Blum v. CIR

Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 1 FILED United States Court of Appeals PUBLISH Tenth Circuit UNITED STATES COURT OF APPEALS November 2, 2026 Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _________________________________ SCOTT A. BLUM; AUDREY R. BLUM, Petitioners - Appellants, v. No. 25-9001 COMMISSIONER OF INTERNAL REVENUE, Respondent - Appellee. _________________________________ Appeal from the United States Tax Court (CIR No. 5313-16) _________________________________ William M. Sharp, Sr., Holland & Knight LLP, Atlanta, Georgia (Chad M. Vanderhoef and James P. Dawson, Holland & Knight LLP, Tampa, Florida; Christopher S. Rizek, Holland & Knight LLP, Washington, District of Columbia; and Susan E. Seabrook, Winston & Strawn LLP, Washington, District of Columbia, on the briefs), for Petitioners- Appellants. Clint A. Carpenter (Brett A. Shumate, Assistant Attorney General; Joshua Wu, Deputy Assistant Attorney General; and Richard L. Parker, Tax Litigation Branch Civil Division, United States Department of Justice, Washington, District of Columbia, with him on the brief), for Respondent-Appellee. _________________________________ Before MATHESON, McHUGH, and FEDERICO, Circuit Judges. _________________________________ MATHESON, Circuit Judge. _________________________________  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 2 Scott and Audrey Blum appeal a U.S. Tax Court decision rejecting their challenges to IRS notices of deficiencies (“NODs”) for tax years 1999, 2007, and 2010, which disallowed a $78.5 million tax shelter loss and assessed about $22 million in taxes and penalties. Mr. Blum participated in the tax shelter as a partner in a partnership. The IRS engaged in a two-step process to determine the proper treatment of the Blums’ income from the partnership. At the first step, the partnership level, the IRS determined that the tax shelter lacked economic substance. The Blums’ partnership challenged that determination in the U.S. District Court for the Northern District of California and lost. At the second step, the partner level, the IRS issued NODs disallowing their claimed $78.5 million loss. The Blums challenged that determination in the Tax Court. In the Tax Court, the Blums argued that the IRS’s partnership-level determination was untimely, and that in turn rendered the partner-level NODs untimely. The court held that the Blums waived that argument because they could raise the timeliness issue only at the partnership-level proceeding in the Northern District of California, and they failed to do so. Exercising jurisdiction under Section 7482(a)(1) of the Internal Revenue Code (“I.R.C.” or “Code”), we agree with the Tax Court and affirm. 1 1 The I.R.C. is codified in Title 26 of the U.S. Code. 2  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 3 I. BACKGROUND A. Legal Background To facilitate understanding of the factual and procedural history of this case, “we must spend a few moments shedding light on the structure and operation of the relevant statutory provisions.” Exby-Stolley v. Bd. of Cnty. Comm’rs, 979 F.3d 784, 811 (10th Cir. 2020) (en banc). The Code’s Structure – Subtitles A and F During the taxable years at issue, the Code contained 11 subtitles that together governed the federal tax system. Two subtitles are relevant to this case. Subtitle A, titled “Income Taxes,” I.R.C. §§ 1-1564, includes “Accounting Periods and Methods of Accounting, §§ 441‑483; “Partners and Partnerships,” §§ 701-777; and “Capital Gains and Losses,” §§ 1201-1298. Subtitle F, titled “Procedure and Administration,” I.R.C. §§ 6001-7874, includes “Assessment,” §§ 6201-6255, and “Limitations” (statutes of limitations), §§ 6501-6533. Taxes and Partnerships For income tax purposes, partnerships are pass-through entities that do not themselves pay tax. Rather, partners in partnerships are “liable for income tax only in their separate or individual capacities.” I.R.C. § 701. To calculate partners’ “distributive share” of items that affect their individual income tax liability, § 702, partnerships must file informational returns, see § 6031, and send Schedule K‑1s to the partners reporting their shares of partnership items (e.g., income), see id. 3  