material advisor’ to the SCE transaction. We find that these expenses constituted nondeductible syndication costs and that the rest of the ‘other deductions’ must also be disallowed.” T. C. Memo. 2026-19, at p. 2.

For the J L Minerals backstory, see my blogpost “Blunging Farblundgeit,” 10/8/24.

IRS’ asserted Section 6663 fraud chops fail, as the deal was fully disclosed on the return. But the Donalds do get hit for the 40% gross valuation misstatement chop.

I’d thought the Boss Hoss herds first stampeded by The Jersey Boys a round dozen years ago (see my blogpost “Penalty Kick,” 7/17/14) had finally quietened down to routine summary J motions for garden-variety Section 6662 chops in Dixieland Boondockeries.

But it seems the Boss Hoss stampede is ongoing. See STJ Diana L. (“Sidewalks of New York”) Leyden taking IRS to task in Alexander Shen & Allison Shen, Docket No. 3974-25, filed 2/18/25. 

IRS is asserting a Section 6662(a) accuracy chop in this deficiency case. But the Boss Hoss has apparently bolted before IRS saddled up.

“If respondent wishes to continue to assert the accuracy-related penalty under section 6662(a) in this case, he shall file a status report and attach thereto a Case History Transcript, a Note Transcript, if applicable, and any other relevant documents to demonstrate compliance with section 6751(b)(1). Alternatively, if respondent concludes that he did not comply with the requirement under section 6751(b)(1) with respect to the accuracy-related penalty under section 6662(a), he should consider conceding that penalty and notify the Court by filing a status report.” Order, at p. 2.

And just in case IRS’ counsel has forgotten how to round up a Boss Hoss and document the hoofprint of same, STJ Di has a checklist.

“To show compliance with this provision, respondent must show (1) the identity of the individual who made the ‘initial determination,’ (2) an approval of the penalty ‘in writing,’ (3) the identity of the person giving approval and his or her status as the ‘immediate supervisor,’ and (4) evidence that the supervisory approval was obtained no later than the issuance to petitioners of the initial formal communication of proposed adjustments that includes penalties and provides the taxpayer the right to protest those proposed adjustments, such as a 30-day letter or Letter 525.” Order, at p.1. (Citations omitted).

No ride into the sunset for the Boss Hoss.

I’ve often criticized the vagaries of DAWSON’s creek, from. the months-long shutdown that preceded its opening to its teething pains and later glitches. But Sergio Martinez and Arely Tolentino, et al., Docket No. 18467-24, filed 2/17/26, though stymied by DAWSON, reveal the lacking human element.

Ch J Patrick J. (“Scholar pat”) Urda tells the story. Note the dates.

“On August 28, 2024, petitioners filed in paper form an imperfect Petition to commence the case at Docket No. 13995-24. By Order issued August 28, 2024, the Court directed petitioners to file a proper amended petition. After having received no response from petitioners, on November 19, 2024, the Court entered at Docket No. 13995-24 an Order of Dismissal for Lack of Jurisdiction and that case was closed. The Order of Dismissal stated that, if petitioners filed an amended petition within 30 days, the Court would consider vacating the dismissal and reinstating the case.

“On November 25, 2024, without having eAccess to their above-referenced case, it appears petitioner Sergio Martinez attempted to electronically file the amended petition. That action resulted in a separate Petition being filed to commence the case at Docket No. 18467-24.” Order, at p. 1.

Taishoff says notwithstanding Sergio’s electronic miscue, a docket search shows the amended petition filed 11/25/24 as stated.

IRS moves to toss that stealth amended petition 1/7/26. 

The same docket search shows that a year went by with a SPTO, a change of address for one of IRS’ counsel, an EoA (no counsel stated for Sergio; must be IRS counsel), and a Notice of Trial for venue Sergio requested.

IRS apparently assigned three (count ’em, three) attorneys to this case.

No crosschecking. No followup.

Ch J Scholar Pat has to straighten this out.

No comment.

Sources inform me that “Presidents’ Day” is a popular misnomer for the Federal holiday created by statute in 1879. The statute designated the day as set forth hereinabove at the head hereof (as my already-on-the beach-in-an-undisclosed-location colleagues would say, between sips of their piña coladas).

So, whether as purist you call Monday, 2/16/26 Washington’s Birthday, or as a populist name it Presidents’ Day, Tax Court is closed.

I am silent.

I’ve been chronicling Tax Court’s fighting retreat from Boechler in deficiency cases, sticking to Sanders and Hallmark Rsch. Collective even as 2 Cir. crumbles to Buller, 3 Cir caves first with Culp, and 6 Cir collapses with Oquendo. Of course, the Supremes gave cert. den. to Culp, so anyone lifting their eyes to those hills will find that from thence cometh no salvation.

Now Ch J Patrick J. (“Scholar Pat”) Urda, with the determination of the famed Australian militiamen defending the Kokoda Track, scheduling all those defeats yet stoutly refusing to retreat an inch, sends off Francene Elizabeth Stewart, Docket No. 15421-25, filed 2/13/25, for being a day late and more than a dollar short. Her petition was due by 6:00 EST, 11/10/25, but wasn’t efiled until 9:30 p.m. EST, 11/11/25.

