James Clark, T. C. Memo. 2025-13, filed 2/4/25, has spent 30 (count ’em, 30) years supporting himself as a freelance writer of movie reviews and seller of movie memorabilia. For year at issue, he lumped all his earnings together, listed them as “other income” and went to an H&R Block shop to file his return.

What’s wrong with this picture? No Sched C, no Sched SE. IRS processes return, issues SND for SE and five-and-ten substantial understatement chop. James petitions timely as postmark on his mailed petition proves, but petition didn’t get to IRS for four (count ’em, four) months, too late to stop assessment. So IRS reverses assessment per Section 6213(a), and notifies Social Security Administration, which issues a letter saying no SE due. James says IRS estopped.

No, says Judge Tamara W. Ashford. If this sounds familiar to Judge Ashford, it’s because another (unrelated) Ashford (William T.) tried the same move. See my blogpost “You Might As Well Capitulate,” 9/22/22.*

SSA withdrew the SE because it hadn’t been properly assessed. But it will be back as soon as James loses this case. His writing-and-selling gigs are clearly self-employment, pass every test. Moreover, James reported the income as nonemployee compensation.

As for the chop, it’s a close call. Good faith belief and want of sophistication can offset, and James is only a high school graduate, but at day’s end he has been around the block too many times.

“At trial petitioner appeared sincere but seemed a little confused as to the tax treatment of the income he admitted receiving from freelance movie review writing and selling movie-related memorabilia in [year at issue]. To be sure, his sophistication regarding federal income tax matters is rather limited in the light of his educational background, but he has been in business for himself over 30 years and indeed he acknowledged at trial that he always just pays the penalty for failure to pay estimated tax when he files his return each year (as he did for [year at issue]). He also stated that H&R Block prepared his [year at issue] return, but that statement alone does not show that he actually relied on advice from a tax professional during the preparation process. Accordingly, we find that petitioner failed to present persuasive evidence of a cognizable effort to assess his proper tax liability or reasonable cause for the error. Because the understatement of income tax was by definition substantial, we will sustain the penalty.” T. C. Memo. 2025-13, at pp. 7-8.

Gotta wonder what training that H&R Block shop gave its line preparers.

* https://taishofflaw.com/2022/09/29/you-might-as-well-capitulate

So Judge Christian N. (“Speedy”) Weiler finds in Andrew Parker, Docket No. 775-23L, filed 2/4/25, especially when Andrew and IRS seem to have hashed out their differences. Each has filed Motion for Entry of Decision, which Judge Speedy Weiler will put on hold.

The only hitch is in a “below the line” agreement in the decision document. For more on below-the-liners, see my blogpost “Below the Line,”11/4/23*.

Now stips are contracts and treated as such. Those resulting in entry of decision can be enforced like decisions (what we State courtiers call “judgments”).

Below-the-line (that is below where the Judge “so orders” the stip) agreements are still enforceable, but they aren’t decisions, so you’ve got to go separately to enforce, and contract defenses apply.

“While on the other hand, if there is no meeting of the mind, or agreement, then this Court is precluded from enforcement of a proposed stipulation between the parties.” Order, at p. 1. I think you meant “meeting of the minds”, Judge, that basic element of contract formation. Takes two to tango.

So let the parties enlighten Judge Speedy Weiler as to what their minds met on.

* https://taishofflaw.com/2023/11/14/below-the-line/

Classicist Judge Patrick J. (“Scholar at”) Urda disproves a classic mantra of mine in Thomas W. Langlois, T. C. Memo 2025-12, filed 2/3/25, and showing off his Latin erudition in a footnote. And more.

The footnote bears the title first set forth hereinabove at the head hereof, as my expensively prolix colleagues would say.

Here it is, in extenso.

“Ecce math. Mr. Langlois contended that he made capital contributions of $59,309 in 2012; removing the Form 1099 category reduces this amount to $49,917. After we take into account his 2012 distributive share of loss from Hair Station ($32,636), he is left with an adjusted basis of $17,281. For 2013 the removal of the Form 1099 category reduced his claimed capital contributions from $55,925 to $20,342. Adding his 2012 basis to his 2013 contributions yields $37,623, which is less than the distributive share of loss he claimed for 2013 ($40,309) and left him with an adjusted basis of zero (and a surplus loss of $2,686). Things continued along this path in 2014, which saw a reduction in his contributions to $20,793, well below the sum of the carryforward loss from 2013 ($2,686) and the distributive share of the 2014 loss he claimed ($38,569), which left him with an adjusted basis again of zero and a loss of $20,462 to be carried forward. Even assuming that Mr. Langlois made capital contributions of $15,189 in 2015 as he asserts, he has an insufficient basis—in light of the loss carryforward of $20,462—to deduct the distributive share of loss claimed on his 2015 tax return ($29,537).” T. C. Memo. 2025-12, at p. 16, footnote 7.

