Full opinion text
WESLEY, Circuit Judge: Taxpayer Jason Chai’s appeal and the Commissioner of Internal Revenue’s (the “Commissioner”) cross-appeal relate to Chai’s underreporting of - income in his 2003 tax return, principally in connection with a $2 million payment Chai received from Delta Currency Trading, LLC (“Delta”) for his role in a now-defunct tax-shelter scheme. The Commissioner issued Chai a timely notice of deficiency asserting that he owed self-employment tax on the $2 million payment, plus a 20% accuracy-related penalty. The original notice of deficiency did not assert an income-tax deficiency because the $2 million increase in Chai’s income was initially offset for income-tax purposes (but not self-employment-tax purposes) by his reported share of a partnership loss that could be adjusted only in a separate, partnership-level, proceeding. Chai initiated a deficiency proceeding in the United States Tax Court to challenge the Commissioner’s self-employment-tax determination. While Chai’s deficiency proceeding was pending, losses reported by Mercato Global Opportunities Fund, LP (“Mercato”) — a partnership of which Chai was a member — were disallowed in a partnership tax proceeding (the “Mercato proceeding”). Chai had reported his share of Mercato’s losses on his 2003 personal return. With that loss disallowed, Chai would also owe income tax on the $2 million payment if the Tax Court decided that the payment was income. To collect that tax (and another 20% accuracy penalty), the Commissioner filed an amended answer in Chai’s personal deficiency proceeding to assert an income-tax deficiency in addition to the original self-employment-tax deficiency. In separate orders, the Tax Court held (1) it lacked jurisdiction over the added income-tax deficiency because I.R.C. § 6230 required the Commissioner to apply the results of the Mercato proceeding to Chai by computational adjustment, rather than in his deficiency proceeding, and (2) Chai owed the self-employment tax and corresponding penalty. In upholding the penalty assessment, the Tax Court rejected as untimely Chai’s argument, raised for the first time in post-trial briefing, that the Commissioner failed to carry its burden to show compliance with a statutory written-approval requirement. The Commissioner challenges the first ruling, and Chai challenges the second. For the reasons discussed below, we hereby: (1) VACATE the Tax Court’s jurisdictional ruling and, because Chai concedes that the $2 million payment is fully taxable, REMAND the case to the Tax Court to enter a revised decision upholding the income-tax deficiency; (2) AFFIRM the portion of the Tax Court’s order upholding the self-employment-tax deficiency; and (3) REVERSE the portion of the Tax Court’s order upholding the accuracy-related penalty. BACKGROUND I. Statutory Framework This case involves the complicated intersection of partnership and individual taxpayer tax court proceedings. Before turning to the facts and procedural background of this case, both of which are encumbered with terminology and concepts that have confounded the parties and the Tax Court, it is helpful to start with a basic outline of the statutory context underlying this case. When the Internal Revenue Service (the “IRS”) audits an individual taxpayer’s return and determines that he owes more than he reported, it must follow statutorily prescribed deficiency procedures to recover unpaid tax, including unpaid self-employment tax imposed by I.R.C. § 1401(a), as well as any applicable reporting penalty. See I.R.C. §§ 6211-6216, 6665(a)(1). Those procedures require the IRS to assert its claim for additional tax and penalty through a notice of deficiency, which the taxpayer may challenge by petition filed in the Tax Court within 90 days of the notice’s issuance. See I.R.C. §§ 6212(a), 6213(a). The' Tax Court “exercises jurisdiction only to the extent provided by statute.” See GAF Corp. v. Comm’r, 114 T.C. 519, 521 (2000). Its jurisdiction to redetermine a deficiency asserted by the IRS “depends upon a valid notice of deficiency and a timely filed petition.” Id.; see Moret ti v. Comm’r, 77 F.3d 637, 642 (2d Cir. 1996) (“A notice of deficiency is ... considered the jurisdictional prerequisite to a taxpayer’s suit in the Tax Court for rede-termination of his tax liability.” (internal quotation marks omitted)). Where the notice of deficiency is invalid, the Tax Court must dismiss the case. See GAF Corp., 114 T.C. at 528. The IRS is prohibited from assessing and collecting additional tax deficiencies during the period for filing a Tax Court petition. If the taxpayer timely files, that prohibition remains in place until the decision of the Tax Court becomes final. I.R.C. § 6213(a). Along the same lines, the statute of limitations on the assessment of any additional deficiencies is tolled during that period and for 60 days thereafter. 1.R.C. § 6503(a)(1). Unlike individuals and corporations, partnerships are not separately taxable entities. A partnership’s income and expenses pass through to the individual partners, who must pay a tax on their proportionate shares of net gain or may claim a deduction for their shares of net loss. Partnership tax is subject to the procedures set forth in the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”), Pub. L. No. 97-248, 96 Stat. 324 (codified as amended at I.R.C. §§ 6221-6234). Central to those procedures is the distinction between partnership and nonpartnership items. “Partnership item[s]” are items more properly determined at the partnership level than at the partner level — e.g., income, gain, loss, deduction, and credit. I.R.C. §§ 6221, 6231(a)(3). “Nonpartnership item[s]” are all of the partnership’s remaining income and expenses that are not “partnership item[s].” I.R.C. § 6231(a)(4). To initiate adjustments to partnership items, TEFRA requires the IRS to conduct a unitary audit of the partnership and issue a final partnership administrative adjustment (“FPAA”) to the partners, which the partners may challenge in a single judicial proceeding (a “TEFRA proceeding”) in, inter alia, the Tax Court. See I.R.C. §§ 6223(a)(2), 6226. Adjustments to nonpartnership items follow the standard procedures for adjustments to personal income. See I.R.C. §§ 6221, 6230(a)(2)(A). The goal of the TEFRA procedures “is to ensure that, in general, partnership items are adjusted once at the partnership level. A1 partners, whose tax liability will be affected by its outcome, have the opportunity to participate in the audit allowing each to be bound by its result.” Callaway v. Comm’r, 231 F.3d 106, 111 (2d Cir. 2000). As with the deficiency proceedings for nonpartnership (i.e., personal) items, the IRS is prohibited from making FPAA-re-lated deficiency assessments during the period in which a partner may challenge the FPAA and, if a challenge is commenced, until after a final Tax Court decision is issued. I.R.C. § 6225(a). The statute of limitations is likewise tolled during that period and for one year after a final decision. I.R.C. § 6229(d). Once a partnership-level tax proceeding becomes final (or the time to. seek judicial review of the FPAA expires), the IRS applies the results to each partner’s personal return and calculates any deficiencies. If the deficiency calculation would be purely computational, the Commissioner issues to the partner a “notice of computational adjustment,” rather than a notice of deficiency. I.R.C. § 