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 4 The Tax Equity and Fiscal Responsibility Act of 1982 a. TEFRA – Two-level framework In 1982, Congress enacted the Tax Equity and Fiscal Responsibility Act (“TEFRA”) “to promote consistent tax treatment of partners and to avoid duplicative litigation.” Omega Forex Grp., LC ex rel. Flath v. United States, 906 F.3d 1196, 1204 (10th Cir. 2018) (quoting Prati v. United States, 603 F.3d 1301, 1305 (Fed. Cir. 2010)). TEFRA’s partnership tax provisions were codified in subtitle F at I.R.C. §§ 6221-6234. Id. Congress repealed TEFRA in 2015, effective January 1, 2018, but its provisions applied to the partnership tax matters at issue in this case. See id. 2 TEFRA set up a two-level framework to address (1) partnership issues at the partnership level and (2) partner-specific issues at the partner level. In our ensuing discussion of that framework, we focus on two statutes: 3 I.R.C. § 6221: [T]he tax treatment of any partnership item (and the applicability of any penalty, addition to tax, or additional amount which relates to an adjustment to a partnership item) shall be determined at the partnership level. I.R.C. § 6231(a)(3): 2 Although Congress repealed TEFRA, for ease of understanding, we refer to its provisions and application in the present tense. 3 Congress amended TEFRA 11 times. We cite to the substantive provisions of TEFRA and the Treasury Regulations that were effective during the affected taxable years in this case. See Christiansen v. Comm’r, 843 F.2d 418, 419 n.1 (10th Cir. 1988). For the taxable years at issue, the relevant statutory text did not change. 4  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 5 The term “partnership item” means, with respect to a partnership, any item required to be taken into account for the partnership’s taxable year under any provision of subtitle A to the extent regulations prescribed by the Secretary provide that, for purposes of this subtitle, such item is more appropriately determined at the partnership level than at the partner level. b. Treasury Regulation To implement I.R.C. § 6231(a)(3), the Secretary of the Treasury promulgated Treasury Regulation § 301.6231(a)(3)-1 to define “partnership items.” Subsection (a) lists various items that subtitle A of the Code requires partnerships to determine. See Treas. Reg. § 301.6231(a)(3)-1(a). For example, the partnership’s income, gain, loss, deduction, or credit are partnership items. Id. So too are the partners’ shares of those items. Id. Subsection (b) adds: “The term ‘partnership item’ includes the accounting practices and the legal and factual determinations that underlie the determination of the amount, timing, and characterization of items of income, credit, gain, loss, deduction, etc.” Id. § 301.6231(a)(3)-1(b). That is, the Regulation considers “partnership items” to include accounting practices and determinations that “underlie” the determination of the partnership items in subsection (a). c. Affected items In contrast to partnership items addressed at the partnership level, “affected items” fall into the partner level. An “affected item” is “any item to the extent such item is affected by a partnership item.” I.R.C. § 6231(a)(5). When the IRS adjusts partnership tax items such as income or losses, these partnership-level changes often require 5  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 6 corresponding adjustments to “affected items” on the individual partners’ income tax returns. For example, increasing a partner’s share of partnership income, a partnership item, may affect a partner’s deductions tied to the partner’s individual adjusted gross income (“AGI”), such as the medical expenses deduction. Treas. Reg. § 301.6231(a)(5)- 1(a). 