On February 23, 2022, the Tax Court issued a Memorandum Opinion in the case of Hoops LP v. Commissioner (T.C. Memo. 2022-9). The primary issues presented in Hoops LP v. Commissioner were whether partnership was entitled to deduct deferred compensation owed to two of its basketball franchise's players, and whether the partnership was required to take into account the amount of its deferred compensation liability for players when computing its taxable gain or loss from sale of franchise under IRC § 1231. Held: No. Yes. Win, IRS. Background to Hoops LP v. Commissioner The petition was before the court for readjustment of the final partnership administrative adjustment (FPAA) issued to the partnership’s tax matters partner for 2012. In the March 2018 FPAA, the IRS disallowed an additional deduction of $10,673,327 for salaries and wages that Hoops LP (“Hoops”) claimed on its Form 1065X, Amended Return or Administrative Adjustment Request (AAR),…