6225; see I.R.C. § 6230(a)(1) (“Except [in certain circumstances], subchapter B of this chapter [i.e., deficiency procedures] shall not apply to the assessment or collection of any computational adjustment.”).; N.C.F. Energy Partners v. Comm’r, 89 T.C. 741, 744 (1987). The deficiency procedures, however, do apply to “affected items” that require an individual, partner-level factual determination. I.R.C. § 6230(a)(2)(A). In such instances, the IRS is required to issue, within one year of the outcome of the TEFRA proceeding, an affected-item notice of deficiency (unless it can be folded into the partner’s existing deficiency proceeding). I.R.C. §§ 6229(d), 6230(a)(2)(A)©; Treas. Reg. § 301.6231(a)(6)-1(a)(3). The TEFRA provisions (and cases interpreting them) are clear: Partnership-level proceedings must be kept distinct from deficiency proceedings involving individual partners. A problem arises, however, where, as here, a partnership’s net loss is so large that it offsets proposed adjustments to nonpartnership items in a partner’s personal deficiency proceeding. In that case, the loss offset could eliminate some of the partner’s personal tax deficiencies (but not others, such as a self-employment-tax deficiency), and the non-TEFRA adjustments could wind up being uncollectible because of the expiration of the statute of limitations vis-a-vis nonpart-nership items. That was the case in Munro v. Commissioner, 92 T.C. 71 (1989). There, the IRS presumptively — i.e., prior to the conclusion of ongoing partnership-level TEFRA proceedings — issued a notice of deficiency to each partner that disallowed partnership losses for computation purposes. Id. at 72-73. The taxpayers moved to dismiss for lack of jurisdiction, asserting that the deficiency was attributable to partnership-level adjustments subject to ongoing TEFRA proceedings. Id. at 73-74. Although the Tax Court agreed that a deficiency existed and that it had jurisdiction, the court rejected the IRS computation. The court held that partnership items included on a taxpayer’s return must be “completely ignored [for purposes of] determining] if a deficiency exists that is attributable to nonpartnership items.” Id. at 74. This became known as the “Munro computation.” But Munro created its own problems for taxpayers and the IRS. A taxpayer/partner, for example, who is subject to concurrent TEFRA and individual deficiency proceedings could be assessed and required to pay a deficiency that would have to be returned by the IRS as an overpayment if partnership losses were ultimately allowed. The taxpayer would effectively be without a prepayment forum to litigate the partnership item adjustments. The IRS similarly would be unable to adjust various nonpartnership deductions where a taxpayer derives income primarily from a partnership, because the income would have to be ignored under Munro. Thus, in 1997, Congress created a procedure — codified at I.R.C. § 6234 — to deal with Munro-like situations. See Taxpayer Relief Act of 1997, Pub. L. No. 105-34, § 1231(a), 111 Stat. 788, 1020-23, amended by Job Creation and Worker Assistance Act of 2002, Pub. L. No. 107-147, § 416(d)(1)(D), 116 Stat. 21, 55. Section 6234 is a helpful method for coordinating deficiency and TEFRA proceedings to avoid the taxpayer losing out on prepayment rights and the IRS losing its ability to assess deficiencies attributable to partnership items. It provides a declaratory judgment procedure for adjustments to án oversheltered tax return— that is, a return that shows no taxable income and a net loss from a TEFRA partnership proceeding. I.R.C. § 6234(b). In such an instance, the IRS may issue a “notice of adjustment” for nonpartnership items if “the adjustments resulting from such determination do not give rise to a deficiency (as defined in section 6211) but would give rise to a deficiency if there were no net loss from partnership items.” I.R.C. § 6234(a)(3). The taxpayer may challenge the notice of adjustment within 90 days in the Tax Court, which has jurisdiction to determine the correctness of the adjustment. I.R.C. § 6234(c). If the Tax Court’s decision is upheld (or not contested) and the taxpayer’s partnership items are ultimately adjusted in a subsequent TEFRA proceeding, the IRS may collect any additional deficiency attributable to nonpartnership items. If the TEFRA proceedings conclude before the Tax Court makes a declaration, the notice of adjustment is treated as a notice of deficiency. I.R.C. § 6234(g)(3). Finally, if the taxpayer does not contest the notice within the period to do so, the taxpayer may seek a refund upon conclusion of the TEFRA proceeding for any deficiencies attributable to partnership items that were ultimately upheld. I.R.C. § 6234(d). With that baseline in mind, we turn to the facts of this case. II. The Tax-Shelter Scheme and Chai’s Role as Accommodating Party Chai is a Harvard-trained architect who got involved in a substantial tax-shelter scheme at the urging of Andrew Beer, after Beer married Chai’s cousin. Central to the self-employment tax inquiry is Chai’s relationship to Beer and role in the various tax shelters. Beer is an investment manager who “created and marketed several tax shelters directed to wealthy individuals” in 2000 and 2001. App’x 234. The goal was to reduce the substantial tax liabilities of prospective clients by generating losses to offset taxable income for a particular year. Among the entities Beer formed to market and advise the tax shelters were Bricolage Capital, LLC (“Bricolage”), Counterpoint Capital, LLC (“Counterpoint”), and Delta Currency Trading, LLC (“Delta”). At all relevant times, Beer owned all or a majority of the interests in Delta, Bricolage, and Counterpoint (collectively, the “Bricolage entities”). Chai never owned an interest in Delta or Bricolage. The Bricolage entities shared clients, offices, employees and resources. For their services, the Bricolage entities (and particularly Beer as majority owner) collected sizable advisory and client-facilitation fees. The shelters shared three characteristics: (1) each involved a flow-through entity (“FTE”); (2) to garner the tax benefits, the FTEs entered into “straddle” transactions by which gains would be triggered before the participant entered the shelter and losses would be triggered thereafter, leaving the participant with an interest in only the losses; and (3) each required an accommodation (accommodating party) — a transitory partner or shareholder — to serve as initial owner of the straddled gains. This is where Chai came in. In 2000, Beer offered Chai the opportunity to act as an accommodating party in exchange for compensation from the Brico-lage entities. Chai agreed to a $100,000 annual salary plus a signing bonus and potential discretionary, bonuses. Beer explained to Chai his integral role in the schemes as a conduit and assured Chai that the tax liabilities he incurred in the transactions would be eliminated by later-acquired offsetting losses. Pursuant to this arrangement, during 2000 and 2001, Chai served as the accommodating party for at least 131 tax shelters and reported over $3.2 billion of shelter-derived income. He received and reported equal offsetting losses during that time. In his capacity as accommodating party, Chai executed numerous transactions and traveled to the offices of Delta and its affiliates “a lot” and “regularly.” App’x 238. Due to travel conflicts with his architecture