D.C. District Court Rejects Tax Analyst's FOIA Request For Background File on TAM That Might Identify Taxpayer Among the Taxpayers that Littlejohn Disclosed (9/18/26)

In Tax Analysts v. IRS (D.D.C. No. 1:24-cv-03257 at # 32 Memo Opinion & Order dtd 9/9/26) CL here, Tax Analysts sought disclosure of the background file for Technical Advice Memorandum TAM 201929019, TN here, on basis shifting strategy. In its order, the Court did not identify the TAM, but the TAM is identified in the Complaint here, Answer here, and Government  Motion for Summary Judgment here. The Court’s order is short, so I just quote it:

          The parties have agreed that this case can easily be resolved once the identity of the subject taxpayer is known. See Pl. Resp. at 1; Reply at 1. Plaintiff does not have this information and, for reasons to be explained, the IRS refuses to make it available to the plaintiff. Instead, the parties agree that the case could move forward if this Court reviewed the disputed material in camera. See Pl. Resp. at 2; Reply at 1-2. At the Court's request, the IRS delivered the relevant materials to the Court on September 4, 2026, and the Court has now reviewed them.

          The parties agree that former IRS contractor Charles Littlejohn publicly disclosed tax return information of "some prominent Americans," including Donald Trump, Warren Buffett, Bill Gates, Rupert Murdoch, Mark Zuckerberg, Jeff Bezos, Elon Musk, and others. The parties now also agree that if the taxpayer here is a person of such prominence, he or she could easily be identified with the Littlejohn disclosure and related news reporting. See Pl. Resp. at 2; Reply at 1-2.Any member of the public would be able to identify the subject taxpayer. If that is the case, the parties agree, the Court necessarily would conclude that the withheld documents are exempt from disclosure. See id. (citing 26 U.S.C. §6110(c)(1) and (c)(5)). The Court, having now reviewed the documents in camera, concludes that the subject is a person of such prominence that disclosure would be tantamount to identifying the taxpayer. Therefore, the records may be withheld. Accordingly, it is hereby

          ORDERED that on or before September 23,2026, the parties shall meet and confer and file a joint status report suggesting appropriate next steps in this case.

As presented, the Memo and Order raises the question as to which taxpayer the TAM relates to—"Donald Trump, Warren Buffett, Bill Gates, Rupert Murdoch, Mark Zuckerberg, Jeff Bezos, Elon Musk, and others.”

The TAM on its face does not identify the taxpayer. I have no personal information on the taxpayer. So, all I can do is to identify references to others’ works that provide some information that might permit inferences.

• Kristen A. Parillo, Tax Notes here, Trump Agenda Casts Doubt on Fate of Basis-Shifting Initiative (Tax Notes 1/6/25), here. Excerpts:

Given Trump’s aggressive reform agenda and history of eliminating tax regs disliked by business, he’ll likely order Treasury to review and propose for deletion or modification Biden-era tax regs deemed overly burdensome or to have exceeded statutory authority.

The basis-shifting guidance would likely be among those tax rules targeted for a partial or complete rollback.

Trump may want to halt the guidance initiative for personal and political reasons, said Walter D. Schwidetzky of the University of Baltimore School of Law. “Trump himself engaged in a type of basis shifting, though not one covered by the recent guidance,” he said.

Schwidetzky was referring to a May 2024 report by ProPublica and The New York Times, which said that in 2008 Trump claimed a worthlessness deduction for a partnership interest in 401 Mezz Venture LLC, the parent partnership of the entity that owned the Trump International Hotel and Tower in Chicago. Two years later, 401 Mezz Venture was merged into another partnership, DJT Holdings LLC, in an assets-over merger transaction, thereby allowing continued tax benefits from the terminating partnership. The report claimed that the transaction was the subject of an April 2019 IRS technical advice memorandum (TAM 201929019), released by the agency with the taxpayer’s name and other identifying information redacted.

Schwidetzky, who wrote an April 2024 Tax Notes article on inappropriate uses of the deduction for worthless partnership interests, noted that other taxpayers have also used the technique purportedly used by Trump.

The basis-shifting proposals “would primarily hurt the wealthy and big business, groups that tend to have his ear,” Schwidetzky said. But the proposals do have some flaws, he said, adding that “they’re too broad — that would provide an objective basis for their withdrawal.” 

• Professor Schwidetzky’s (Professor Baltimore Law, here, and UF Levin Law, here, article is Walter Schwidetzky, Related Party Partnerships: The Ultimate Tax Dodge, 79 Tax Law. 135 , 146 n. 81 (2026), ABA here (requires membership in ABA)(only one footnote included):

A. TAM 201929019: It is Not Just About Affiliated Groups

          To my knowledge, the first response to basis shifting did not involve affiliated groups but related partnerships. In TAM 201929019, the facts were redacted but most likely involved two partnerships, X and Y, each owned by A, an individual, and a corporation wholly owned by A, with A owning 99% and the corporation 1% of each partnership. 81  A took a worthlessness deduction for his interest in economically distressed Partnership X, retained the interest, and then merged X into more economically viable Partnership Y, likely owned the same as X, in a tax-free “assets over merger.” 82  A’s outside basis in his partnership interest in X would have been reduced to zero by the worthlessness deduction. 83  A apparently had a significantly positive outside basis in Y. If the transactions were respected as structured, through the merger, A would have been allowed to take advantage of his outside basis in Y to obtain the tax benefits, for example, of the cost recovery deductions attributable to the assets once owned by X, but after the merger owned by Y. All of this occurs notwithstanding A’s worthlessness deduction, effectively giving A two bites of the apple, one bite in the form of the worthlessness deduction, and the second bite in the form of additional depreciation deduction of the X assets in Y’s hands.
    81 EY came to similar conclusions, see Deemed Distribution of a Partnership Interest in an Assets-Over Merger Requires Downward Basis Adjustment; Deferred COD Income Not Considered Tax Gain That Can Attract IRC Section 743(b) Adjustment, EY, Tax News, Aug. 2, 2019 File No.2019-1403 (in which A was reportedly Donald Trump); see also Russ Buettner and Paul Kiel, Audit of Trump Zeroes in on Disputed Accounting, N.Y. Times, May 12, 2025 at A1 (quoting happily your author—my discussions with practitioners indicate that Mr. Trump was far from the only one to use this technique); see also Walter D. Schwidetzky, The Worthlessness Deduction for Partnership Interests, An Unguided Missile, 183 Tax Notes Fed. (TA) 461 (Apr. 15, 2024).

 So, that is inconclusive as to whether Trump was the taxpayer or otherwise identified in the background file. Even if it were some other taxpayer, Trump would have an interest in withdrawing the Regulation if he or related persons or entities were still in audit or subject to audit.