# United States Court of Appeals **For the Eighth Circuit**

___________________________ No. 15-2329

___________________________ Randall J. Thompson, &; Karen G. Thompson

lllllllllllllllllllll Appellant s

v.
Commissioner of Internal Revenue

lllllllllllllllllllll Appellee

____________ Appeal from the United States Tax Court

____________ Submitted: January 12, 2016 Filed: May 3, 2016

____________ Before WOLLMAN, MELLOY, and COLLOTON, Circuit Judges.

____________ WOLLMAN, Circuit Judge.
Randall and Karen Thompson appeal from an order of the United States Tax Court 1 that dismissed for lack of jurisdic tion their petition challenging the Internal Revenue Service’s (IRS) assessment of a penalty with respect to their 2001 joint tax return. We affirm.

1 The Honorable Robert A. Wherry, United States Tax Court Judge.This is the third appeal brought to ch allenge adjustments made by the IRS to 2001 tax returns filed by the Thompsons and a related partnership. SeeRJT Invs. X v. Comm’r , 491 F.3d 732 (8th Cir. 2007) (partnership-level proceeding); Thompson v. Comm’r , 729 F.3d 869 (8th Cir. 2013) (partner-l evel proceeding). We relate only those general facts necessary to resolution of the jurisdictional issue presented here.
In 2001, Randall Thompson (Thompson) formed a partnership, RJT Investments X, LLC (RJT), which he then us ed in an illegal tax-shelter transaction to offset capital gains of approximately $21. 5 million that otherwise would have been taxable on his 2001 joint tax return. Th e IRS conducted an audit of RJT’s 2001 partnership tax return and determined that RJ T was a sham, that it lacked economic substance, and that it was fo rmed so that Thompson coul d use the overstated basis he claimed in his RJT partnership interest to offset the $21 million in capital gains. RJT Invs. X , 491 F.3d at 735; Thompson , 729 F.3d at 871. The IRS disallowed all deductions and losses reported by RJT on its 2001 partnership return. It also determined that a 40-percent accuracy-re lated penalty for gross misstatement of partnership basis would be applied to any underpayment of tax by RJT partners resulting from the adjustments made to the RJT partnership return. RJT and Thompson challenged these adjustments in a partnership-level proceeding before the Tax Court, but the adjustments, including imposition of the penalty, were affirmed by the Tax Court and by this court on appeal. RJT Invs. X , 491 F.3d at 738.
After the RJT partnership-level proceed ing became final, the IRS initiated a partner-level proceeding to determine th e resulting effects of the partnership adjustments on the Thompsons’ 2001 joint tax return. Because the IRS had previously determined that RJT was a sh am and must be disregarded for tax purposes, it further determined that Thompson’s basis in his RJT partnership interest was zero and that he could not use his basis in that interest to offset the $21 million capital gain reported on his 2001 joint tax return. In addition to the tax assessed on this capital gain, the

-2-IRS imposed the 40-percent accuracy-relate d penalty it had previously determined was applicable in the RJT partnership-level proceeding.
The Thompsons filed a petition in the Ta x Court to challenge both the tax deficiency and the penalty. The IRS moved to dismiss the petition for lack of jurisdiction, arguing that the Thompsons we re not entitled to a prepayment hearing before the Tax Court but were instead requi red to pay both the tax deficiency and the penalty in full before they could challengethe adjustments in a tax-refund proceeding.
The Tax Court granted the IRS’s motion to dismiss the petition for lack of jurisdiction. The Thompsons appealed to this c ourt, and we reversed as to the Tax Court’s jurisdiction over the tax deficiency . We observed th at, although RJT was a sham partnership, it did “not necessarily follow . . . that Thompson’s entire purported basis” in RJT was overstated. Thompson , 729 F.3d at 873. Because the determination of Thompson’s basis in his RJT partnership in terest “must be determined at the partner level,” we concluded that th e Tax Court had jurisdiction ina partner-level proceeding to determine Thompson’s basis and to cons ider his challenge to any tax deficiency resulting from that determination. Id.
With respect to the Tax Court’s jurisd iction over the penalty issue, however, we affirmed the Tax Court’s dismissal for l ack of jurisdiction based on an express abandonment of the issue by the Thompsons. In their brief, the Thompsons stated:
[T]he taxpayers are too late with this argument. The taxpayers agree that they cannot here collaterally attack the jurisdiction of the Tax Court over penalties in this case [ i.e. , the partner-level proceed ing to adjust the tax and penalty applicable to the Thompsons’ 2001 joint tax return]. The earlier Tax Court Decision in [the] RJT [partnership-level proceeding] is res judicata on the applicability of penalties here. . . . The decision of the Tax Court dismissing this [partn er-level proceeding] for lack of jurisdiction should be reversed as to jurisdiction over the deficiency determination.

