On August 6, 2020, the Tax Court issued a Memorandum Opinion in the case of Stevens v. Commissioner (T.C. Memo. 2020-118). The primary issue before the court in Stevens v. Commissioner was whether (and to the what extent) the Tax Court can uphold the IRS’s deficiencies in the face of the petitioners’ claimed partnership loss deductions. The decision of this broad issue hinges on three primary sub-issues, which are whether (1) three partnerships were “small partnerships” under TEFRA; (2) whether the “oversheltered return” rules of IRC § 6234 apply; and (3) whether the petitioners provided sufficient “grounds” for challenging the IRS’s determination and disallowance of deductions. History of (Non)Filings in Stevens v. Commissioner The petitioners and their partnerships were dilatory at best with respect to their tax return filings. If a return was filed, it was nowhere near timely (2-3 years late was about average). If no return had been…