4 In this situation, the medical expenses deduction is an affected item. See id. d. Tax matters partner Under TEFRA, one general partner of a partnership serves as the tax matters partner (“TMP”). I.R.C. § 6231(a)(7). The TMP’s obligations to the partnership and its partners are based on TEFRA’s scheme of determining partnership items at the partnership level before determining the partner-level effects. See Omega Forex, 906 F.3d at 1204-05. See generally I.R.C. §§ 6223-6225. For example, the TMP must “keep each partner informed of all administrative and judicial proceedings for the adjustment at the partnership level of partnership items.” § 6223(g). * * * * The Supreme Court has summarized TEFRA’s two-stage framework to adjust partnership items: Under TEFRA, partnership-related tax matters are addressed in two stages. First, the IRS must initiate proceedings at the partnership level to adjust “partnership items,” those relevant to the partnership as a whole. §§ 6221, 6231(a)(3). It must issue a[] [final partnership administrative adjustment] 4 An increase in partnership income increases a partner’s AGI, which in turn reduces the partner’s medical expense deduction because the partner can only deduct medical expenses that exceed 7.5 percent of AGI. See Treas. Reg. § 301.6231(a)(5)-1(a); I.R.C. § 213(a). A higher AGI increases the non-deductible portion of medical expenses. 6  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 7 notifying the partners of any adjustments to partnership items, § 6223(a)(2), and the partners may seek judicial review of those adjustments, § 6226(a)-(b). Once the adjustments to partnership items have become final, the IRS may undertake further proceedings at the partner level to make any resulting “computational adjustments” in the tax liability of the individual partners. § 6231(a)(6). Most computational adjustments may be directly assessed against the partners, bypassing deficiency proceedings and permitting the partners to challenge the assessments only in post-payment refund actions. § 6230(a)(1), (c). Deficiency proceedings are still required, however, for certain computational adjustments that are attributable to “affected items,” that is, items that are affected by (but are not themselves) partnership items. §§ 6230(a)(2)(A)(i), 6231(a)(5). United States v. Woods, 571 U.S. 31, 39 (2013). Final Partnership Administrative Adjustments The IRS may initiate adjustments to partnership items, such as determining that partnership income should be different from the amount reported by the partnership. To do so, it must provide notice of an administrative partnership-level proceeding, audit the partnership, and then mail to each notice partner a final partnership administrative adjustment (“FPAA”). I.R.C. § 6223(a); see Omega Forex, 906 F.3d at 1204. A “notice partner” is effectively any partner known to the IRS. See I.R.C. §§ 6223(a), 6231(a)(8). Within 90 days, the TMP “may file” in Tax Court, district court, or the Claims Court, “a petition for a readjustment of the partnership items.” § 6226(a). If the TMP does not file a readjustment petition, any notice partner may file one. § 6226(b)(1). Consistent with TEFRA’s scheme of adjudicating partnership items at the 7  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 8 partnership level to “avoid duplicative litigation,” Omega Forex, 906 F.3d at 1204; see also Callaway v. Comm’r, 231 F.3d 106, 111 (2d Cir. 2000), if the TMP does not bring the partnership-level readjustment petition and “more than 1 action is brought” by a partner other than the TMP, then the one brought in Tax Court goes forward; if none are brought in Tax Court, the first one goes forward. I.R.C. § 6226(b)(1)-(3). In these partnership-level proceedings—whether brought by the TMP or another partner—all partners are considered parties, and the court hearing the petition must permit their participation. § 6226(c); see also § 6224(a). The TMP may also enter into settlement agreements about the determination of partnership items—which bind not only notice partners, who are parties to the adjudication, see §§ 6224(c)(1), 6226(c), but also non-notice partners when the TMP “expressly states that such agreement shall bind the other partners.” § 6224(c)(3)(A). Limitations Periods and Extensions After a taxpayer files a return, the IRS generally must assess tax or issue a notice of deficiency within three years. I.R.C. § 6501(a). But the IRS and the taxpayer may extend the limitations period by agreement. § 6501(c)(4). The same is true for a partnership under TEFRA: [T]he period of assessing any tax . . . which is attributable to a partnership item (or affected item) for a partnership taxable year shall not expire before the date which is 3 years after the later of—(1) the date on which the partnership return for such taxable year was filed, or (2) the last day for filing such return for such year (determined without regard to extensions). 