business, however, Chai was often unable to be physically present to sign documents in his capacity as accommodating party. To resolve the problem, Chai formed JJC Trading, LLC (“JJC”) in 2001 at Delta’s suggestion. Chai was sole owner of JJC and Brico-lage was named a nonmember-manager with discretionary and signatory authority. Chai’s friendship with Beer and the resulting business arrangement proved fruitful for Chai. In 2000, for instance, Chai received $1.2 million as a signing bonus from Counterpoint, and in 2001, he received $1 million from Delta. Both entities reported the payments as 'nonemployee compensation (on IRS Form 1099-MISC, Miscellaneous Income), and Chai reported them as income on his tax returns. Chai also received the agreed-upon $100,000 annual salary from Bricolage and Counterpoint in each of 2001 and 2002. On his 2001 return, Chai made a series of income-offsetting declarations related to his arrangement with Beer. Chai reported on Schedule C — the form for “Profit or Loss From Business (Sole Proprietorship)”- — -that he “ ‘materially partieipate[d]’ in the operation of [JJC’s] business during 2001,” thereby entitling him to favorable treatment under passive-loss rules. Supp. App’x 146. Chai described certain capital losses as “disposition^] of business property,” which, under I.R.C. § 1231, allowed him to treat JJC’s losses as ordinary losses. Supp. App’x 160-65. Chai also made a “mark-to-market” election for JJC under I.R.C. § 475(f) — an election limited to persons “engaged in a trade or business as a trader in securities.” Supp. App’x 156, 166; see also I.R.C. § 475(f)(1)(A). By the end of 2001, all of Chai’s ■ and JJC’s interests in the tax shelters had been liquidated. In April 2002, after Chai received a $1 million payment from Delta, Delta’s financial officer, Helen Del Bove, emailed Chai that she would be “finalizing some numbers within the next week or so” regarding additional fees he would receive from Delta in the future. Supp. App’x 211. In February 2003, Chai and Del Bove discussed the proper tax treatment of a prospective $2 million payment from Delta to Chai. Del Bove told Chai that she was going to wire him the $436,000 remaining in JJC, dissolve that entity, and pay him another $2 million. Chai asked her how the payments should be treated and whether he would be issued an IRS Form 1099 for the whole amount. Del Bove told him multiple times that the $2 million payment was income and that Delta would report it on his Form 1099 for 2003. Beer subsequently authorized on behalf of Delta a payment of $2 million to Chai as a discretionary bonus. Delta, consistent with Del Bove’s guidance, treated the payment as non-employee compensation on Chai’s Form 1099 for 2003. III. Chai’s 2003 Return and Related Audits Chai did not report the $2 million payment from Delta as taxable income on his 2003 return. Instead, in filing his return, he took the position that it constituted the return of capital from his investments. Chai, however, was not a partner of, and did not invest any capital in, Delta. And neither Chai nor JJC reported any portion of Delta’s income or'loss in 2003. No corresponding tax form was prepared by Delta for Chai. Chai’s return showed an overall loss of $11,466,070 (with $0 tax), the majority of which ($11,149,621) came from his share of partnership losses claimed by Mercato — a partnership of which Chai was a member and that had no direct connection to the $2 million Delta payment. The IRS conducted separate, but concurrent, audits of Chai’s and Mercato’s 2003 returns. The audit of Chai’s return resulted in a net increase income adjustment of $2,397,139, primarily due to the unreported $2 million payment from Delta. In its May 5, 2009 notice of deficiency to Chai, the IRS characterized the $2 million Delta payment as self-employment income and therefore asserted a corresponding deficiency in Chai’s self-employment tax. At that time, the IRS did not assert a deficiency in Chai’s “regular” income tax related to the $2 million payment because it was prohibited from adjusting Chai’s $11.1 million share of the Mercato loss prior to the conclusion of the Mercato proceedings. Meanwhile, the audit of Mercato led the IRS to issue, on June 17, 2009, an FPAA that completely disallowed Mercato’s $110 million claimed loss. In separate proceedings over the following years, Chai challenged the notice of deficiency and Mercato challenged the FPAA in the Mercato proceedings. IV. The Tax Court Proceedings Soon after filing an answer in Chai’s deficiency proceeding in the Tax Court, the Commissioner concluded that, under Munro, he should have included in the May 2009 notice a deficiency in Chai’s income tax that would result from the approximately $2.4 million upward adjustment to Chai’s income if his share of the Mercato loss were removed. That is, if Chai’s reported $11.1 million share in Mer-cato’s losses were ignored, his overall loss would decrease from approximately $11.5 million to approximately $400,000; the $2.4 million adjustment would therefore result in $2 million of taxable income. On October 30, 2009, the Commissioner filed an Amendment to Answer in Chai’s deficiency proceeding asserting an additional deficiency in income tax ($563,868) and a corresponding additional 20% penalty ($112,-773.80). On June 3, 2013, the Mercato proceeding concluded. In an order dated September 13, 2013, the Tax Court disallowed all of Mercato’s losses for 2003. Under I.R.C. § 6229(d), the IRS had one year from that date to assess any computational deficiency in Chai’s 2003 income tax and penalty. In December 2013, at the beginning of trial in Chai’s personal deficiency proceeding, Chai moved to dismiss for lack of jurisdiction the claims made by the Commissioner in his 2009 Amendment to Answer. Chai did not dispute the disal-lowance of the Mercato loss. Instead, he argued that, rather than asserting the additional claims for income tax due after disallowance of the Mercato losses in' Chai’s present deficiency proceeding, the Commissioner had to issue a notice of computational adjustment — the method by which the IRS notifies partners of purely computational deficiency assessments and related penalties resulting from the application of the outcome of a partnership-level proceeding to their returns. See I.R.C. §§ 6225, 6230(a)(1). The Commissioner countered that he had “properly recomputed the [asserted] deficiency and penalty” in the 2009 Amendment to Answer by removing Chai’s share of the partnership loss from the computation, as required by Munro. Supp. App’x 10-11. Alternatively, the Commissioner argued, even if Munro did not apply because the Munro computation here would effect a complete, rather than partial, disallowance of the partnership losses, the Tax Court could “now take jurisdiction and rule on” the recomputed amounts pursuant to its I.R.C. § 6212 deficiency jurisdiction (as augmented by I.R.C; § 6214(a)). Supp. App’x 17. In support, the Commissioner relied on Harris v. Commissioner, 99 T.C. 121, 123 (1992), for the proposition that “once partnership items are resolved, the Court may take those partnership items 'into account for computational purposes in a [partner’s previously initiated] deficiency proceeding.” Supp. App’x 17 (citing Harris, 99 T.C. at 123). The Commissioner alternatively argued (as he does here) that the $2 million payment (or the deficiency attributable thereto) was an “affected item” under