-3-J.A. 212. In addition to this direct con cession, the Thompsons’ request for relief on appeal was limited to a “revers[al] as to jurisdiction over the [tax-]deficiency determination.” Id.
Relying on this express abandonment of any challenge to the penalty, we concluded that the question of the Tax Court’s jurisdicti on over the penalty issue was moot:
As to the Tax Court’s jurisdicti on over the penalties, the Thompsons concede “that they cannot here collate rally attack the jurisdiction of the Tax Court” because “[ t]he earlier Tax Court Decision in [the] RJT [partnership-level proceeding] is res judicata on the applicability of penalties here.” Accordingly, this issue is moot.
Thompson , 729 F.3d at 872 n.3 (citation omitted). We then remanded the case to the Tax Court for proceedings consistent with our opinion.
On remand, the parties stipulated to the amount of the tax deficiency, but the Thompsons again attempted to argue that the Tax Court had jurisdiction over the penalty issue. The IRS moved for entry of a decision limited to the stipulated tax deficiency, asserting that the Thompsons had abandoned any ch allenge to the Tax Court’s jurisdiction over the penalty issue and that revisiting that issue would exceed the scope of this court’s mandate on remand.
The Tax Court agreed with the IRS, c oncluding that its decision in the RJT partnership-level proceeding had resolvedthe penalty issue—a decision that had become final and had acquired preclusive effect. The Tax Court specifically noted that the Thompsons had conceded in their appeal to this court that the penalty issue had been resolved by the final judgment inthe RJT partnership-level proceeding and was not subject to collateral attack in th e partner-level proceeding. The Tax Court concluded that the penalty could be “dir ectly assessed” agains t the Thompsons under

-4-I.R.C. §§ 6225(a)(2) and 6230(a)(1) and that th ey could raise any defenses they might have against assessment of the penalty only in a “postpayment refund suit” under I.R.C. § 6230(c)(1)(C). Thompson v. Comm’r , 108 T.C.M. 104, at *3 (2014). The Tax Court accordingly granted the IRS’s mo tion to dismiss the penalty dispute for lack of jurisdiction, a dete rmination that we review de novo . See Thompson , 729 F.3d at 872.
The IRS contends that the Thompsons are prohibited from challenging the Tax Court’s jurisdiction over the penalty issue under the law-of-the-case doctrine, which “prevents relitigation of a se ttled issue in a case and requires that courts follow decisions made in earlier proceedings to in sure uniformity of decisions, protect the expectations of the parties[ ,] and promote judicial economy.” Klein v. Arkoma Prod. Co. , 73 F.3d 779, 784 (8th Cir.1996). Thus, when a case has be en decided by an appellate court and remanded for further proceedings, every question decided by the appellate court, whether expr essly or by necessary implication, is finally settled and determined, and the court on remand is bound by the decree and must carry it into execution according to the mandate. Seeid. at 784-85; see also Lamb Eng’g & Constr. Co. v. Ne. Pub. Power Dist. , 145 F.3d 996, 998 (8th Cir.1998) (“Under the law of the case doctrine, the district court was bound on remand to obey the Eighth Circuit’s mandate and not to re-examine issues alrea dy settled by our prior panel opinion.”). “[T]he doctrine posits that wh en a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.” Gander Mountain Co. v. Cabela’s, Inc. , 540 F.3d 827, 830 (8th Cir. 2008) (citation omitted). Al though a court should notreopen issues already decided, if a prior decision “is clearly erroneous and w ould work a manifest injustice,” reopening may be appropriate. Wong v. Wells Fargo Bank, N.A. , 789 F.3d 889, 898 (8th Cir.) (citation omitted), cert. denied , 136 S. Ct. 507 (2015).
As noted above, the Thompsons expressly withdrew their challenge to the Tax Court’s jurisdiction over the IRS’s penalty determination in an earlier stage of this

-5-partner-level litigation. The penalty issue thus became moot, Thompson , 729 F.3d at 872 n.3, and the Tax Court’s initial holding that it lacked jurisdiction over the penalty became the law of the case. The Tax Court properly declined to revisit the issue on remand. See In re Raynor , 617 F.3d 1065, 1068 (8th Cir. 2010) (“We have held that when an appellate court remands a case . . . all issues decided by the appellate court become the law of the case.” (alterations a nd citations omitted)). And given the fact that the Thompsons expressly disclaimed this argument in their earlier appeal, no manifest injustice would occur by hol ding them to that concession. See Wong , 789 F.3d at 898.
Nevertheless, the Thomps ons now contend that they did not concede the “individual” penalty issue in their earlier appeal. They ar gue that they conceded only that the Tax Court’s penalty determinati on against RJT in the partnership-level proceeding was res judicata such that they could not make a collateral attack on that partnership determination in this partner-level proceeding. We disagree with this characterization of the Thompsons’ earlier con cession, for the Thompsons in their first appeal in this partner-level proceeding expressly and unconditionally conceded the penalty issue as it affected th eir 2001 joint tax return. See J.A. 212. In sum, we reject the Thompsons’ attempt to revisit thei r argument regarding the Tax Court’s jurisdiction over the penalty assessed on th eir 2001 joint tax return. The Tax Court did not err by dismissing the penalty issue for lack of jurisdiction.
The judgment is affirmed.

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