Judge Scholar Pat is a lawyer who can add.

Judge Rose E. (“Cracklin'”) Jenkins has a guide for litigating the Dixieland Boondockeries that are so prevalent just now. See Wahoo River, LLC, Wahoo River Investments, LLC, Tax Matters Partner, Docket No. 503-23, filed 1/31/25. The Wahoos are bracketed with two other syndicated cases, and have chosen a test case “to rule them all, to find them, to bring them all, and in the darkness bind them,” as a much finer writer than I put it.

Judge Cracklin’ Jenkins lays out, at pp. 1-2 of her Order, to what she needs the parties to stipulate in order to bring the desired result: a one-size-fits-all resolution to the controversy.

But lest the parties become too elated, Judge Jenkins cautions them.

“There is not [sic] set formula for a stipulation of jurisdictional facts. The Court reiterates that the list provided above contains examples of facts and documents that are often included in a stipulation of jurisdictional facts. The Court recognizes that the parties may not be able to stipulate to all of the facts listed herein and that certain items and documents listed may not be relevant to this case.” Order, at p. 2.,footnote 1.

A short while ago I was pointing out how IRS’ boilerplate summary J motions for Boss Hossery didn’t always work. Well, just now Park Lake II, LLC, Park Lake Partners, LLC, Tax Matters Partner, T. C. Memo. 2025-11, filed 1/30/25, tells the old story: the exception proves the cliché.

While Judge Albert G. (“Scholar Al”) doesn’t tell us if the Park Lakers interposed good faith reliance as a defense to the chops, the Park Lakers’ trusty attorneys, led by the redoutable Vivian D. (“Golden”) Hoard, would not overlook any valid argument.

So IRS comes out swinging, with every RA, supe, team manager, territory manager, Senior Counsel, Associate Area Counsel, documenting time, activity, transmission, receipt of every communication.

But the Golden Hoard is nowise dismayed at this Constitution Avenue Charge of the Heavy Brigade. “Petitioner struggles mightily, but in vain, to gin up a dispute of material fact.” T. C. Memo. 2025-11, at p. 4.

No, there’s no Service-wide mandate to chop every Dixieland Boondockery with excessive over(under) valuation chops. The RA decided on her own after consulting team manager. Taishoff says once a deal type appears on the bad boys’ list, no need for a policy statement, there’s a target on the back and front of every one of them.

A preliminary “let’s think about chops” memo isn’t a determination, which must be “an action ‘with a high degree of concreteness and formality.'” T. C. Memo. 2025-11, at p. 5, citing Belair. But the entire idea behind Section 6751(b) was to prevent low-level examiners from bludgeoning settlements out of terrified taxpayers with meritorious claims by threats of chops; what price “concreteness and formality”?

And of course there’s no sense fighting about IRS’ paperwork and electronicity, as they’ve documented everything. Vivian keeps probing, but to no avail.

I have to think when IRS gets one of these syndicated conservation easement deals, the full-court-press immediately follows.

That’s another virtue of summary J; it exposes adversary’s weakness. But there’s a vice: it exposes yours. While the nonmovant gets all the breaks and you lose your motion thereby, you know where you need to strengthen your case if you have to go to trial. But you can overdo it.

I’ll leave any account of the tangled family buyout trail in Estate of Clark J Levi, Deceased, Nathan D. Clark, Administrator, Docket No. 34455-21, filed 1/30/25, to Judge Christian N. (“Speedy”) Weiler, whose grasp of these maneuvers exceeds mine, despite such neologisms as “As way of illustration,” Order, at p. 4. I humbly suggest either “As an illustration,” or “By way of illustration.” And I’ll also exclude speculation about the regulatory kerfuffle that triggered renegotiation of the buyout deal and stirred up the $1,306,284 payout to the bought-outs.

The late Clark J., before he became the late Clark J., deducted same as a Section 162 ordinary-and-necessary. Rather than disallowing, IRS says it has to be capitalized. Both cross-move for summary J.

Neither gets it.

“… respondent cites us to provisions of contracts and deposition testimony, however, petitioner objects on the grounds that the contracts ‘do not support respondent’s factual assertion’ or that ‘respondent’s factual assertions’ are rebutted by other evidence. In fact, petitioner’s Response contends that respondent ‘attempts to simply [sic] a complex and nuanced set of facts involving family and friends operating a highly regulated pharmaceutical operation with sales across multiple states.’ Considering the above factual disputes, we do not find summary judgment to be appropriate.” Order, at p. 4.