8  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 9 § 6229(a). Section 6501(n)(2) (during the relevant tax years) states, “For extension of period in the case of partnership items (as defined in section 6231(a)(3)), see section 6229.” Section 6229(b)(1) permits extending the limitations period by agreement, using Form 872‑P with the TMP or Form 872 with the individual partner. See § 6229(b)(3) (permitting extensions “only if the agreement expressly provides that such agreement applies to tax attributable to partnership items”); § 6501(c)(4). § 6229(b)(1) states: The period [of limitations for making assessments] . . . may be extended— (A) with respect to any partner, by an agreement entered into by the Secretary and such partner, and (B) with respect to all partners, by an agreement entered into by the Secretary and the tax matters partner (or any other person authorized by the partnership in writing to enter into such an agreement), before the expiration of such period. Mailing an FPAA to the TMP suspends the limitations period to “assess[] any tax . . . with respect to any person which is attributable to any partnership item (or affected item) for a partnership taxable year,” § 6229(a), until one year after a partnership-level proceeding concludes (or if there is no partnership-level proceeding, then for the period it can be brought plus one year). § 6229(d). 9  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 10 B. Factual History 5 Mr. Blum, founder of online retailer Buy.com, participated in the Offshore Portfolio Investment Strategy (“OPIS”) and Bond Linked Issue Premium Structure (“BLIPS”) tax shelters. A “tax shelter” is “(I) a partnership or other entity, (II) any investment plan or arrangement, or (III) any other plan or arrangement, if a significant purpose . . . is the avoidance or evasion of Federal income tax.” I.R.C. § 6662(d)(2)(C)(ii). Both the OPIS and BLIPS shelters were investment plans or arrangements that enabled participants to report losses on their tax returns that they did not actually suffer. We addressed the Blums’ OPIS tax issues in Blum v. Commissioner, 737 F.3d 1303, 1306 (10th Cir. 2013). This case concerns the BLIPS shelter. See Blum v. Commissioner, T.C.M. (RIA) 2025-018 (2025). The BLIPS Shelter In broad strokes, the Eleventh Circuit provided a helpful description of the BLIPS tax shelter: Like many of its kin, this tax shelter employs a series of transactions to create artificial financial losses that are used to offset real financial gains, thereby reducing tax liability. BLIPS participants transfer assets encumbered by significant liabilities to a partnership with the purpose of artificially increasing their basis in that partnership. Tax basis is the amount used as the cost of an asset when computing how much its owner gained or lost for tax purposes when 5 We draw the factual background from (1) our decision in Blum v. Commissioner, 737 F.3d 1303 (10th Cir. 2013), (2) the Tax Court decision denying the Blums’ challenge to the IRS tax deficiencies, Blum v. Comm’r, T.C.M. (RIA) 2025-018 (2025), and (3) materials in the Appellants’ Appendix. 10  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 11 disposing of it. In the partnership context, “outside basis” refers to each partner’s interest in the partnership, and “inside basis” refers to the partnership’s basis in its own assets. The partners in a BLIPS scheme evade tax liability by attaching their inflated outside basis to a liquidating distribution received from the sham partnership. When they sell the distributed assets, they generate artificial losses. Estate of Keeter v. Comm’r, 75 F.4th 1268, 1276 (11th Cir. 2023) (citations and quotations omitted). The Blums (through Mr. Blum) took these steps here. In 1999, Mr. Blum participated in the BLIPS shelter through Bogan Ventures, LLC (“Bogan”), his single-member limited liability company, which invested in the partnership Democrat Strategic Investment Fund, LLC (“DSIF”). Because Bogan was a disregarded entity for federal tax purposes (meaning Bogan did