Katanga Properties, LLC, R. Brent Evans, Partnership Representative v. Commissioner, 167 T.C. No. 10 (2026)

The United States Tax Court recently issued a reported decision interpreting the statute of limitations governing centralized partnership audits under the Bipartisan Budget Act of 2015 (BBA). In Katanga Properties, LLC v. Commissioner, 167 T.C. No. 10 (2026), the Court addressed a pivotal procedural question for tax practitioners representing partnerships under audit: When a partnership executes a Form 872–M consent extending the limitations period under Internal Revenue Code (I.R.C.) § 6235(a)(1), does the subsequent issuance of a Notice of Proposed Partnership Adjustment (NOPPA) trigger a rigid 330-day deadline under I.R.C. § 6235(a)(3) that cuts short the agreed-upon extension period?

Writing for the Court, Judge Weiler held that under the plain language of I.R.C. § 6235(a), the statute of limitations for issuing a Notice of Final Partnership Adjustment (FPA) does not expire until the later of the dates determined under paragraphs (1), (2), and (3) of subsection (a). The Court clarified that an extension agreement executed pursuant to I.R.C. § 6235(b) extends the baseline limitations period under paragraph (1), and the Internal Revenue Service (IRS) may issue a valid, timely FPA at any point before that extended period expires—even if more than 330 days have elapsed since the NOPPA was mailed.

This decision delivers critical insights for CPAs, Enrolled Agents (EAs), and tax attorneys evaluating procedural defenses in BBA audit controversies. It reaffirms that statutory extension agreements under I.R.C. § 6235(b) preserve the IRS’s adjustments period broadly and cannot be circumvented by interpreting notice timing provisions as sequential statutory cutoffs.

Factual Background and Procedural History

Katanga Properties, LLC (Katanga or Petitioner) is a Louisiana limited liability company classified as a partnership for federal income tax purposes and subject to the centralized partnership audit regime established under I.R.C. §§ 6221–6241. For the 2020 taxable year, Katanga timely filed its Form 1065 (U.S. Return of Partnership Income) on June 10, 2021. Simultaneously, Katanga filed Form 8979 (Partnership Representative Revocation, Designation, and Resignation), designating R. Brent Evans as its Partnership Representative (PR). On its 2020 return, Katanga reported a substantial charitable contribution deduction.

On May 27, 2022, the IRS selected Katanga’s 2020 return for audit by issuing a Notice of Selection for Examination letter. During the course of the examination, the partnership and the IRS agreed to extend the statutory period for making partnership adjustments under I.R.C. § 6235(a)(1). On January 27, 2023, the PR signed Form 872–M, “Consent to Extend the Time to Make Partnership Adjustments,” which the IRS countersigned on February 21, 2023. Under the express terms of the Form 872–M, the parties extended the limitations period under I.R.C. § 6235(a)(1) until May 30, 2025.

On April 16, 2024, the IRS mailed a Notice of Proposed Partnership Adjustment (NOPPA) to Katanga and its PR pursuant to I.R.C. § 6231(a)(2), proposing to disallow the 2020 charitable contribution deduction in its entirety. Following the issuance of the NOPPA, the partnership opted not to submit a request to modify the imputed underpayment under I.R.C. § 6225(c). Consequently, the statutory 270-day modification period specified in I.R.C. § 6225(c)(7) expired on January 13, 2025.

On March 25, 2025, the IRS mailed a Notice of Final Partnership Adjustment (FPA) to Katanga, addressed to the PR, disallowing the deduction. On June 23, 2025, Katanga timely petitioned the U.S. Tax Court (Docket No. 9439-25) challenging the FPA and affirmatively alleging that the Commissioner had issued the FPA after the statute of limitations had expired.

Taxpayer Request for Relief and Summary Judgment Motion

Katanga filed a Motion for Summary Judgment under Tax Court Rule 121(a), contending that the period of limitations for making partnership adjustments for tax year 2020 expired prior to the mailing of the FPA on March 25, 2025.

In support of its motion, Katanga advanced a sequential interpretation of the statutory framework under I.R.C. § 6235(a). Specifically, Katanga contended that subsection (a) establishes a rigid, three-stage procedural timeline for BBA audit proceedings:

Paragraph (1) governs the deadline for issuing the initial NOPPA;
Paragraph (2) governs the issuance of the FPA when a taxpayer submits a modification request under I.R.C. § 6225(c); and
Paragraph (3) governs the issuance of the FPA when no modification request is submitted.

Based on this framing, Katanga argued that the extension agreement executed on Form 872–M pursuant to I.R.C. § 6235(b) extended solely the paragraph (1) deadline for issuing the NOPPA. Katanga asserted that once the IRS issued a timely NOPPA on April 16, 2024, paragraph (1) ceased to have operative effect, and the timeline for issuing the FPA became governed exclusively by I.R.C. § 6235(a)(3). Under paragraph (3), the Commissioner must make adjustments within 330 days after the date of the NOPPA.