Judge Speedy Weiler draws the line.

“The parties are urged to minimize the time and expense of trial, if trial becomes necessary, by entering into more comprehensive stipulations, without disputed characterizations, that include all documents any party deems relevant and a narrative in chronological order of the organization and operation of the entities and relevant transactions. Further, the parties are urged to minimize time-consuming motions that can be avoided by negotiation between or among counsel.” Order, at p. 4. (Emphasis added.)

IOW, don’t use summary J as a hook to turn the Tax Court Bench into special masters supervising discovery. And don’t try for summary J where you have zero basis. ” The parties also seek summary judgment with respect to the penalties asserted by respondent in the notice of deficiency. The parties, however, have neither established nor negated a reasonable cause and good-faith defense to the penalties.” Order, at p. 4. The standard IRS tactic of moving for summary J on Boss Hossery to sustain chops doesn’t always work.

Once again, the Genius Baristas have released a bombardment of opinions. Widespread topics, some interesting sidelights, otherwise  not a lot new.

Karl W. Leo and Fay L. Leo, T. C. Memo. 2025-9, filed 1/29/25, is another Dixieland Boondock appraisal mix-and-match, although two interesting points emerge. First, from the formulaic language of the stips of fact. That an appraisal “may be considered by the Court in arriving at its finding of fact” doesn’t mean that the Court is bound by every word and number therein. It’s in evidence, so is weighed and sifted like all other evidence. T. C. Memo. 2025-9, at p. 20.

Second, the history of the Boondocks at issue is replete with leases and amendments to leases, each one more sloppily drafted than the last. Unattached exhibits and undefined terms abound. Judge Morrison must have remembered his days in private practice, berating junior associates, but here forbore.

Charlton C. Tooke, III, 164 T. C. 2, a full-dress T. C., filed 1/29/25, is Judge Courtney D. (“CD”) Jones’ tour d’horizon of the famous protester Appointments Clause (U.S. Const. art. II, § 2, cl. 2, the “advice and consent” bit) argument that Appeals Chief and the AOs are “officers of the United States” and need Presidential appointment and Congressional approval. No, says Judge CD Jones, in 41 (count ’em, 41) pages of somber reasoning and copious citation of precedent. Federal Constitutional law wonks will find this fascinating.

Finally, hitting for the cycle as we baseball fans say, STJ Diana L. (“Sidewalks of New York”) Leyden has an off-the-bencher, Carol D. Gomez, Docket No. 3339-24S, filed 1/29/25.. This is a new (post-7/1/19) innocent spousery, where Section 6015(e)(7) is in play, so she allows petitioner sworn testimony (previously unavailable) and reviews de novo. Doesn’t help Carol, though: “Given that petitioner had knowledge of the retirement distributions, reported the amount on the couple’s tax return that she prepared, and that she did not fear any physical or mental abuse from her husband for not reporting the full amounts as taxable, the Court concludes that petitioner is not entitled to equitable relief under section 6015(f).” Transcript, at pp. 11-12.

Carol was also too late for “section 6015(b) or section 6015(c) because she filed her claim more than two years after the IRS began collection activity—namely an offset of a federal tax overpayment….” Transcript, at p. 7.

Equitable tolling, maybe? Ya gotta love the Supremes, American jurisprudence’s answer to Ignaz the Mouse.

I hear maybe FDA isn’t so sure you should be, but Mira Vista Homeowners Association, Inc., Docket No.  14901-22X, filed 1/28/25, definitely wants supplements to the administrative record whereto should be added, they say, “some 239 pages, including favorable IRS exemption letters, website information and 990EZ annual filings for other HOAs located in Texas. On brief, respondent disputes the relevance of this submission by petitioner, and contends the documents ‘do not provide any of the facts and circumstances upon which the IRS based their determinations.’” Order, at p. 3.

The Mira Vistas and IRS, with the supplements up in the air, jointly moved to submit under Rule 121. See my blogpost “Common Good, All In ?” 9/25/24.*

Now IRS wants a vacation of that order, and remand to Appeals. The Mira Vistas want a trial.

Judge Christian N. (“Speedy”) Weiler shucks his former order and finds Rule 217 will stretch to cover.

“Rule 217 provides that the ‘[d]isposition of an action for declaratory judgment…that involves… the initial qualification or classification of an exempt organization…will ordinarily be made on the basis of the administrative record, as defined in Rule 210(b)(12). (emphasis added). This Rule equally provides ‘[o]nly with the permission of the Court, on good cause shown, will any party be permitted to introduce before the Court any evidence other than that presented before the Internal Revenue Service and contained in the administrative record as so defined.’ In interpreting Rule 217, courts have permitted supplementation of the record when good cause is shown.” Order, at p. 4 (Footnote and citation omitted).