not need to file a tax return), Blum, T.C.M. (RIA) 2025-018, at *3-4, Mr. Blum was an indirect partner of DSIF. See id. at *4; I.R.C. § 6231(a)(10). Bogan owned about 90% of DSIF. Blum, T.C.M. (RIA) 2025-018, at *4. Presidio Growth, LLC and Presidio Resources, LLC owned the remaining interests. Id. Presidio Growth was DSIF’s TMP. Id. The BLIPS tax shelter involved a series of transactions that “lacked economic substance,” id. at *44, meaning they were not legitimate investments and were executed for tax accounting purposes only. See id. at *43-44. First, as pertinent to the Blums, DSIF acquired assets in transactions that inflated Bogan’s “outside basis” in DSIF. Id. 11  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 12 at *4, *43; see Shasta Strategic Inv. Fund, LLC v. United States (Shasta SIF), No. C-04- 04264-RS, 2014 WL 3852416, at *2-3 (N.D. Cal. July 31, 2014). 6 Eventually, DSIF “liquidate[d] and distribute[d] its assets . . . to Bogan.” Blum, T.C.M. (RIA) 2025-018, at *4. Because Bogan was a disregarded entity, this liquidating distribution gave the Blums the same inflated basis as Bogan in the distributed assets. See id. The Blums’ basis in the assets “receive[d] in [the] liquidating distribution from a TEFRA partnership [(DSIF)] [was] an affected item.” Id. at *43. Finally, Mr. Blum through Bogan sold the assets at their fair market value, not their inflated basis, “to generate $78.5 million in artificial tax loss.” Id. at *4. Resulting Tax Returns On April 17, 2000, DSIF filed its tax year (“TY”) 1999 informational partnership return, which included partner Bogan’s Schedule K‑1—the “[p]artner’s [s]hare of [the partnership’s] [i]ncome, [d]eductions, [c]redits, etc.” Id. Based on “Schedule K‑1, Bogan was a notice partner of DSIF and was entitled to receive a copy of [an] FPAA.” Id.; see also I.R.C. § 6231(a)(8). For the same TY 1999, the Blums timely filed their personal return, claiming the $78.5 million loss as capital loss, deducting that loss to offset about $74.8 million of capital gain from their sale of an unrelated asset, and therefore reporting no taxable Shasta SIF was the partnership-level proceeding that concerned the Blums’ 6 BLIPS shelter. 12  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 13 income. Blum, T.C.M. (RIA) 2025-018, at *4. For TYs 2007 and 2010, they deducted capital loss carryforward from their remaining TY 1999 artificial loss. Id. The IRS Audit On September 5, 2000, the IRS issued I.R.S. Notice 2000-44, 2000-2 C.B. 255, advising the BLIPS investors that the tax shelter was “not bona fide and did not reflect actual economic consequences.” Id. at *5. In October 2001, the IRS began auditing the Blums’ 1998 return. Id. Because they had participated in the OPIS shelter, the IRS expanded the audit to include their TY 1999 and TY 2000 returns and DSIF’s TY 1999 return. Id. a. Consents to extend the limitations periods i. TMP Consents During the DSIF audit, “DSIF’s TMP Presidio Growth signed three Forms 872‑P, Consent to Extend the Time to Assess Tax Attributable to Partnership Items ([“TMP Consents”]), to extend the limitations period for 1999 to December 31, 2004.” Id. at *17. The Tax Court noted that the first TMP Consent “extend[ing] the limitations period to June 30, 2004, is signed by the TMP but not the IRS.” Id. But it appears from the record that, in addition to the TMP’s signing this first TMP Consent on March 27, 2003, the IRS also signed it on April 2, 2003—before the three-year limitations period under I.R.C. § 6229(a) would have expired around April 17, 2003. See Aplee. Suppl. App., Vol. 3 13  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 14 at 131-32. 7 The TMP and IRS executed two more TMP Consents on February 20, 2004, and on October 13, 2004. Id. at 133-36. ii. Individual Consents The Blums “and the IRS also executed multiple Forms 872 ([“Individual Consents”]), to extend [the Blums’] personal limitations period for 1999 to December 31, 2005.” Blum, T.C.M. (RIA) 2025-018, at *17. But these Individual Consents “did not expressly extend the limitations period to assess tax attributable to partnership or affected items.” Id. b. The FPAA On December 17, 2004, before the extended limitations period expired, the IRS mailed FPAAs to DSIF’s TMP and its partners—Presidio Growth, Presidio Resources, and Bogan (recall Bogan was a notice partner, see I.R.C. § 6231(a)(8)). Blum, T.C.M. (RIA) 2025-018, at *12. 