Fourth Circuit Reverses Tax Court in Virginia Historic

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March 31, 2011

On March 29, 2011, the Fourth Circuit rendered its opinion in Virginia Historic Tax Credit Fund 2001 LP v. Comm’r, No. 10-1333 (opinion linked below).  As described in our previous coverage, the case involved an IRS challenge to the taxpayer’s treatment of partnerships used as marketing vehicles for state tax credits derived from historic rehabilitation projects.  Agreeing with the government’s disguised sale theory, the court reversed the Tax Court and ruled that the transactions at issue were taxable sales of state tax credits, as opposed to non-taxable capital contributions followed by partnership distributions.

After quickly dispensing with the … Read More

Government Rehearing Petition Filed in Burks

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March 29, 2011

As promised, the government filed a petition for rehearing en banc in the Fifth Circuit in the Burks case.  The filing has one wrinkle that differs from the numerous other recent filings on this issue.  The petition claims an intracircuit conflict as a basis for rehearing en banc, arguing that the panel’s decision conflicts with Phinney v. Chambers, 392 F.2d 680 (5th Cir. 1968), a case that the panel had found distinguishable.  See our previous report on the Burks decision here.

Burks – US petition for rehearingRead More

New Government Filings Try to Unify Courts of Appeals Behind the Six-Year Statute for Overstatements of Basis

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March 24, 2011

As we have reported extensively (e.g. here and here), the courts of appeals appear to be hopelessly split on the “Intermountain” issue of whether a six-year statute of limitations applies to overstatements of basis.  Nevertheless, the government has not given up on the possibility of winning this issue in all courts of appeals and thus eliminating the need for it to go to the Supreme Court.  To that end, it filed in two cases at the rehearing stage yesterday. 

In the Beard case in the Seventh Circuit, the government filed a response opposing the taxpayer’s petition for … Read More

More Securities Loan Cases on Appeal

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March 21, 2011

A while ago we reported on a spate of IRS successes in cases involving purported securities loans (here).  The Samueli case is fully briefed in the Ninth Circuit and is expected to be argued in the next couple of months.  As we anticipated, two more of those cases, Anschutz and Calloway, have been appealed to the Tenth and Eleventh Circuits, respectively.  The taxpayer in Calloway filed his opening brief on March 15, 2011 (linked below).  Briefing has not yet begun in Anschutz.

In Calloway, the taxpayer was an IBM employee of many years who had … Read More

Third Circuit Debates Tax Court Jurisdiction Puzzle

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March 18, 2011

As we have previously reported, the Third Circuit is considering a tricky issue relating to the Tax Court’s jurisdiction to resolve disputes concerning overpayment interest.  At the oral argument, the court explored different facets of the issue, even while joking about its complexity.  At one point, one of the judges appeared to question whether the Tax Court’s Estate of Baumgardner case was correctly decided, even though the IRS had acqueisced in it.  Government counsel declined that offer, instead adhering to the view that Baumgardner is different because it involved deficiency interest rather than overpayment interest.  Taxpayer’s counsel invoked Code … Read More

Oral Argument Set for May 16 in Castle Harbour Redux

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March 18, 2011

The Second Circuit has announced a May 16 oral argument date in TIFD III-E, Inc. v. United States, which is the second go-round for the case better known as Castle Harbour after the district court ruled again for the taxpayer on remand from the Second Circuit’s previous reversal.  (See our prior reports and the briefs here, here, and here.)  The identity of the three-judge panel will not be revealed until a later date.… Read More

Seventh Circuit to Consider Petition for Rehearing in Beard

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March 11, 2011

On March 7, the taxpayer filed a petition for rehearing en banc (attached below) with the Seventh Circuit in Beard, emphasizing that both the Fifth and Fourth Circuits had explicitly disagreed with that decision and reached the opposite result on the Intermountain issue.  Although courts of appeals often deny such petitions without a response, the Seventh Circuit almost immediately directed the government to file a response, which is due March 23.  Today’s pro-government decision by the Federal Circuit in Grapevine perhaps takes a little steam out of the possibility of rehearing since a circuit conflict will likely persist even … Read More

Federal Circuit Adds to Intermountain Conflict by Deferring to New Regulations That Apply Six-Year Statute to Overstatements of Basis

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March 11, 2011

The Federal Circuit has ruled for the government in Grapevine, throwing the circuits into further disarray by adopting an approach that differs from all three of the courts of appeals that have previously addressed the Intermountain issue subsequent to the issuance of the new regulations.  Becuase the Federal Circuit had already rejected the government’s construction of the statute in Salman Ranch, the Grapevine case starkly posed the question whether the new regulations had the effect of requiring the court to disregard its prior decision and reach the opposite result.  As we previously reported, at oral argument the … Read More

Briefing Schedules Line Up on UK Tax Creditability Issue

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March 3, 2011

The Third Circuit has now issued a briefing schedule in the PPL case that makes the government’s opening brief due on April 5.  This schedule should have the case marching along in fairly close parallel with Entergy, the companion case presenting the same UK tax creditability issue to the Fifth Circuit.  (See our previous post here.)  In Entergy, the government recently requested an extension to file its opening brief.  The court granted an extension, but for less time than requested.  The brief is now due April 13, after a 30-day extension.   That date will likely hold, since … Read More