I.R.C. §§ 6230(a)(2)(A)© and 6231(a)(5). He asserted that the claim for the increased deficiency was contingent upon the Tax Court’s resolution of the dispute over the $2 million payment from- Delta, which the IRS termed a substantive “partner-level [individual taxpayer] determination” with respect to an “affected item.” Supp. App’x 13. As the Commissioner has now acknowledged, it was an odd fit. Nevertheless, recognizing that the affected-item argument might render the Amendment to Answer ineffective to confer jurisdiction over the additional deficiency, the Commissioner also sought leave to amend the answer again to formally reassert the income-tax deficiency claim now that the Mercato proceeding was final. The Tax Court granted leave to file what it restyled as the “First Amendment to Answer” on April 24, 2014. Y. The Tax Court’s Rulings A. The Jurisdictional Ruling On February 13, 2015, the Tax Court granted Chai’s motion to dismiss, holding that it lacked jurisdiction over the Commissioner’s claim for additional income tax. The court agreed with Chai that the 2009 Amendment to Answer attempted “to increase a taxpayer’s deficiency based on the Commissioner’s proposed, but unadjudieat-ed, adjustments to .. ■. partnership items” in violation of Munro. Supp. App’x 40. The court did not address the Commissioner’s now-primary argument that, even if Munro did not allow the amendment, under Harris the court obtained jurisdiction over the newly added claims once the Mercato decision became final simply by virtue of its I.R.C. § 6212 deficiency jurisdiction (as augmented by I.R.C. § 6214(a)). The court also rejected the Commissioner’s argument that it obtained jurisdiction by virtue of the First Amendment to Answer based on the affected-item theory. The “critical inquiry” under an affected-item theory, said the court, was “whether the increased deficiency ... requires a partner-level determination before it can be assessed.” Supp. App’x 42. The court held that it did not: There is no factual determination that must occur in the petitioner’s deficiency proceeding before respondent can apply the results of the [Mercato] proceeding. The disallowed losses from the [Merca-to] proceeding can be applied to petitioner’s 2003 income taxes regardless of the outcome of this deficiency proceeding (whether the $2 million at issue in this ease is taxable non-employee compensation or a return of capital). Supp. App’x 43. In the court’s view, “section 6230(a)(1) requires that the results of the [Mercato] proceeding be applied to [Chai] through a Notice of Computational Adjustment.” Supp. App’x 43. Thus, the court found that the First Amendment to Answer did not give the court jurisdiction over the increased deficiency. The Commissioner moved for reconsideration, noting that he had already applied the results of the Mercato proceeding to Chai’s 2003 tax return in an August 2014 notice of computational adjustment — that is, he automatically applied the disallowed loss to Chai’s then-agreed upon income— $49,869 — and determined income tax thereon. However, the Commissioner explained, the IRS could not apply the additional deficiency claimed as a result of the $2 million Delta payment without treating it as taxable income in its computations. And it could not treat the payment as taxable income because the court had not yet ruled in the deficiency proceeding that Chai had received the payment as gross income, rather than as a return of capital or a gift. In other words, the Commissioner argued, the partner-level ruling regarding the proper treatment of the $2 million payment was necessary before it could assess the additional deficiency. The Tax Court denied the motion for reconsideration, without comment, on April 16, 2015. B. The Self-Employment Tax Ruling On May 6, 2015, the Tax Court entered its final decision upholding the deficiency in Chai’s self-employment tax and an accuracy-related penalty. The court noted that “[t]he character of a payment for tax purposes is determined by the intent of the parties, particularly the intent of the pay- or, as disclosed by the surrounding facts and circumstances.” App’x 245-46 (collecting cases). Gross income, the court explained, “generally includes all income from whatever source derived, including compensation for services in the form of fees, commissions, or fringe benefits.” App’x 245 (citing I.R.C. § 61(a)(1)). A return of capital or receipt of a gift, on the other hand, is not taxable income. Here, the court found that the trial testimony and record evidence (including the contemporaneous email exchange with Del Bove and other correspondence between Chai and Delta personnel) supported the conclusion that the $2 million payment was compensation subject to self-employment tax. The court rejected Chai’s attempts to minimize his role in the tax shelters, finding instead that his role “was' a critical component of the transactions and the tax shelters could not have functioned as planned without [his] participation.” App’x 246. Additionally, the court found that the evidence contradicted Chai’s characterization of the payment as a return of capital. Instead, the evidence showed that Chai was not a partner or investor in- Delta and did not have a capital investment in any tax-shelter entity after 2001. Neither was the payment a gift from Beer, the court held, as “[t]he record is devoid of any evidence suggesting that the payment resulted from detached and disinterested generosity.” App’x 255. Finally, the court held that, as necessary to be subject to self-employment tax, “the record demonstrate[d] that [Chai] accommodated tax shelters with sufficient continuity, regularity, and a profit motive such that he was engaged in a trade or business as a tax shelter accommodating party.” App’x 253. C. The Penalty Ruling In post-trial briefing, Chai argued for the first time that the Commissioner had failed to satisfy his burden of production under I.R.C. § 7491(c) “by not introducing evidence of his compliance with section 6751(b)(1),” which requires written supervisory approval of certain penalty determinations. App’x 256. The court declined to consider Chai’s argument, finding, it untimely and that the Commissioner would be prejudiced by its consideration. The court then upheld the 20% accuracy-related penalty asserted in the notice of deficiency. The court held that the Commissioner had satisfied his burden to prove the existence and amount of deficiency, and that Chai failed to satisfy the reasonable-cause exception because he could not establish justified reliance on his accountant. Chai filed a timely notice of appeal on May 18, 2015, and the Commissioner filed a notice of cross-appeal on July 24, 2015. VI. Proceedings in this Court In January 2016, Chai moved to dismiss as untimely the Commissioner’s cross-appeal, arguing that the Tax Court’s February 2015 jurisdictional order dismissing the IRS’s claims for the additional deficiency and penalty was an immediately appealable “dispositive order” within the meaning of Tax Court Rule 190(b)(1). In March 2016, a panel of this Court denied Chai’s motion, citing Estate of Yaeger v. Commissioner, 801 F.2d 96, 98 (2d Cir. 1986). DISCUSSION We review de novo the Tax Court’s legal conclusions and for clear error its factual findings. Callaway, 231 F.3d at 115 (citing I.R.C. § 7482(a)(1)). “In particular, ‘[w]e owe no deference to the Tax Court’s statutory interpretations, its relationship to us being that of a district court to a court of appeals, not that of an administrative agency to a court of appeals.’ ” Id. (alteration in original) (quoting Exacto Spring Corp. v. Comm’r, 196 F.3d 833, 838 (7th Cir. 1999)). I. The Jurisdictional Ruling A. We Have Jurisdiction Over the Commissioner’s Cross-Appeal As an initial matter, Chai again asserts that the Commissioner’s cross-appeal is untimely. While we need not revisit our prior decision denying his motion to dismiss, we explain briefly why it stands. With exceptions not relevant here, the United States Courts of Appeals “have exclusive jurisdiction to review the decisions of the Tax Court ... in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury.” I.R.C. § 7482(a)(1). In the context of an appeal from a district court decision, “[fjederal appellate jurisdiction generally depends on the existence of • a decision by the District Court that ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ ” Coopers & Lybrand v. Livesay, 437 U.S. 463, 467, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 89 L.Ed. 911 (1945)); see also 28 U.S.C. § 1291 (generally limiting appellate jurisdiction to “appeals from ... final decisions of the district courts”). The Third Circuit has stated that “[j]urisdiction under section 7482(a)(1) ... extends only to a ‘final decision’ of the tax court.” N.Y. Football Giants, Inc. v. Comm’r, 349 F.3d 102, 105 (3d Cir. 2003) (quoting Ryan v. Comm’r, 680 F.2d 324, 326 (3d Cir. 1982)). This Court has held “that Tax Court decisions are appealable only if they dispose of an entire case.” Estate of Yaeger, 801 F.2d at 98. A notice of appeal from the Tax Court must be filed within 90 days of the entry of such “decision,” or within 120 days of the entry of “decision” if another party has filed a timely notice of appeal. I.R.C. § 7483. Here, the Tax Court entered its final decision on May 6, 2015. Chai filed a notice of appeal 12 days later. The Commissioner filed a notice of appeal on July 24, 2016, 49 days after entry of the Tax Court’s decision and well before the 120-day limit set by § 7483. The Commissioner’s notice was therefore timely. Chai contends that the Commissioner’s notice was untimely because the Tax Court’s February 13, 2015 dispositive order concerning its jurisdiction over the income-tax deficiency was the operative final decision for the cross-appeal. An order is an appealable final decision only when it was “clearly intended to end a litigation.” SongByrd, Inc. v. Estate of Grossman, 206 F.3d 172, 178 (2d Cir. 2000). Because the Tax Court’s February 13, 2015 order was not intended to dispose of the Commissioner’s initial self-employment-tax-deficiency claim and end the proceeding in the Tax Court, that order was not immediately appealable. See Coopers & Lybrand, 437 U.S. at 467, 98 S.Ct. 2454. Chai’s central argument that Tax Court Rule 190(b)(1), which provides that a “dis-positive order ... shall be treated as a decision of the Court for purposes of appeal,” rendered the February 13, 2015 order immediately appealable is meritless. As discussed above, a final decision must clearly be intended to end the litigation; Rule 190(b)(1) does not address finality and must be read in a manner consistent with the statutory finality requirement. We also reject Chai’s argument that the February 13, 2015 order was final and appealable under I.R.C. §; 7481(a)(1), which provides that a “decision of the Tax Court shall become final ... [u]pon the expiration of the time allowed for filing a notice of appeal.” That subsection addresses finality only when a “[t]imely notice of appeal [has] not [been] filed,” see id. without dictating when the time to file a notice begins. Chai’s argument thus begs the question in the present case. B. The Tax Court’s Jurisdictional Ruling was Incofrect The odd posture of this case has confounded even the Commissioner; he has offered several theories to support his request for reversal, only to abandon them to focus on others. The problem is that the Internal Revenue Code’s jurisdictional provisions have gaps, and this case lands neatly within one. The irony is that no one — not even Chai — disputes that, as a result of the decision in the Mercato proceeding disallowing the partnership losses, Chai has $2 million of net income on which he has not paid income tax. The question is, can the IRS collect it? More precisely, we must decide whether the Tax Court had jurisdiction over the additional income-tax deficiency when the Commissioner filed the First Amendment to Answer at the conclusion of the Mercato proceeding, at some earlier time, or not at all. In plain English: Did the Tax Court have the authority to consider the re-determination of Chai’s partnership losses in deciding his income-tax liability resulting from his receipt of the $2 million Delta payment — a payment that had nothing to do with his Mercato partnership interest? The Commissioner has abandoned his prior reliance on Munro and instead advances two somewhat contradictory arguments as to how the Tax Court erred in its jurisdictional analysis. His primary argument is that, for much the same reasons set forth in Harris, the Tax Court obtained jurisdiction over the increased deficiency because the Commissioner’s First Amendment to Answer was filed after the conclusion of the Mercato proceeding and prior to the Tax Court’s decision in Chai’s deficiency proceeding. Alternatively, the Commissioner argues that the claim for the increased deficiency is attributable to an “affected item,” requiring a partner-level determination. Chai responds that Harris is inapposite and that this is not an affected-item case. He seems to suggest, as did the Tax Court, that the only way for the Commissioner to have assessed the additional deficiency was by issuing a notice of computational adjustment” under I.R.C. § 6230(c)(2)(A). This case does not fit neatly into the statutory methods marrying TEFRA and deficiency proceedings. See I.R.C. § 6234. But procedural oddities do not mean the tax is uncollectible. For the following reasons, we are persuaded that the Tax Court erred in dismissing the Commissioner’s claim for the additional income-tax deficiency. We start with two uneontr-oversial premises. First, the IRS could not have assessed the income-tax deficiency attributable to the $2 million Delta payment until the Mercato proceeding concluded. It is textbook tax law, affirmed in Munro, that any increased deficiency (and penalty) attributable to a proposed, but not-yet-adjudicated, adjustment to a partnership item at issue in a TEFRA proceeding must await the outcome of the partnership-level proceeding. Munro, 92 T.C. at 74; see also GAF Corp., 114 T.C. at 521-28 (dismissing for lack of jurisdiction a notice of deficiency issued prior to the completion of related partnership-level proceedings). Second, as a general matter, the scope of a deficiency proceeding may be expanded to cover any additional deficiencies for the tax year beyond those asserted.in a statutorily-compliant notice of deficiency that is the subject of the proceeding. See I.R.C. § 6214(a) (“[T]he Tax Court shall have jurisdiction to redetermine the correct amount of the deficiency even if the amount so redetermined is greater than the amount of the deficiency, notice of which has been mailed to the taxpayer, and to determine whether any additional amount, or any addition to the tax should be assessed, if claim