United States Tax Court

United States Tax Court

167 T.C. No. 9

AIRBNB, INC. & SUBSIDIARIES,

Petitioner

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

—————

Docket No. 12423-24.

Filed September 2, 2026.

—————

P and R filed competing Motions for Discovery

Protective Order Pursuant to Rule 103, which have since

been amended. R attached to his Motion for Discovery

Protective Order, and to his Response to P’s Motion for

Discovery Protective Order, Declarations by R’s chosen

expert witness for the case.

P filed two Motions to Strike, requesting that we

strike the Declarations primarily on the grounds that they

are improper expert witness reports that do not meet the

requirements of Tax Ct. R. Prac. & Proc. 143(g).

Held: The requirements of Tax Ct. R. Prac. &

Proc. 143(g) do not apply to declarations submitted in

support of a pretrial discovery motion.

Held, further, P’s Motions to Strike will be denied.

—————

Mark T. Roche and Scott H. Frewing, for petitioner.

David B. Flassing, Charles A. S. Wiseman, and Charles E. Buxbaum, for

respondent.

Served 09/02/26

2

OPINION

TORO, Judge:

This deficiency case concerns principally

section 482. 1

Petitioner, Airbnb, Inc. & Subsidiaries (Airbnb),

challenges the Commissioner’s determination to increase Airbnb’s

income by $4,195,858,428 with respect to the resources, capabilities, and

rights that Airbnb made available on December 31, 2013, to an affiliate

registered under the laws of Ireland and tax resident in Jersey.

As is common for this type of case, the parties anticipate

conducting extensive discovery. And, as parties often do in these

circumstances, Airbnb moved for a discovery protective order. The

Commissioner likewise moved for a discovery protective order. The

competing Motions led to the dispute we resolve here.

In support of his Motion for a Discovery Protective Order

Pursuant to Rule 103, and in opposition to Airbnb’s Motion for a

Discovery Protective Order, the Commissioner submitted two

Declarations from Monty G. Myers (Declarations). 2 Mr. Myers has 48

years of software development experience and is the founder and chief

executive officer of a project-oriented, custom software solution delivery

and management company based in Austin, Texas. The Commissioner

has engaged Mr. Myers “to provide independent expert consulting and

analysis in [the Commissioner’s] dispute with [Airbnb].” Resp’t’s Mot.

for Disc. Prot. Order, Ex. 2, at 2 (hereinafter First Decl.).

Airbnb has moved to strike both Declarations. It maintains that

they (1) function as improper expert reports; (2) violate the Court’s Rules

governing expert disclosures, specifically Rule 143(g); (3) offer

impermissible legal opinions and advocacy; and (4) rely on orders from

cases bearing no resemblance to this case.

The Motions to Strike raise an issue of first impression

concerning the application of Rule 143(g). As we explain below, Airbnb’s

reliance on Rule 143(g) is misplaced. We also conclude that striking the

Declarations is not an appropriate remedy here. But we will disregard

the Declarations to the extent they offer legal opinions. We will defer

1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C. (I.R.C.), in effect at all relevant times, and Rule references are to

the Tax Court Rules of Practice and Procedure.

2 For convenience, we will refer to the individual declarations as the First

Declaration and Second Declaration, respectively.

3

further evaluation of the Declarations until we resolve the competing

Motions for Discovery Protective Orders in due course.

Background

The following facts are derived from the parties’ pleadings and

Motion papers. They are stated solely for the purpose of ruling on the

Motions before us and not as findings of fact in this case. See Rowen v.

Commissioner, 156 T.C. 101, 103 (2021) (reviewed).

Airbnb provides an online marketplace through which registered

users who wish to offer travel services can connect and transact with

users seeking to book accommodations. Airbnb, Inc., is a corporation

organized under Delaware law and has its principal place of business in

San Francisco, California. 3

The software that Airbnb uses to operate its business is a key

aspect of the transfer pricing dispute in this case. On April 10, 2026,

Airbnb filed a Motion for Discovery Protective Order Pursuant to Rule

103, which was subsequently amended. Airbnb says that its source code

and other technical materials are sensitive and should be accessed by

the Commissioner only through a clean room, 4 to be established in

Airbnb’s offices or the offices of its counsel.

