Tax Court Invalidates Regulation on CPAR/BBA Partnership FPA Limitations Period and Holds Partnership Adequately Disclosed to Avoid Limitations Extension (7/3/24)

In JM Assets, LP v. Commissioner, 165 T.C. ___ No. 1 (7/2/25) (reviewed opinion with no dissents), TC here dkt #46 and GS here [to come], the Court invalidated a regulation that, if valid, would have extended the period for a final partnership adjustment under the CPAR/BBA beyond the statutory period of 330 days. The FPA is the final action imposing the imputed tax at the partnership level under CPAR/BBA.

 The Court offers the following “latest possible dates” for a valid FPA (Slip Op. 12-13):

(1) three years after the date on which the partnership return was filed, I.R.C. § 6235(a)(1)(A); (2) three years after the due date of the return, I.R.C. § 6235(a)(1)(B); (3) three years after the date on which the partnership filed an administrative adjustment request under section 6227, I.R.C. § 6235(a)(1)(C); (4) in the case of a proposed partnership adjustment under section 6231(a)(2), the date that is 330 days (plus any extension under 6225(c)(7)) after the date of such a notice, I.R.C. § 6235(a)(3); or (5) in the case of a modification request made pursuant to section 6225(c), 270 days (plus any extension under 6225(c)(7)) after the date on which everything required to be submitted to the Secretary pursuant to such section is so submitted, I.R.C. § 6235(a)(2).

JM Assets involved (5) relating to modification requests.

I don’t think there is anything surprising in that interpretation of the statutory text under Loper Bright’s de novo interpretation standard. I should note that the IRS argued unsuccessfully for delegated interpretive authority for the regulation of the type Loper Bright approved.

I think the more interesting part of JM Assets is its conclusion that the FPA period was not extended by § 6235(c)(2) which provides that for an extension for the FPA if there is a substantial omission of income as defined by § 6501(e)(1)(A). That part of opinion deals with the general tax extension in the latter section. I discuss the general tax extension in my Federal Tax Procedure (Practitioner Edition pp. 198-199; Student Edition pp. 138-139).

On Footnotes--More or Less (6/21/24)

In 2021, I blogged on the demise of Appendix C of my Federal Tax Crimes Book (Student and Practitioner Editions). See On Footnotes and the Demise of Appendix C from FTPB (7/28/21; 11/21/23), here. In noting (and somewhat lamenting) its demise, I incorporated the footnote as it then was written into the blog. I have subsequently updated the blog so that my ranting on footnotes is somewhat fresh.

I picked up the following article today: David Weisenfeld, Want to understand the logic behind a Supreme Court opinion? Focus on footnotes, says professor (ABA Journal 6/18/24), here. The article discusses some aspects of Professor Peter Charles Hoffer’s book, The Supreme Court Footnote: A Surprising History, Amazon here, indicating a publication date of June 18, 2024 (perhaps explaining the lack of customer reviews (as of viewing on 6/21/24 at 12:00pm).

Hoffer is a Professor of History at the University of Georgia (see bio here).

I don’t know whether Professor Hoffer includes my favorite Scalia quote on footnotes. I have continued including that quote in the body of the text since retiring Appendix C. That quote as I present it in the current working draft of the August 2024 editions is (footnotes omitted, of course):

Supreme Court Grants Cert to Consider Overruling or Clarifying Chevron (5/1/23)

In today’s Order List, here, the Supreme Court granted the petition writ of certiorari in  Loper Bright Enterprises v. Raimondo (SEC) (Dkt 22-451). The Court limited cert to the following issue (from the petition):

  2. Whether the Court should overrule Chevron or, at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.

I have written before on the Loper petition’s trajectory where I also link the docket entries on the Supreme Court website and on SCOTUSblog. See Petition for Writ of Certiorari in NonTax Case Raising Issue of Continued Viability of Chevron (Federal Tax Crimes Blog 3/19/23; 4/30/23)), here, and see no need to repeat or extend that discussion at this time.

Added 11:20 am:

More on Footnotes (9/28/21)

In prior editions of my Federal Tax Procedure Book, I offered Appendix C as a digression on footnotes.  I posted a blog entry with that Appendix C in its final version before I dropped the Appendix from the FTPB.  See On Footnotes and the Demise of Appendix C from FTPB (7/28/21), here.  Still, I continue my interest in footnotes and the uses and abuses of footnotes.  So this posting caught my eye:  Eugene Volokh, Footnotes and Exile (The Volokh Conspiracy 9/26/21), here.  It is very short, which tempts me to “copy and paste” it,  I don’t want to come close to some copyright or other infringement, so I just link the offering.  I will offer this quote (fair use):  “Footnotes are the Siberia of your article or your brief—and endnotes, I suppose, the Kamchatka (the peninsula, not the vodka).”

