Commissioner v. JT USA, LP, 630 F.3d 1167

IRS alleges a Son-of-BOSS scheme to convert a $32M capital gain into a large loss for JT USA by transferring ownership to two entities under Gregorys' control, avoiding tax for 2000.
Gregorys elected TEFRA participation only for their direct JT USA interests, not for indirect interests in JT Racing, Inc. and JT Racing, LLC, due to a clerical TEFRA notice error.
Because indirect interests were not properly pursued within TEFRA, IRS could not assess against those indirect interests within the TEFRA framework and outside action deadline expired for indirect interests by end of 2005.
IRS also could not pursue JT Racing entities within TEFRA because they were tax-immune (S corporation/partnership status).
By 2006, IRS had two options: show Gregorys had a direct JT USA interest, or invalidate the bifurcated election as to indirect interests.
Gregorys filed a November 2006 Tax Court petition to eliminate themselves from TEFRA and substitute JT Racing, LLC; IRS argued bifurcated election was invalid and not separable.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Jurisdiction under practical finality doctrine	IRS seeks interlocutory review as practically final.	Order is not final and lacks national significance; not under Gillespie/Coopers exceptions.	No jurisdiction; practical finality factors not met.
Jurisdiction under collateral order doctrine	Collateral order review warranted for an important, separable order.	Order is not collateral; not effectively unreviewable on final judgment.	No jurisdiction; collateral order doctrine does not apply.

Gillespie v. U.S. Steel Corp., 379 U.S. 148 (1964) (gives limited leeway to finality in marginal cases under Gillespie)
Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978) (limits Gillespie finality exceptions; strict interpretation)
SEIU, Local 102 v. County of San Diego, 60 F.3d 1346 (9th Cir. 1994) (gives framework for practical finality balancing)
Solis v. Jasmine Hall Care Homes, Inc., 610 F.3d 541 (9th Cir. 2010) (narrow practical finality standard; limits to extraordinary cases)
Pauly v. U.S. Dep't of Agriculture, 348 F.3d 1143 (9th Cir. 2003) (practical finality when ministerial action would resolve merits)
Brookes v. Comm'r, 163 F.3d 1124 (9th Cir. 1998) (partial decision not certifiable under Rule 54(b) prevents appeal)
Grand Canyon Trust v. Tucson Elec. Power Co., 391 F.3d 979 (9th Cir. 2004) (final judgment rule includes earlier non-final orders when reviewing judgment)
In re Copley Press, Inc., 518 F.3d 1022 (9th Cir. 2008) (collateral order test for review of discrete issues)
Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863 (1994) (collateral order doctrine requires conclusiveness and independence from merits)
Mohawk Indus., Inc. v. Carpenter, 130 S. Ct. 599 (2010) (limits on collateral order doctrine; finality principle)