The Commissioner filed his own Motion for Discovery Protective

Order Pursuant to Rule 103 on the same day. It too was subsequently

amended. 5 As relevant here, the Commissioner contends that the clean

room should be established in Austin, Texas—where Mr. Myers is

3 Absent stipulation to the contrary, see I.R.C. § 7482(b)(2), appeal of this case

would lie to the U.S. Court of Appeals for the Ninth Circuit, see I.R.C. § 7482(b)(1).

4 As the parties have used the term, a “clean room” is a secured room to which

access is limited and from which removal of documents or materials is permitted only

in certain circumstances. This usage does not incorporate any decontamination

protocols or standards that may be common in fields such as electronics

manufacturing. See generally Yearout Mech. & Eng’g, Inc. v. Commissioner, T.C.

Memo. 2008-217, 2008 WL 4346331, at *1 n.3 (describing clean rooms in the

semiconductor manufacturing industry).

5 On May 20, 2026, the Commissioner filed a Second Motion to Amend his

Motion for Discovery Protective Order. We have deferred acting on the Commissioner’s

Second Motion to Amend.

Since the filing of both sets of Motions and their amendments, the parties

reached agreement on the treatment of nontechnology proprietary and confidential

information, and on August 14, 2026, we issued an Order governing its protection.

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located—and that the category of information subject to clean room

procedures should be narrower than proposed by Airbnb.

In support of his Motion for Discovery Protective Order and his

response to Airbnb’s Motion for Discovery Protective Order, the

Commissioner attached the Declarations. The First Declaration states

that Mr. Myers has, “for the last 20+ years, . . . served as an expert

witness/consultant in more than a hundred software-related cases.”

First Decl. 4.

The Declarations set out Mr. Myers’s view on how the clean room

should operate and which materials it should include. They further

maintain that “the terms petitioner insisted on for the [protective order]

are generally unreasonable and are onerous and inefficient relative to

numerous other Federal Court [protective orders] I’ve worked under in

software litigation matters.” First Decl. 11; see also Resp’t’s Resp. to

Pet’r’s Mot. for Disc. Prot. Order, Ex. 1, at 22 (hereinafter Second Decl.)

(referring to Airbnb’s proposed terms as “onerous” and opining that they

“hinder discovery” and “create[] significant opportunities for frequent

disagreements” between the parties). They also state Mr. Myers’s

opinion that protective orders “have been generally weaponized to the

point of substantially undermining reasonable processes and efficiency

in software and technology litigation.” First Decl. 17; see also Second

Decl. 9–10 (“This level of complexity and unreasonable scope is precisely

the type of ‘weaponization’ of discovery that I described in the [First

Declaration] . . . .”).

Airbnb filed a Motion to Strike the Declaration of Monty G. Myers

on April 20, 2026, requesting that we strike the First Declaration from

the record. On May 20, 2026, Airbnb filed a second Motion to Strike,

asking that we strike the Second Declaration.

Airbnb contends that the Declarations (1) function as improper

expert reports, (2) violate the requirements of Rule 143(g), (3) offer legal

opinions and advocacy that are impermissible under Rule 702 of the

Federal Rules of Evidence, and (4) rely on protective orders from cases

that are irrelevant to this case. The Commissioner argues that Rule 143

and Rule 702 of the Federal Rules of Evidence are inapplicable to the

Declarations and that the Declarations do not offer improper legal

opinions.

5

Discussion

Rule 52 provides that the Court may strike “any redundant,

immaterial, impertinent, frivolous, or scandalous matter” from, as

relevant here, “briefs, documents, or any other papers or responses filed

with the Court.”

Motions to strike are generally disfavored by federal courts. Clay

v. Commissioner, 152 T.C. 223, 234 (2019) (first citing Estate of Jephson

v. Commissioner, 81 T.C. 999, 1001 (1983); and then citing Allen v.