Counting 330 days from April 16, 2024, Katanga calculated that the statute of limitations for issuing the FPA expired on March 12, 2025. Because the IRS mailed the FPA on March 25, 2025—13 days after March 12, 2025—Katanga maintained that the adjustment was untimely as a matter of law and requested that the Tax Court invalidate the FPA.

Respondent’s Statutory Position and Defense

The Commissioner opposed Katanga’s motion, contending that the FPA was fully timely under the plain text of the Internal Revenue Code. Respondent argued that I.R.C. § 6235(a) explicitly defines the limitations period as expiring on the later of the dates determined under paragraphs (1), (2), and (3).

Furthermore, the IRS highlighted that I.R.C. § 6235(b) permits the extension of the limitations period described in subsection (a) by written agreement entered into before its expiration. Because the parties executed a valid Form 872–M extending the I.R.C. § 6235(a)(1) period through May 30, 2025, the Commissioner argued that paragraph (1) provided an open limitations window through May 30, 2025. Comparing May 30, 2025 (under paragraph (1) as extended by subsection (b)) with March 12, 2025 (under paragraph (3)), Respondent asserted that the plain “later of” statutory directive rendered May 30, 2025 the controlling limitation deadline. Because the FPA was mailed on March 25, 2025—well before May 30, 2025—the IRS urged the Court to deny Katanga’s motion.

Summary Judgment Standard and Burden of Proof

In evaluating the parties’ cross-positions, Judge Weiler began by outlining the governing legal standard under Tax Court Rule 121(a)(2). The Court emphasized the fundamental administrative utility of summary judgment, noting:

“The purpose of summary judgment is to expedite litigation and avoid costly, time-consuming, and unnecessary trials.” Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988).

Under Rule 121(a)(2), summary judgment is appropriate only where there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Citing Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994), the Court noted that factual inferences are construed in the light most favorable to the nonmoving party.

Regarding the burden of proof in statute of limitations disputes, the Court affirmed that:

“To establish the defense of an expired limitations period, a taxpayer ordinarily must prove that it filed the statutory return and that the statutory limitations period has expired.” Robinson v. Commissioner, 57 T.C. 735, 737 (1972).

Because the parties stipulated that Katanga’s 2020 Form 1065 was timely filed and raised no factual disputes, the sole matter for resolution was purely legal: whether the statutory period had expired prior to March 25, 2025.

Judicial Analysis of the BBA Statutory Architecture

To resolve the dispute, the Tax Court examined the structural design of the BBA centralized audit regime enacted under Public Law 114-74. Under I.R.C. § 6231(a), Congress created three statutory notices:

The Notice of Administrative Proceeding (NAP) under I.R.C. § 6231(a)(1), which formally notifies the partnership that an examination has commenced;
The Notice of Proposed Partnership Adjustment (NOPPA) under I.R.C. § 6231(a)(2), which sets forth proposed adjustments and imputed underpayment calculations; and
The Notice of Final Partnership Adjustment (FPA) under I.R.C. § 6231(a)(3), which codifies final partnership adjustments and provides the gateway for judicial review under I.R.C. § 6234(a).

The core of the Court’s legal analysis focused on the statutory interplay between I.R.C. § 6231(b) (governing the timing of notices) and I.R.C. § 6235 (governing the period of limitations on making adjustments).

Section 6235(a) dictates that no adjustment under the BBA subchapter may be made after the later of:

Paragraph (1): The date which is 3 years after the latest of the return filing date, the return due date, or the date an Administrative Adjustment Request (AAR) is filed under I.R.C. § 6227;
Paragraph (2): In the case of a modification under I.R.C. § 6225(c), the date that is 270 days after everything required to be submitted is so submitted; or
Paragraph (3): In the case of a NOPPA under I.R.C. § 6231(a)(2), the date that is 330 days after the date of such notice.

In rejecting Katanga’s attempt to isolate paragraph (3), Judge Weiler invoked foundational principles of statutory interpretation, writing:

“‘It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.’” Davis v. Mich. Dep’t of Treasury, 489 U.S. 803, 809 (1989).

Applying this canon, the Court held that Katanga’s argument flatly contradicted the plain statutory language enacted by Congress:

“Petitioner ignores the plain text of section 6235(a), which provides that ‘no adjustment under this subchapter for any partnership taxable year may be made after the later of.’ Furthermore, the use of ‘or’ between paragraphs (1) and (2), and paragraphs (2) and (3), supports our understanding that the paragraphs are read disjunctively and indicates that the reader must determine the ‘later of’ deadline for which partnership adjustments may be made.”

Judge Weiler emphasized that Tax Court precedent firmly establishes that I.R.C. § 6235(a) functions as a disjunctive mechanism allowing the IRS to make adjustments prior to the latest date among paragraphs (1), (2), and (3), explicitly citing Mammoth Cave Property, LLC v. Commissioner, No. 5401-24, 166 T.C., slip op. at 8 (Mar. 9, 2026) and JM Assets, LP v. Commissioner, 165 T.C. 1, 11 (2025).