therefor is asserted by the Secretary [through the Commissioner] at or before the hearing or a rehearing.”). The Tax Court’s decision was, at bottom, based on the blanket assertion that, because the increased deficiency was not an “affected item” under § 6230(a)(2)(A)(i), “section 6230(a)(1) required] that the results of the [Mercato] proceeding be applied to [Chai] through a Notice of Computational Adjustment.”' Supp. App’x 43 (emphasis added); see I.R.C. § 6230(a)(1) (“Except [in certain circumstances], subchapter B of this chapter [i.e., deficiency procedures] shall not apply to the assessment or collection of any computational adjustment.”). We agree that neither the increased deficiency attributable to the $2 million payment by virtue of the disallowed Mercato losses nor the $2 million payment itself is an “affected item.” As the Commissioner has effectively conceded in arguing its primary position, the $2 million Delta payment is not an “affected item,” since “the disallowance of the Mercato loss has no bearing on whether $2 million is includible in [Chai’s] income.” Comm’r Br. 50 n.16. In other words, the proper treatment of the $2 million payment was unaffected by the Mercato proceeding; the disallowance affected only the tax consequences of that treatment. And an increased deficiency in itself is not an affected item for purposes of § 6230(a)(2)(A)(i), since that section refers to deficiencies as attributable to (not themselves constituting) affected items. We disagree, however, with the Tax Court’s framing of the inquiry as “whether the increased deficiency is an affected item that requires a partner-level determination before it can be assessed” and its conclusion that, where § 6230(a)(2) does not apply, the results of the partnership-level proceeding necessarily must be applied to the taxpayer through a notice of computational adjustment. Supp. App’x 42. We conclude, to the contrary, that a computational adjustment is not the only method that may be employed when § 6230(a)(2) does not apply. When a computational adjustment is not feasible, § 6230(a)(l)’s bar on the use of deficiency procedures does not apply. This case illustrates the point. The IRS did exactly as the Tax Court prescribed with respect to the income Chai did report — in the August 2014 computational adjustment, the Commissioner calculated $10,269 of tax on the $49,869 of other income that Chai stated on his 2003 return. The Tax Court and Chai seem to suggest, however, that the IRS should have also included in its computational adjustment the income-tax deficiency attributable to the unreported $2 million Delta payment. But Chai did not report the $2 million payment as income on his 2003 return. Thus, in order to assess the deficiency the Commissioner still needed a determination in Chai’s individual deficiency proceeding as to the nature of the $2 million payment — i.e., as the Tax Court put it, “whether the $2 million at issue in this case [was] taxable non-employee compensation or a [non-taxable] return of capital.” Supp. App’x 43. The Tax Court and Chai would have the IRS collect the tax purportedly due on a payment, the treatment of which was the subject of ongoing deficiency proceedings. This is an odd position for Chai to take. He is essentially arguing that the Commissioner should have denied him a prepayment forum to adjudicate the treatment of the $2 million payment simply by virtue of the disallowance of the partnership losses, belying a fundamental axiom of the Federal income tax structure: A taxpayer is typically “entitled to an appeal and to a determination of his liability for the tax prior to its payment.” Flora v. United States, 362 U.S. 145, 159, 80 S.Ct. 630, 4 L.Ed.2d 623 (1960) (quoting H.R. Rep. No. 68-179, at 7 (1924)). We have no doubt that had the Commissioner done as Chai suggests — assess by computational adjustment a deficiency attributable to a still-disputed $2 million payment — Chai would have cried foul, taking the position exactly opposite to the one he adopts now. A notice of computational adjustment was not the answer. So what was? It cannot be that the additional deficiency is insulated from assessment simply because of the timing of the conclusion of the partnership-level proceeding. By that we mean, had the Merca-to proceeding concluded after the Tax Court determined in Chai’s deficiency proceeding that the $2 million Delta payment constituted income, the IRS could have assessed the additional income-tax deficiency in a notice of computational adjustment. But, under the Tax Court’s approach, the additional tax is unassessable simply because the Mercato proceeding concluded before the Tax Court determined the proper treatment of the unreported $2 million payment — i.e., before the IRS had the legal predicate to assess Chai’s additional income-tax deficiency. We read neither § 6230 nor any other statutory. provision to require the anomalous result of depriving the Tax Court of delicien-cy jurisdiction in all cases where § 6230(a)(2) does not apply. Harris supports our conclusion. In Harris, the Tax Court rejected the Commissioner’s argument that it lacked jurisdiction to consider the effect of a separate TEFRA partnership proceeding in an ongoing deficiency proceeding. The court acknowledged that, under I.R.C. § 6230(a)(2)(A)(ii), a TEFRA “settlement is applied to a partner by means of a computational adjustment and not under the ordinary deficiency ... procedures,” but it did not read that provision to deprive the court “of jurisdiction to take account of the settled items pursuant to section 6214(b).” Harris, 99 T.C. at 126. The court reasoned: [Ajfter a settlement has been reached, the substantive partnership level issues have been resolved, and all that remains is the mechanical procedure of applying such settlement to the partner. Once substantive partnership level determinations have been made, the congressional objective in enacting the TEFRA partnership provisions has been accomplished. Consequently, the provisions mandating separation of partner and partnership level proceedings can be relaxed. Id. (citing Munro, 92 T.C. at 73-74). The Commissioner reads Harris as standing for the proposition that the TEFRA-mandated adjustments subsequent to the filing of the notice of deficiency “become subsumed within the partner’s then-existing deficiency posture, and the court continues to exercise its standard deficiency jurisdiction (as augmented by § 6214(a), if the subsequent adjustments result in a claim for an increased deficiency).” Comm’r Br. 48. That is, “once the Mercato decision became final, the resulting $11.1 million adjustment to [Chai’s] income became subsumed within his then-existing deficiency posture.” Id. Chai responds that the Commissioner’s theory “attempts to avoid TEFRA and use ordinary deficiency procedures to apply the results of Mercato to [Chai].” Chai Reply Br. 10. He argues that Harris is inapposite, largely because of details the Commissioner elided. Harris, Chai asserts, relied on the fact that “[w]hen the Commissioner and a partner enter into a settlement with respect to partnership items, however, such items become nonpartnership items. Sec. 6231(b)(1)(C).” Chai Reply Br. 12-13 (alteration in original) (quoting Harris, 99 T.C. at 126 (emphasis added)). Here, Chai argues, there was no settlement and the disallowed Mercato losses therefore were not converted into nonpart-nership items. See Chai Reply