Commissioner, 71 T.C. 577, 579 (1979)), aff’d, 990 F.3d 1296 (11th Cir.

2021). “A motion to strike should be granted only when the allegations

have no possible relation to the controversy. When the court is in doubt

whether under any contingency the matter may raise an issue, the

motion should be denied.” Id. (quoting Estate of Jephson, 81 T.C.

at 1001). And “a motion to strike will usually not be granted unless

there is a showing of prejudice to the moving party.” Id. (quoting Estate

of Jephson, 81 T.C. at 1001).

Airbnb’s primary argument is that the Declarations are expert

witness reports subject to the requirements of Rule 143(g). In Airbnb’s

view, the Declarations do not comply with those requirements and

therefore must be stricken.

Rule 143(g) does not apply here. Rule 143 provides evidentiary

rules for trials before this Court. It is found in Title XIV of the Tax Court

Rules of Practice and Procedure, titled “Trials.” 6 The Rule itself is titled

“Evidence,” and Rule 143(a) explains how “[t]rials before the Court will

be conducted.” Moreover, Rule 143(g), by its terms, applies to “any party

who calls an expert witness.”

There has been no trial in this case. The Commissioner has not

yet firmly identified the expert witnesses he intends to call at trial. And

the Declarations focus on pretrial procedural matters, not the

underlying substantive questions at issue in this case. Thus, Rule 143

6 Absent a specific instruction to the contrary, e.g., I.R.C. § 7806(b), titles and

headings are “‘tools available for the resolution of a doubt’ about the meaning of a

statute,” Almendarez-Torres v. United States, 523 U.S. 224, 234 (1998) (quoting Bhd.

of R.R. Trainmen v. Balt. & Ohio R.R. Co., 331 U.S. 519, 529 (1947)); accord Abdo v.

Commissioner, 162 T.C. 148, 163 (2024) (reviewed). The same is true with respect to

our Rules.

6

is inapplicable to the Declarations, 7 and the requirements of Rule 143(g)

do not provide grounds for striking the Declarations. 8

Airbnb also argues that the Declarations should be stricken

because they provide “legal conclusions and advocacy, not proper expert

testimony to assist the trier of fact.” Pet’r’s First Mot. 7.

It is of course true that “an expert witness cannot give an opinion

as to her legal conclusion, i.e., an opinion on an ultimate issue of law.”

Nationwide Transp. Fin. v. Cass Info. Sys., Inc., 523 F.3d 1051, 1058–59

(9th Cir. 2008) (quoting Hangarter v. Provident Life & Accident Ins. Co.,

373 F.3d 998, 1016 (9th Cir. 2004)); see also Fed. R. Evid. 702(a)

(providing that an expert may testify if his specialized knowledge “will

help the trier of fact to understand the evidence or to determine a fact

in issue”); Sunoco, Inc. & Subs. v. Commissioner, 118 T.C. 181, 183–84

(2002) (collecting authorities).

It is not evident that the Declarations should be read as offering

legal conclusions. See Nationwide Transp. Fin., 523 F.3d at 1059

(acknowledging that “a district court does not abuse its discretion in

allowing experts to use legal terminology” and collecting cases in which

a court of appeals “affirmed the district court’s decisions to allow experts

to refer to terminology from applicable law”); Torres v. Cnty. of Oakland,

758 F.2d 147, 151 (6th Cir. 1985) (“The best resolution of this type of

problem is to determine whether the terms used by the witness have a

separate, distinct and specialized meaning in the law different from that

present in the vernacular.”); see also Fed. R. Evid. 704 advisory

committee’s note to 1972 proposed rules (observing that opinion

testimony designed to explore the applicability of legal criteria is

permitted, relying on McCormick on Evidence). And, given that the

Declarations relate only to the proper scope of a discovery protective

7 Rule 143(c) underscores that “[e]x parte affidavits or declarations . . . do not

constitute evidence.”

