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On March 25, the Supreme Court accepted certiorari in U.S. v. Gary Woods. (Supreme Court order) The issue presented to the Court arose from a split in the Circuits over whether a taxpayer can avoid the valuation misstatement penalties of section 6662(e) and (h) by conceding that there was no economic substance to its return position (and thus that the valuation misstatement was not the basis for its tax deficiency). Compare, e.g., Todd v. Commissioner, 862 F.2d 540 (5th Cir. 1988) (no penalty imposed under predecessor of section 6662), with e.g., Gustashaw v. Commissioner, 110 A.F.T.R.2d 2012-6169 (11th Cir. 2012) (9/28/12) (criticizing Todd).
In accepting the case, the Supreme Court also directed the parties to address an additional matter - whether the trial court even had jurisdiction under section 6226 (dealing with TEFRA partnership-level proceedings) to consider the valuation misstatement penalty.
Taxpayers who have disputed and lost cases involving the same issue would be wise to preserve their appeal rights, if still available, so that they can potentially benefit from a favorable decision by the Supreme Court.