So without deciding the merits (and not even if IRS was arbitrary in denying the Mira Vistas 501(c)(4) status, the Mira Vistas still have to prove they qualify), Judge Speedy Weiler tells the parties to decide what supplements they’re taking.

Practice tip: Never ever agree to a Rule 121 unless you’re sure your admin record is complete and bulletproof. Save the money your client will have to spend on supplements.

* https://wp.me/p1eNMc-6B9

For backstory, see my blogpost “A Hill of Beans,” 10/16/19.* Judge Elizabeth Crewson Paris sent IRS and the Aggies off to do a Rule 155 beancount (geddit?).

They ask for an extension.

Five (count ’em) five years later, they are still on extension, as they can’t agree how to allocate the DPAD against the DPAI of the four-member Expanded Affiliated Group taking into account patronage and nonpatronage activities, “including the EAG members’ distributive shares of relevant items from partnerships and limited liability companies (LLCs).” Order, at p. 2.

Oh yes, the case is Ag Processing, a Cooperative and Subsidiaries, Docket No. 23479-14, filed 1/17/25, going into its eleventh year, with years at issue well into their later teens. If the Aggies didn’t deposit to stop interest, anything short of an outright win will be far worse than if they’d paid the tax to begin with.

Anyway, perhaps the Aggies were counting on Growmark to bail them out. For the Growmark story, see my blogpost “Another Corny Cooperative,” 12/11/19.**

And they got the bailout.

“Having considered in detail all of respondent’s additional arguments in his Second Supplemental brief, the respondent has not persuaded the Court that the allocation method described in Growmark and proposed by petitioner for the Step Three allocations is incorrect.” Order, at p. 4.

A speedy resolution: took only five years. I wonder if the legal fees are less than the ultimate deficiency, if any.

Howbeit, Judge Paris has finally had enough.

“Further, because the parties have never agreed to the computations for entry of decision under Rule 155, the parties may submit their computations separately if they fail to come to an agreement and they are convinced they have reached an impasse. If that is the case, then each computation should include a supplemental brief to explain their positions, so long as those positions are not relitigating a matter previously decided by this Court in either this case, AG Processing, Inc., or Growmark, Inc.” Order, at p. 4.

And have it in by 2/28/25.

* https://wp.me/p1eNMc-43G

** https://wp.me/p1eNMc-48B

IRS, in its never-ending battle to shoot down Dixieland Boondockerys without the expense of witnesses and trials, for which I as a taxpayer applaud them (governmental efficiency transcends politics), is again on the trail of Desoto Holdings LLC, Desoto Investors LLC, Tax Matters Partner, Docket No. 13013-20, filed 1/24/25.

This time the claim is that, by subdividing the boondocks whereupon the Desotos placed the easements in question, the Desotos violated the zoning laws of the Town of Harpersville in Shelby County, Alabama (and no, I don’t know where that is, either).

Judge Elizabeth Crewson Paris hikes through the land transfers that landed the Desotos in this “Heart of Dixie,” and parses the relevant Harpersville enactments.

“Harpersville Subdivision Regulations § 1:05. A violation ‘shall be punishable by a fine of one hundred dollars ($100) for each lot or parcel of land so transferred sold or agreed or negotiated sold,’ and the Town of Harpersville “may enjoin such transfer or sale or agreement by a civil action for injunction brought in any court of competent jurisdiction.” Id.(emphasis added).” Order, at p. 6.

Except Harpersville didn’t enjoin. And the AL zoning cases involve disputes between vendor and purchaser, not at issue here.

Besides, “… the conveyance of property in this case has already occurred. The Town of Harpersville did not enjoin the transfer of property from [vendor] to DeSoto. Neither Alabama law nor the Harpersville Subdivision Regulations give the Town of Harpersville the right to void a completed transfer of property from [vendor] to DeSoto.” Order, at p. 7.

But whether the zoning violation would have prohibited the Desotos from engaging in the limestone mining they claim was worth the millions and billions which they forwent for the noble and Congressionally-endorsed purpose of sparing the precious wilderness from the cutter’s blade is a question of fact. And the Desotos can still apply to the Town of Harpersville for subdivision approval, even if maybe the subdivision law is only intended to control sales and development.

Summary J denied: the deed is not void for violation of the zoning law, and because a question of fact exists about whether the violation prevents the mining, and thus the “before”  valuation of the property in the Desotos’ hands.

Word to the dodgefloggers: Hire competent local counsel to do the due diligence on your boondocks. Or pay them when the slipshod work of those you did hire causes this kind of schemozzle. The former is probably cheaper.