On the endnote thing, I have to say that I generally do not like endnotes.  Like much of life, the benefits of choices are mixed.  Footnotes are easier to read because one need only glance down to the bottom of the page, rather than having to turn to the end of the publication for the endnote.  Endnotes require some extra effort and thus are less distracting than footnotes simply because a reader may not take the trouble to read the endnote.  The downside of footnotes is that they are too easy to read, simply a downward glance will work.  If they are easy to read, the reader may be tempted to read the footnote which usually distracts from the flow of the text.  So the question is whether your footnotes are of such quality that you want to discourage most readers from reading them; if so, use endnotes.  If, however, you want your readers to sometimes actually read the note, use footnotes.

At one time I offered my FTPB with notes as footnotes and endnotes (two separate versions).  It was easy to turn the footnotes version into an endnoted version.  I finally concluded that, if a reader does not want to be distracted by footnotes or endnotes (most students), then get the Student edition without footnotes or endnotes.  If a reader sometimes or often reads footnotes, then the footnoted Practitioner edition is the way to go.  I just felt that few would be interested in endnotes, so I quit generating an endnote edition.

Musing on Citation of Obvious Propositions and Footnotes (8/24/21)

I am working on a legal article tonight.  The issue I am concerned with is whether I need to support everything I say with some citation, usually in a footnote.

In the conventions of legal scholarship, almost every point we make in a brief must have a citation, often in footnotes.  Really?

When I was at DOJ Tax Appellate, I suggested (probably in a bullshit session) that we have a convention to use a citation which I call “O.P.” which stood for obvious proposition.  Why should we have to cite something for the observations that are obvious? For example, if we have to say that the sun rises in the East, do we really have to cite something for the proposition?  Could we not just say:  "The sun rises in the East.  O.P."?

My suggestion was not formally presented or formally rejected by the powers that be in the Appellate Section.  

In some sense, the concept may be implemented by some scholars and judges in writing.  They just state the proposition and move on.  Nevertheless, in my writings, I continue to struggle with the issue of whether I need to cite authority for such obvious propositions.

My problem, since I am a prolific footnote writer (aka abuser), is that, if I have to cite such authority, I would do so in a footnote.  As we all know from reading footnotes (particularly my footnotes), footnotes are terrible temptations to wander and distract.

Now, what does this have to do with Federal Tax Procedure?  Not much except to say that I have some 4600 footnotes in my Federal Tax Procedure (2021 Practitioner Ed.).  Some of those footnotes, perhaps many, deal with obvious propositions that just logically extend from the information in the text.  I do that because I think that more specific citation than O.P. might be helpful to practitioners even though, in many cases, the proposition is obvious from the discussion in the text.  (I don't have a citation for that last statement.)

On Footnotes and the Demise of Appendix C from FTPB (7/28/21; 2/25/24)

For the 2021 editions of my Federal Tax Procedure Book (Practitioner and Student editions), I decided the omit Appendix C where I digressed on footnotes.  I originally did that because footnotes in the Practitioner Editions are many and sometimes digressive in nature and wanted to add some humor on the subject.  I think the Appendix has outlived its use, if indeed it ever even had any use.  So, I am omitting the Appendix from the 2021 editions (which, I hope will be out in final by the end of next week.

I thought, however, that for those few misguided souls who liked such things, I would put the Appendix out here both in a cut and paste to the blog and a link to a pdf file, here.  (Those who review the pdf will see that the page number for the current working draft with Appendix C is 1,046, which will decrease to 1,043 when I strip this Appendix.)

APPENDIX C - ON FOOTNOTES

In earlier versions, I included as a footnote a long diversion on footnotes.  The diversion got out of control (certainly too many words).  Accordingly, since I was really liked the thought of a diversion on footnotes, I decided to offer the diversion as an Appendix at the end of the entire text, a destination not to be reached or easily ignored by many readers of the text.

In an earlier article, John A. Townsend, Judge Posner's Opinion in Kikalos, 108 Tax Notes 593 (Aug. 1, 2005) [SSRN link here], I had a footnote on footnotes and offer it here but have significantly revised it. I don’t bother to indent it to show that I am quoting):

It was reported in 1999 that Judge Posner had never used a footnote in a judicial opinion. Lawrence Lessig, The Prolific Iconoclast, The American Lawyer (December 1999). I have not attempted empirical research, but I don't recall having seen a footnote in his opinions. I surmise that Judge Posner thinks that, if the point is worthy of the distraction of a footnote, the point can be concisely made perhaps with less distraction in the text.  Other noted jurists such as Justice Breyer and Circuit Judge Abner Mikva also tend to avoid footnotes.  Justice Neil Gorsuch Is No 'Footnotephobe' (National Law Journal Supreme Court Brief 7/3/19) [no free link available].  And Justice Scalia claimed not to read footnotes, but certainly was not averse to authoring footnotes.  William Jay, Tribute: The Justice who said he hated writing (SCOTUSBlog 3/4/16), here.