PROCEDURALLY TAXING tax notes federal
by Jenni Black Jenni Black is a managing director in Citrin Cooperman’s national tax office and the practice leader of the tax procedure and controversy practice. In this post, Black examines the Tax Court opinion in JM Assets and she argues that by determining reg. section 301.62351(b)(2)(i) is “invalid,” the court opinion removes quite a bit of certainty for both taxpayers and the government. This article reflects the author’s personal views and not necessarily those of Citrin Cooperman. On July 2, the Tax Court released a full T.C. 1 opinion in the case JM Assets LP. In its opinion, the Tax Court determined that reg. section 301.6235-1(b)(2)(i), which provides when everything required to be submitted as part of a modification request is “so submitted” for purposes of the period of limitations, is “invalid” 2 (reason for quotes explained in the next article). I’ll be honest, I really expected this case to go the other way. The court determined, in this case, the date the partnership submitted “everything
required to be submitted” for its modification request was prior to the date the regulations would say everything was submitted. The court found this made the regulation contrary to the statute and, thus, “invalid.” At the same time, the court’s opinion could be read to hold that the statutory text can mean two different things based on the facts, instead of having a “single” “best” meaning. But they say hindsight is 20/20 and the court’s analysis seems to hinge on facts not necessarily knowable at the time a partnership submits its request. But aside from having to go “Back to the Future,” the court’s opinion in JM Assets, by determining reg. section 301.62353 1(b)(2)(i) is “invalid,” removes quite a bit of certainty for both taxpayers and the government. And we all like tax certainty, right? 4 But “wait, slow down, love, not so fast,” let’s take a step back and explain what this is all about. Section 6235 prescribes the period of limitations on making adjustments (not assessments) to Bipartisan Budget Act partnerships. The period of limitations on making adjustments is determined by reference to the latter of three dates (simplified for ease of reading): 1. three years from when the partnership return (or administrative adjustment request) is filed; 2. if a modification request is filed by the partnership, 270 days from the date “on which everything required to be submitted to the Secretary pursuant to [section 6225(c)] is so submitted”; or
1
JM Assets LP v. Commissioner, 165 T.C. No. 1 (2025). This article does not discuss the court’s ruling that there was no substantial omission of income for purposes of extending the period of limitations. 2
In the interest of full disclosure, I am the primary author of the regulation at issue, although it (as with the rest of Bipartisan Budget Act regulations) was a massive team effort. So maybe this makes me a bit of a mama bear when it comes to this case.
3
The Tax Court did not address reg. section 301.6235-1(b)(2)(ii), which modifies reg. section 301.6235-1(b)(2)(i), so it is unclear whether this provision is also invalid. But, based on the court’s ruling, I would guess that it is because it will matter if the submission is incomplete. 4
You don’t play around with the “Funky Cold Medina.”
TAX NOTES FEDERAL, VOLUME 188, JULY 14, 2025 For more Tax Notes® Federal content, please visit www.taxnotes.com.
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Hindsight Is 20/20: JM Assets and the Blow to Tax Certainty, Part 1