Br. 13-14. Chai misreads Harris and § 6230(a)(2)(A)(ii). True, settled partnership items become nonpartnership items pursuant to § 6231(b)(1) and there was no settlement here. Also true, § 6230 specifically provides that deficiency procedures apply to certain “items which have become nonpartnership items.” I.R.C. § 6230(a)(2)(A)(ii). But the jurisdictional dispute in Harris arose precisely from the fact that, under § 6230, deficiencies attributable to settled partnership items — unlike deficiencies attributable to other “items which have become nonpartnership items” — are excepted from the deficiency procedures. I.R.C. § 6230(a)(2)(A)(ii) (stating that deficiency procedures apply to “items which have become nonpartnership items (other than by reason of section 6231(b)(1)(C))”) (emphasis added); see I.R.C. § 6231(b)(1)(C) (providing that partnership items become nonpartnership items upon settlement). Thus, it mattered not that the settled items became nonpart-nership items under § 6231(b)(1)(C). The point is, the settled items were not subject to the deficiency procedures under § 6230(a)(2)(A)(ii), but were nevertheless found to be the proper subject of a deficiency proceeding by the Harris court. Thus, as the Commissioner explains, “for jurisdictional purposes, the erstwhile partnership items in Hams are indistinguishable from the Mercato partnership items.” Comm’r Reply Br. 10-11. We agree. Section 6230(a)(2)(A)(ii) was meant “to enable the Commissioner to collect amounts due as a result of settlements without the necessity of issuing a statutory notice of deficiency,” not to deprive the Tax Court of jurisdiction to decide cases like this. See Hards, 99 T.C. at 126. That does not mean purely computational adjustments will not continue to be assessed via notice of computational adjustment, outside of normal deficiency procedures. Indeed, the IRS used that procedure here. The results of the Mercato proceeding— applied to Chai by computational adjustment — increased Chai’s taxable income to $49,869, and § 6230 did not require the Tax Court to ignore the effect of that increase on the deficiency computation in the ongoing deficiency proceeding. Rather, the Tax Court had jurisdiction to redetermine the deficiency by virtue of I.R.C. § 6214(a) upon the conclusion of the Mer-cato proceeding. For those reasons, we hold that the Tax Court erred in concluding that it lacked jurisdiction over the additional income-tax deficiency attributable to the $2 million Delta payment. This result is not inconsistent with I.R.C. § 6234 or Munro. At first blush, this would appear the ideal case for the IRS to issue a § 6234 notice of adjustment, which provides a declaratory judgment procedure for asserting deficiencies relating to oversheltered returns prior to the conclusion of partnership-level proceedings. However, the provision (read literally) does not apply to situations where the adjustments to nonpartnership items would result in a deficiency even if the partnership losses were given effect. See I.R.C. § 6234(a)(3) (applying where “the adjustments resulting from such determination do not give rise to a deficiency (as defined in section 6211) but would give rise to a deficiency if there were no net loss from partnership items”). The typical example is where the IRS asserts a deficiency in income that would result in an adjusted net income so much greater than the taxpayer’s partnership losses that the adjustment would result in a deficiency even if the partnership losses are allowed. But this case is a bit different. If Chai’s partnership losses were given effect, the adjustment to Chai’s nonpartnership item (the $2 million payment) would still result in a self-employment tax deficiency (since self-employment income is not offset by partnership losses), but not an income-tax deficiency (since his partnership losses would still far exceed his adjusted net income). Because a deficiency — albeit not an income-tax deficiency — would exist, we agree with the Commissioner that § 6234 was not available. See Comm’r Br. 42 (asserting that § 6234 does not apply “because the adjustment gave rise to an asserted deficiency in self-employment tax notwithstanding [Chai’s] reported share of the Mercato loss”). This makes sense in light of § 6234. Where there is no deficiency after crediting partnership losses, the IRS cannot issue a timely notice of deficiency (which would suspend the limitations period for deficiencies attributable to nonpart-nership item adjustments) prior to the conclusion of the partnership-level proceeding; that is where § 6234 comes into play. But the existence of the self-employment-tax deficiency here gave the IRS a basis for a valid notice of deficiency, obviating the need for a § 6234 notice. Further, in instances like this, where § 6234 does not apply, Munro typically continues to apply, except, the Commissioner argues, “where ... the non-partnership income reported on an oversheltered return is itself zero or negative,” and “the Munro computation [thereby] has the same effect as a complete disallowance of the partner’s reported share of the partnership loss, contrary to the intent of the TEFRA provisions.” Comm’r Br. 42-43; accord IRM 4.31.6.2.5.1 (Aug. 1, 2006). While we are skeptical about the Commissioner’s argument (for reasons set forth in the margin), there is no need to decide whether Munro applied here. Munro provides a method for computing (and suspending the limitation period for) partner-level deficiencies attributable to nonpart-nership items prior to the conclusion of the partnership-level proceedings. Because the Mercato proceeding ended before Chai’s personal deficiency proceeding, Munro is inconsequential. Once the Mercato proceeding concluded, the Tax Court had jurisdiction by virtue of its standard I.R.C. § 6212 deficiency jurisdiction (as augmented by I.R.C. § 6214(a)). II. The Self-Employment Tax Ruling A. Standard of Review This Court reviews the Tax Court’s factual findings as to whether Chai’s role in Beer’s tax shelters constituted a “trade or business” within the meaning of I.R.C. § 1402(a) under the clearly erroneous standard. UFCW Local One Pension Fund v. Enivel Props., LLC, 791 F.3d 369, 372 (2d Cir. 2015) {“UFCWLocal One”). “Where there are two permissible views of the evidence, the factfinder’s choice between them cannot be clearly erroneous.” Id. (quoting Banker v. Nighswander, Martin & Mitchell, 37 F.3d 866, 870 (2d Cir. 1994)). “However, the district court’s application of those facts to draw conclusions of law ... is subject to de novo review.” Id. (omission in original) (quoting Travellers Int'l, A.G. v. Trans World Airlines, Inc., 41 F.3d 1570, 1575 (2d Cir. 1994)). B. The Two-Prong Groetzinger Standard Under I.R.C. § 1401, self-employment taxes (which amount to the equivalent combined Social Security and Medicare taxes on wages imposed by the Federal Insurance Contributions Act) are imposed on “the net earnings from self-employment derived by an individual ... during any taxable year.” I.R.C. § 1402(b). “[N]et earnings from self-employment” is defined generally as “the gross income derived by an individual from any trade or business carried on by such individual.” I.R.C. § 1402(a) (emphasis added). While § 1402 does not define “trade or business,” the Supreme Court in Commissioner v. Groetzinger, 480 U.S. 23, 32-36, 107 S.Ct. 980, 94 L.Ed.2d 25 (1987), considered the meaning of the phrase as it appears in