Interplay Between Section 6231 Notice Provisions and Section 6235 Limitations

The Tax Court next addressed Katanga’s alternative argument seeking to distinguish between statutory provisions setting deadlines for mailing notices (I.R.C. § 6231) and those setting deadlines for making adjustments (I.R.C. § 6235). Katanga argued that while I.R.C. § 6235(a)(1) governs the time to issue a NOPPA under I.R.C. § 6231(b)(1), once a NOPPA is mailed, I.R.C. § 6235(a)(3) serves as a distinct statute of limitations for the FPA.

Judge Weiler rejected this artificial bifurcation, stating directly:

“We find that petitioner’s argument seeks to make a distinction under the Code where one does not exist, since the issuance of a NOPPA, followed by an FPA, both intend to make an adjustment—with the first being ‘proposed’ and the latter being ‘final.’ Congress’s use of the word ‘adjustment’ is sufficiently broad as intending to include the process by which the Commissioner makes adjustments, namely first by a NOPPA, followed by an FPA.”

The Court explained that I.R.C. § 6231(b)(2) works in tandem with I.R.C. § 6235(a) to establish minimum timing requirements, rather than restricting overall limitation windows. Under I.R.C. § 6231(b)(2)(A), the IRS cannot mail an FPA earlier than 270 days after mailing the NOPPA (to preserve the taxpayer’s modification period under I.R.C. § 6225(c)). Subparagraph (B) of I.R.C. § 6231(b)(2) explicitly cross-references I.R.C. § 6235 for the ultimate statute of limitations on making adjustments.

Addressing the scope of extension consents executed under I.R.C. § 6235(b), the Court ruled:

“Accordingly, any agreed-upon extension under section 6235(b) would necessarily extend the limitations period for making adjustments, and any extension must be taken into consideration in determining the latest of the periods found in paragraphs (1), (2), and (3).”

Crucially, Judge Weiler clarified the Tax Court’s prior commentary in JM Assets, LP v. Commissioner, 165 T.C. 1, 11 n.6 (2025). In JM Assets, the Court noted that when read together, I.R.C. §§ 6231(b)(2) and 6235(a)(3) create a 60-day window (between day 270 and day 330 after NOPPA issuance) during which the IRS can issue an FPA when no modification is sought. In Katanga Properties, Judge Weiler explicitly dispelled any misinterpretation of that footnote:

“This note, however, should not be read to say that the Commissioner is precluded from issuing an FPA on day 331 or later, should the limitations period remain open.”

Application of the Law to Katanga Properties and Judicial Conclusions

Applying these legal holdings to the facts, the Tax Court found no defect in the timing of the Commissioner’s administrative actions:

The IRS timely issued the NOPPA on April 16, 2024, within the baseline three-year period under I.R.C. § 6231(b) and § 6235(a)(1).
The parties entered into a binding extension agreement pursuant to I.R.C. § 6235(b) via Form 872–M, validly extending the limitations period under I.R.C. § 6235(a)(1) to May 30, 2025.
Although the 330-day period measured from the NOPPA date under I.R.C. § 6235(a)(3) expired on March 12, 2025, the overall period of limitations under I.R.C. § 6235(a) remained open until May 30, 2025 under paragraph (1) as extended by subsection (b).

Because March 25, 2025 fell comfortably before May 30, 2025, Judge Weiler delivered the Court’s holding:

“We thus hold that the FPA, mailed on March 25, 2025, was issued timely pursuant to section 6235(a)(1). Accordingly, we will deny petitioner’s Motion.”

Practical Implications for Tax Practitioners and BBA Audit Representation

The Katanga Properties decision holds significant practical ramifications for CPAs, EAs, and tax attorneys involved in representation, compliance, and controversy under the BBA audit regime:

Understanding the Broad Scope of Form 872–M Extensions

Tax professionals cannot view Form 872–M as merely an extension to issue a NOPPA. Under I.R.C. § 6235(b), a Form 872–M consent extends the overarching limitations period for making partnership adjustments under I.R.C. § 6235(a)(1). Consequently, an extension agreement keeps the entire adjustment window open for both proposed adjustments (NOPPA) and final adjustments (FPA) until the extended expiration date passes.

Reevaluating Statute of Limitations Defense Calculations

When auditing IRS timeline compliance, practitioners must calculate all three alternative dates under I.R.C. § 6235(a)(1), (2), and (3). Because the statute operates as a “later of” mechanism, the presence of an open date under any paragraph keeps the assessment window open. Practitioners should not advise clients that an FPA is time-barred simply because 330 days have elapsed since the NOPPA mailing date, provided an underlying I.R.C. § 6235(b) consent or another paragraph remains active.

Strategic Negotiation of Extension Consents

When requested by IRS Examination to execute Form 872–M, partnership representatives and their tax advisors must recognize that granting a general extension under I.R.C. § 6235(a)(1) gives the IRS maximum flexibility. Advisors should carefully analyze whether granting an extension aligns with the partnership’s strategy, understanding that once executed, the extended date under paragraph (1) will supersede the 330-day post-NOPPA target date in paragraph (3).

Prepared with assistance from Gemini Notebook.