8 In the FPAA, the IRS found the DSIF-BLIPS scheme lacked economic substance. Id. c. Notices of deficiency for affected items The adjustments in the FPAA increased the Blums’ individual tax liability based on the IRS’s partner-level determinations after the partnership-level proceeding. 7 We do not resolve this appeal on this ground. 8 In 2002, the Blums moved from Monarch Beach, California, to Jackson, Wyoming, although they continued to list their Monarch Beach address on their later tax returns. Blum, T.C.M. (RIA) 2025-018, at *5‑7. Despite earlier trouble in successfully mailing materials to the Blums in Wyoming, there was “no evidence . . . that the USPS returned either copy of the notice partner FPAA to the IRS as undeliverable.” Id. at *12. 14  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 15 On December 8, 2015, the IRS issued three affected-items NODs to the Blums, one each for TYs 1999, 2007, and 2010, determining deficiencies of $14,911,356; $214,385, and $736,216, respectively. Id. at *18. 9 The NODs also assessed additional penalties for misstatement ($5,964,542; $85,754; and $294,486, respectively) and failure to timely file the 2007 return ($10,719). Id. The NODs stemmed mainly from the IRS’s disallowing the $78.5 million “loss” generated for TY 1999 by the BLIPS shelter. Id. The IRS determined the Blums had zero basis in DSIF’s distributed assets. Id. This disallowance trickled down to disallow the Blums’ claimed loss carryforwards in TYs 2007 and 2010. Id. C. Court Proceedings DSIF’s District Court Partnership-Level Proceeding On March 17, 2005, after the IRS issued the FPAA, TMP Presidio Growth “timely filed a consolidated petition for review of the FPAA . . . in the District Court for the Northern District of California”—a partnership-level proceeding. Blum, T.C.M. (RIA) 2025-018, at *13. This proceeding resulted in the Shasta SIF decision. See id. at *14. The Blums knew about and were parties to the proceeding. Id.; see I.R.C. § 6226(c). They could have participated on Bogan’s behalf, see § 6226(c), but did not do so, Blum, T.C.M. (RIA) 2025-018, at *14. Instead, they unsuccessfully pursued settling their BLIPS shelter loss. Id. 9 Recall the Blums’ basis in the assets from the liquidating distributions in the BLIPS shelter were affected items. So the IRS issued affected-items NODs to assess deficiencies relating to the claimed $78.5 million capital loss. 15  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 16 In July 2014, the district court held the BLIPS transactions lacked economic substance, “sustaining all adjustments in the FPAAs” that are relevant to this case. Id.; see Shasta SIF, 2014 WL 3852416, at *18. This decision meant the Blums improperly deducted their $78.5 million loss generated by these BLIPS transactions. See Blum, T.C.M. (RIA) 2025-018, at *2. The district court’s decision became final on January 20, 2015. Id. at *36. The Blums’ Tax Court Partner-Level Proceeding After prevailing in the partnership-level proceeding, the IRS issued the NODs to the Blums for their affected items and penalties for TYs 1999, 2007, and 2010, totaling approximately $22.2 million in additional liability. They challenged the NODs in Tax Court. The Blums argued they should not have to pay the $22.2 million because (1) they did not receive notice of the FPAA as TEFRA required, (2) the district court in the Shasta SIF partnership-level case did not disallow the $78.5 million loss, and (3) the FPAA and affected-items NODs were not timely. Blum, T.C.M. (RIA) 2025-018, at *1-2. 10 The Tax Court rejected these theories as “unfounded” and “baseless.” Id. at *2. The Blums limit their appeal to this court to the third theory. See Aplt. Br. at 1. The Tax Court rejected it as follows: The Tax Court dismissed the misstatement penalties for lack of jurisdiction but 10 held the Blums liable for the penalty for their failure to timely file their 2007 return. Blum, T.C.M. (RIA) 2025-018, at *2. The Blums do not appeal the untimely filing penalty, so roughly $15.9 million of tax liability is at issue in this appeal. 