Leblanc v. United States

OPINION

ALLEGRA, Judge.

Plaintiffs were limited partners in an “agricultural” partnership that generated large “farming” expense deductions for its partners in its first year of operation. After an audit and in settlement of a succeeding lawsuit, the partnership agreed to the disallowance of a portion of those deductions as, inter alia, lacking in economic substance. Plaintiffs essentially agreed to the same adjustments in a separate settlement with the Internal Revenue Service (IRS). A dozen years later, plaintiffs abandoned their partnership interest and sought to deduct a loss roughly…