I.R.C. § 162(a). Groetzinger noted that the terms are “broad and comprehensive,” id. at 31, 107 S.Ct. 980, and that the determination of whether a taxpayer is carrying on a trade or business “requires an examination of the facts in each case,” id. at 36,107 S.Ct. 980 (quoting Higgins v. Comm’r, 312 U.S. 212, 217, 61 S.Ct. 475, 85 L.Ed. 783 (1941)). The Court confined its construction of the term to the tax statute at issue in that case and “d[id] not purport to construe the phrase where it appears in other places.” Id. at 27 n.8, 107 S.Ct. 980. However, the phrase “trade or business” in § 1401 (at issue here) is to be given the same meaning as the same phrase in § 162. I.R.C. § 1402(c). Thus, as the parties agree, “Groetzinger1 s construction of ‘trade or business’ is the most helpful authoritative pronouncement available, and worthy of reliance here.” UFCW Local One, 791 F.3d at 373. Accordingly, for Chai’s role in the tax shelters to be a “trade or business” under § 1401, he must have engaged in the activity: “(1) for the primary purpose of income or profit; and (2) with continuity and regularity.” Id. (citing Groetzinger, 480 U.S. at 35, 107 S.Ct. 980). “A sporadic activity, a hobby, or an amusement diversion does not qualify.” Groetzinger, 480 U.S. at 35, 107 S.Ct. 980. Primary Purpose The Tax Court dealt with this prong swiftly, and rightly so, finding that Chai “was paid for his services through large lump-sum payments that were reported by the payors as nonemployee compensation on Forms 1099 and ... reported the payments as self-employment income.” App’x 253. As the Commissioner notes, the sums Chai received from his tax-shelter dealings “dwarfed the amounts he reported as income from his partnership interest in an architectural firm.” Comm’r Br. 63. It is quite clear that Chai’s primary purpose was to earn compensation in exchange for his services as an accommodating party. Chai asserts that his sole motive was that of an investor — that he agreed to serve as an accommodatingjparty only in the hope of reaping investment gains. The Tax Court rightly rejected that portrayal of the facts. Beer testified that the large sums paid to Chai were largely derived from the fees that Delta received from its clients, not from any increase in the value of Chai’s holdings. The whole point of the shelter scheme was to neutralize any purported returns on investment by generating offsetting losses. Chai emphasizes, however, that Beer’s testimony also explained there was an opportunity to profit on the underlying investments, and that at least some of the $2 million payment was “directly attributable to the profitability of the underlying derivative transactions entered into by the tax shelter entities.” Chai Reply Br. 24-25. That may be true, and Chai may have been paid less if the scheme did not do as well, but there is no evidence that he stood to go without compensation at all. That Chai had an interest in the investment performance of the tax shelters does not mean he was solely an investor in them. Moreover, the unsurprising fact that his payment was, in part, derived from the shelters’ investment gains does not negate the fact that it was largely drawn from client fees. Chai was not simply an investor in the tax shelters — he performed a service by acting as an accommodating party and was compensated as such. The Tax Court did not clearly err in discrediting Chai’s contrary testimony and concluding that he agreed to serve as accommodation party in order to earn compensation. Much of Chai’s argument focuses on factors set forth in Treas. Reg. § 1.183-2(b) — the “hobby loss” provision — to show that he lacked profit motive. The “hobby loss” provision is focused on limiting or disallowing deductions for any activity not denominated a “trade or business” under § 162 or an activity not engaged in for the production of income under § 212. Treas. Reg. § 1.183-2(a). The factors on which Chai relies are meant to guide the analysis of whether the activities for which a taxpayer has claimed an I.R.C. § 183 deduction were “carried on primarily as a sport, hobby, or for recreation,” or instead primarily for profit (in which case expenses are deductible). Treas. Reg. § 1.183-2(a). Chai does not (and could not credibly) argue that his role as accommodating party was purely for pleasure. Nor does he assert that his conduct was a hobby; rather, he says it was to seek a return on investment. The § 183 factors were not designed to distinguish between investment return and profit motives. Indeed, Chai has cited no case law applying them to a case like this. And even to the extent § 183 is useful in this context, the Tax Court’s factual conclusion that Chai had a profit motive was not clearly erroneous. The Treas. Reg. § 1.183-2 factors are: (1) The manner in which the taxpayer carries on the activity; ... (2) The expertise of the taxpayer or his advisors; ... (3) The time and effort expended by the taxpayer in carrying on the activity; (4) Expectation that assets used in the activity may appreciate in value; ... (5) The success of the taxpayer in carrying on other similar or dissimilar activities; ... (6) The taxpayer’s history of income or losses with respect to the activity; (7) The amount of occasional profits, if any, which are earned; ... (8) The financial status of the taxpayer; and ... (9) Elements of personal pleasure or recreation involved in the activity. Treas. Reg. § 1.183-2(b). Chai admits, and the Commissioner does not dispute, that factors (4), (7), and (9) are clearly inapplicable in this case. The others largely weigh against Chai. Manner in which Chai carried on the activity. Chai asserts that he did not conduct his accommodating party activities in a businesslike manner, as “every decision made with respect to the tax shelter transactions was made by Bricolage.” Chai Br. 46. He further claims that, once JJC was formed, “[he] did not even have to sign any documents,” as “Bricolage did everything, including acting as the managing member of JJC.” Id. Again, the Tax Court reasonably found that Chai engaged in businesslike activities in his capacity as accommodating party, and he cannot discount his role by citing his delegation of authority to an agent. Chai nevertheless likens his case to Sloan v. Commissioner, 55 T.C.M. (CCH) 1238 (1988). There, Sloan, a full-time computer analyst who was also an attorney, planned to establish his own law practice after he retired from the U.S. Government, and began performing legal services for clients on weekends while still in the Government’s employ. The Tax Court, analyzing whether Sloan was engaged in a “trade or business” under Groetzinger, held, inter alia, that Sloan did not engage in the law practice with the primary purpose of earning a profit, but instead to gain experience that he could use when practicing in earnest post-retirement. Id. at 1241. Importantly, Sloan rarely billed clients, was not concerned with earning a profit, and relied on his computer-analyst job as his primary source of income. Id. Chai, by contrast, was focused on making a profit (albeit, he says, through investment income), and his income from the tax shelters dwarfed the amounts received from his architecture practice. His role was far more businesslike than Sloan’s, and was definitely no hobby. Moreover, in attempting to offset income, Chai described certain capital losses as “disposition[s] of business property.” Supp. App’x 1