16  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 17 First, the Tax Court said, “Partners cannot challenge the validity of the TMP [C]onsents in a partner-level case. The timeliness of an FPAA is a partnership item that must be raised during the TEFRA [(partnership-level)] case, or it is waived.” Id. at *35. “Accordingly, [the Tax Court did] not address the merits of [the Taxpayers’] argument with respect to the TMP [C]onsents.” Id. Second, the court said the NODs “were timely under section 6229” because the timely mailing of the FPAA suspended the running of the limitations period until one year after the partnership-level proceeding’s decision became final. See id. at *35-36; I.R.C. § 6229(d)(2). The Individual Consents were thus immaterial anyway because the Blums’ TY “1999 limitations period was open to assess tax attributable to partnership and affected items under section 6229.” Blum, T.C.M. (RIA) 2025-018, at *36. Alternatively, the court found the Individual Consents were valid on their face. Id. Third, because the disallowed TY 2007 and TY 2010 losses were loss carryforwards of the TY 1999 tax shelter loss, the limitations periods for those tax years “remain[ed] open . . . to the same extent as the 1999 limitations period.” Id.; see also I.R.C. § 6229. We resolve this appeal on the ground that the Blums waived their FPAA timeliness argument because they failed to raise it in the partnership-level proceeding. * * * * 17  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 18 The following summarizes the key factual and procedural occurrences: Relevant I.R.C. Date Event Section The Blums invested in the BLIPS shelter via Bogan and 1999 the partnership DSIF. Apr. 17, 2000 DSIF filed its TY 1999 informational return. The Blums timely filed their TY 1999 personal return, Apr. 17, 2000 claiming $78.5 million capital loss. The IRS began to audit the Blums’ TY 1998 return. It expanded its audit to include the Blums’ TYs 1999 and 2000 returns and DSIF’s TY 1999 return—covering the Oct. 2001 BLIPS transactions. Feb. & Sept. 2002 The Blums executed two Individual Consents. § 6229(b)(1)(A) Mar. 27, 2003 DSIF’s TMP signed the first TMP Consent. § 6229(b)(1)(B) The IRS appears to have signed the first TMP Consent, Apr. 2, 2003 extending limitations period to June 30, 2004. § 6229(b)(1)(B) Apr. 17, 2003 The limitations period expired if unextended. § 6229(a) The TMP and the IRS executed the second TMP Consent, extending the limitations period to Dec. 31, Feb. 20, 2004 2004. § 6229(b)(1)(B) The Blums executed the third Individual Consent, July 28, 2004 extending their limitations period to Dec. 31, 2005. § 6229(b)(1)(A) The TMP and the IRS executed the third TMP Consent, Oct. 13, 2004 extending the limitations period to Dec. 31, 2005. § 6229(b)(1)(B) Dec. 17, 2004 The IRS mailed FPAAs to DSIF’s partners. TMP filed a petition, starting a partnership-level proceeding in the district court for the Northern District Mar. 17, 2005 of California. Dec. 31, 2005 The limitations period expired if validly extended. § 6229(b)(1)(B) The district court’s decision in the partnership-level Jan. 20, 2015 proceeding, sustaining the FPAAs, became final. Dec. 8, 2015 The IRS issued affected items NODs to the Blums. The limitations period with the one-year extension Jan. 20, 2016 following the partnership-level case expired. § 6229(d) 18  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 19 II. DISCUSSION Exercising jurisdiction under I.R.C. § 7482(a)(1), we review Tax Court decisions “in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury.” We therefore review the Tax Court’s legal conclusions de novo and its factual findings for clear error. Olsen v. Comm’r, 52 F.4th 889, 896 (10th Cir. 2022); Petersen v. Comm’r, 924 F.3d 1111, 1114 (10th Cir. 2019). On appeal to this court, the Blums argue: (A) The first TMP Consent was invalid because the IRS did not sign it, so the next two TMP Consents were untimely and invalid; and (B) The Individual Consents were invalid because they “failed to expressly extend the [TY] 1999 limitations period with respect to partnership or affected items.” Aplt. Br. at 13-15. For these reasons, the Blums claim “the FPAA, partnership[‑level] proceeding, and . . . 