2026-02-16 Hallucinations Enter the Tax Court

This podcast delivers current federal tax developments for the week of February 16, 2026, focusing on recent court cases and their implications. It analyzes the Denim Capital Management case regarding the limited partner exception to self-employment tax, highlighting jurisdictional challenges and differing views on defining a "limited partner." The Clinko case serves as a cautionary tale about using AI for legal research, emphasizing the need for verification to avoid ethical pitfalls. A taxpayer victory in Kolar v. Commissioner regarding hobby losses under Section 183 demonstrates how a rancher successfully proved a profit motive despite substantial losses and high outside income. Additionally, the podcast explains the distinction between rebate and non-rebate refunds using the L versus Commissioner case. It also covers a civil fraud case involving substantiation failures by a CPA and a consolidated return case dismissal due to regulatory non-compliance.