8 Even if Rule 143(g) were applicable to the Declarations, we might accept the

Declarations despite their noncompliance with the Rule’s requirements. Rule 143(g)(1)

applies “[u]nless otherwise permitted by the Court upon timely request.” Additionally,

Rule 143(g)(3) provides that the Court may grant a request to permit an expert witness

to testify without a written report when the expert witness testifies only with respect

to industry practice. The bulk of Mr. Myers’s statements appear to concern his view

of standard protective order practices in the expert witness industry, so they might be

acceptable without a written report under Rule 143(g)(3) in any event.

7

order governing technology issues, they do not appear to offer

conclusions on any ultimate issues of law in this case.

But even if portions of the Declarations could be viewed as

offering legal conclusions, it would not follow that they must necessarily

be stricken. We could decline to rely on those portions without striking

them. 9 See Clay, 152 T.C. at 236 (denying a motion to strike portions of

the taxpayers’ reply brief and noting that “[w]hether we deem [the

taxpayers] to have abandoned the argument, strike the argument, or

decide it on its merits . . . their argument is unavailing”).

Nor has Airbnb demonstrated the type of prejudice that courts

have found sufficient to strike material from the record. See Estate of

Jephson, 81 T.C. at 1003 (describing the taxpayer’s prejudice argument);

see also Hyde Ins. Assocs., Inc. v. Commissioner, T.C. Memo. 1993-240,

65 T.C.M. (CCH) 2818, 2822–23 (denying the taxpayer’s motion to strike

and noting that the disputed matter was not prejudicial to the taxpayer);

Yamaha Motor Corp., U.S.A. v. Commissioner, T.C. Memo. 1992-110, 63

T.C.M. (CCH) 2176, 2182–83 (declining to strike statements from the

Commissioner’s answer and noting that the taxpayer would not be

prejudiced). Because we are free in this case to place no weight on any

statements that improperly provide legal conclusions, it is unlikely that

Airbnb would be prejudiced by their continued presence in the record—

and Airbnb has not shown otherwise. See United States v. Brown, 415

F.3d 1257, 1269 (11th Cir. 2005) (“There is less need for the gatekeeper

to keep the gate when the gatekeeper is keeping the gate only for

himself.”).

Finally, in the procedural posture now before us, a decision not to

strike declarations like those here does not leave a litigant without a

remedy if the litigant views the declarations as lacking a factual

foundation or otherwise lacking merit. In such a case, the litigant

remains free to submit its own declarations or request an evidentiary

hearing at which the author of the declarations might be crossexamined. See, e.g., Dynamo Holdings Ltd. P’ship v. Commissioner, 143

T.C. 183, 185, 189 (2014). And the judge responsible for presiding at

such a hearing would be free to specify the procedures to be followed

with respect to that testimony, including, for example, that written

9 Likewise, Airbnb’s argument that the Declarations refer to “inapposite” cases

does not justify striking the Declarations. Pet’r’s First Mot. 8. That Mr. Myers’s past

experience may not be directly analogous to this case does not render his statements

“redundant, immaterial, impertinent, frivolous, or scandalous.” Rule 52. Instead, this

argument goes to the weight we should ultimately place on Mr. Myers’s statements.

8

reports like those contemplated by Rule 143(g) be submitted ahead of

time. See, e.g., Dynamo Holdings Ltd. P’ship, 143 T.C. at 185, 189.

For all these reasons, we will deny Airbnb’s Motions to Strike. 10

We have considered all of the parties’ arguments and, to the

extent not discussed above, conclude they are irrelevant, moot, or

without merit.

To reflect the foregoing,

An appropriate order will be issued.

10 We need not decide at this stage whether any of the statements presented in

the Declarations are in some way improper. Mindful that “[e]ach courtroom comes

equipped with a ‘legal expert,’ called a judge,” Burkhart v. Wash. Metro. Area Transit

Auth., 112 F.3d 1207, 1213 (D.C. Cir. 1997), we will disregard Mr. Myers’s statements

to the extent they offer legal opinions or advocacy when we ultimately decide the

competing Motions for Discovery Protective Order that remain pending.