2015 [N]otice of [C]omputational [A]djustments and affected item [NODs]” were invalid. Id. at 16. The Blums’ appeal disputes roughly $15.9 million of deficiencies assessed by NODs. 11 A. TMP Consents under TEFRA The Blums argued in the Tax Court partner-level proceeding that the FPAA issued to DSIF was untimely and invalid because the IRS failed to sign the first TMP Consent Form 872-P extending the IRS’s examination of DSIF’s partnership return through 11 The Tax Court dismissed the misstatement penalties for lack of jurisdiction, and the Blums do not challenge the untimely filing penalty, so this amount mainly represents the assessed deficiencies for TYs 1999, 2007, and 2010. 19  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 20 June 30, 2004. This alleged defect, along with allegedly defective Individual Consents, in turn rendered the NODs untimely. The Tax Court rejected this argument as waived, holding the Blums should have raised the validity of the TMP Consent in the partnership- level proceeding held in the Northern District of California and failed to do so. We agree with the Tax Court’s waiver determination. In this appeal, the Blums argue the TMP Consent’s validity is not a partnership item and may be raised in the partner-level proceeding. We disagree on three grounds. (1) FPAA timeliness is a partnership item under I.R.C. § 6221 as defined by § 6231(a)(3) and its corresponding Treasury Regulation. (2) Under § 6221, FPAA timeliness relates to adjustments to partnership items and must be determined at the partnership level. (3) The context, structure, and purpose of TEFRA corroborate that challenges to FPAA timeliness must be raised in partnership-level proceedings. Because the Blums did not do so, they have waived any challenges to the timeliness of the FPAA and therefore also to the NODs sent to them. 12 Our analysis turns on statutory interpretation, which begins by considering “whether the language at issue has a plain and unambiguous meaning.” Dressen v. AstraZeneca AB, 182 F.4th 1232, 1244 (10th Cir. 2026) (quotations omitted). “We determine ‘[t]he plainness or ambiguity’ of a statute’s text ‘by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole.’” Id. (quoting Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997)). 12 The TMP Consent and the limitations period to assess tax or issue the FPAA are so intertwined that we treat them together in addressing whether they are a partnership item. For brevity, we refer to “FPAA timeliness” as the partnership-item issue. 20  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/02/2026 Page: 21 “Our tools of interpretation include examination of the statute’s text, structure, purpose, history, and relationship to other statutes.” United States v. Aguilar, 168 F.4th 1319, 1327 (10th Cir. 2026) (quotations omitted). Partnership Item – I.R.C. § 6231(a)(3) and Treasury Regulation § 301.6231(a)(3)‑1 The parties dispute whether FPAA timeliness is a partnership item under TEFRA. The relevant statute is I.R.C. § 6231(a)(3): The term “partnership item” means, with respect to a partnership, any item required to be taken into account for the partnership’s taxable year under any provision of subtitle A to the extent regulations prescribed by the Secretary provide that, for purposes of this subtitle, such item is more appropriately determined at the partnership level than at the partner level. The question is whether FPAA timeliness is a “partnership item” under § 6231(a)(3) and therefore “shall be determined at the partnership level.” § 6221. a. Statutory delegation to define partnership item Section 6231(a)(3) plainly gives the Secretary discretion to decide what a “partnership item” is, but (1) constrains that discretion to “any item required to be taken into account . . . under any provision of subtitle A,” and (2) limits “partnership items” to those items that the Secretary believes are “more appropriately determined at the partnership level than at the partner level.” b. Partnership item under the Regulation Relying on this statutory authority, the Secretary promulgated Treasury Regulation § 301.6231(a)(3)-1, which lists in subsection (a) various items that subtitle A of the Code 21  Appellate Case: 25-9001 Document: 59-1 Date Filed: 11/0