“In her Objection to Motion to Dismiss for Lack of Jurisdiction… petitioner argues that “the delay in filing was caused by extraordinary circumstances during a federal government shutdown, which created confusion regarding filing obligations,’ and that the principles of the Court’s opinion in Guralnik v. Commissioner, 146 T.C. 230 (2016), should apply in this case. We disagree. As petitioner herself concedes in her Objection, the Clerk’s Office remained open for eFiling and paper filing during the federal government shutdown that occurred from October 1, 2025, through November 12, 2025. And the Court’s records show that our electronic filing and case management system, DAWSON (Docket Access Within a Secure Online Network)—which petitioner used to file the Petition in this case—was operational at all relevant times. Because the Clerk’s Office was accessible throughout the federal government shutdown, Guralnik has no application here.” Order, at p. 2.

For the story of Felix Guralnik, see my blogpost “Neither Equity Nor Designation,” 6/2/16. Note Guralnik was a pre-Boechler CDP NOD case, which Boechler would clearly have saved. 

Since Francene is Golsenized to 11 Cir, Ch J Scholar Pat points to Pugsley to support the jurisdictional bar in Section 6213(a), but Taishoff says see my blogpost “‘Justified’? – I’ll Say!” 12/5/25. The reference in Pugsley to Section 6213(a) was a throwaway, without any discussion of claims-processing-vs-jurisdiction, decided years before Boechler. While the last thing I ever want to do is stir up litigation, someone should take a trip to 11 Cir from a Tax Court deficiency jurisdictional shoot-down (with sympathetic facts, of course) and see what 11 Cir does with Pugsley now.

Anyway, fairness and equity are off the table. If you’re on the wrong side of a State line.

“Petitioner also argues that ‘equity and fairness warrant treating the petition as timely filed.’ To the extent this is an argument that the filing deadline set forth in section 6213(a) for deficiency cases is nonjurisdictional and subject to equitable tolling, we also disagree.” Order, at p. 2.

Beveled Edge Insurance Company, Inc., et al., Docket No. 19821-16, filed 2/12/26, is lead petitioner in 14 (count ’em, 14) microcaptive deficiency cases. The owners of this corporate squadron want summary J that the micros, organized under the laws of KY, are separate entities for tax purposes. They cite Moline Props., 319 U.S. 436 (1943).

OK, says Judge James S. (“Big Jim”) Halpern, but that’s only half the question here. Corporations are separate entities when they satisfy the statutory minimum requirements to become an insurance company under its State of incorporation. That that is especially so when the corporation is not a wholly-owned subsidiary of the insured.

“… respondent does not dispute that [the Corps] were validly formed under Kentucky law. Respondent objects to the Motion on the grounds that there remain genuine disputes as to whether the three corporations satisfy the conditions for—and avoid the exceptions from—application of the general rule of Moline Properties (that separate entities will be respected for tax purposes). Respondent points out that petitioners exclusive list of material facts fails to address the business purposes or continuing business activities of the three corporations, nor does it aver facts to conclude that the corporate forms should not be disregarded because sham or unreal. See Moline Properties, 319 U.S. at 438-39.

“Respondent is correct. Petitioners have failed to address facts that are material if we are to rule that the [each of the Corps]’ respective status as separate state-law entities is to be disregarded for federal tax purposes. For that reason, we will deny the Motion.” Order, at p.6. (Footnote omitted).

Here’s the missing footnote: “In passing, we observe that we do not see the purpose of respondent’s objection that [two of the Corps] be considered separate entities for federal tax purposes. Respondent has determined deficiencies in each’s income tax for [year at issue], which determinations would seem in jeopardy if the entity status of the corporations were disregarded for federal tax purposes.” Order, at p. 6, footnote 5.

A corporation can be separate and have a separate deficiency, but if it is a sham the deficiency will rebound on the owners.

The old cliché of the shoemaker’s children going shoeless should be retired on account of age. But when a tax preparer gets chopped for fraud like Jack Goodwill-Oikerhe, T. C. Memo. 2026-18, filed 2/11/26, maybe it’s the clients who are the real targets.

Judge Nega’s 37 (count ’em, 37) pages of prose tell the story, so I won’t cut-and-paste or paraphrase, except for his peroration. 

“Petitioner is a well-educated businessman and an experienced tax return preparer, and yet he significantly overstated the deductions to which he was entitled on his and [Sub S]’s returns for each of the years in issue. During the examination, he required RA C to summon his bank records, failed to provide promised documents and meetings, and ultimately provided RA C with only minimal documentation to support the claimed deductions. And during trial petitioner provided the Court with no documentation or other corroborating evidence at all with respect to his testimony.

“Petitioner also made implausible and inconsistent statements throughout the course of the examination and trial, as repeatedly demonstrated throughout our analysis of the disputed deductions…, including statements surrounding his employee business expenses that were refuted. And we have found incredible his assertions that whatever books and records he did maintain were destroyed in a flood or absconded with by RA C.” T. C. Memo. 2026-18, at p. 36. (Name and citations omitted).

I wonder how many of the 700 returns that Jack prepared for his cash-paying customers, and how many thereof he signed as preparer, over a three-year span (see T. C. Memo. 2026-18, at p. 5) were of the same quality as the returns he prepared for himself and his Sub S. IRS might want to get a list from Jack, and audit a few those returns (hi, Judge Holmes).