NPR Still Dragging Itself Out of the Minefield

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April 27, 2011

The Government has filed its brief in its Fifth Circuit appeal from the denial of penalties in the NPR Investments case (for prior discussion go here).  There are no surprises.  The Government takes the position that the district court’s reliance on Heasley v. Commissioner, 902 F.2d 380 (5th Cir. 1990) (likely abrogated by Treas. Reg. § 1.6662-5(g) and certainly weakened on these facts by Weiner v. United States, 389 F.3d 152 (5th Cir. 2004)) is misplaced.  Thus, the government argues that the mere fact that the taxpayer’s entire transaction (and not just a valuation or basis item) … Read More

Rehearing Denied in Burks

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April 21, 2011

On April 15, the Fifth Circuit denied the government’s rehearing petition in Burks.  Not surprisingly, the courts of appeals are showing little interest in sitting en banc to address the Intermountain issue when they cannot eliminate the circuit conflict.  To recap, a rehearing petition is pending in the Federal Circuit, but the other three circuits to rule (the Fourth, Fifth, and Seventh) have denied rehearing, and the time is running to file petitions for certiorari in those cases.  The first deadline on the horizon is in the Home Concrete case from the Fourth Circuit, where the certiorari petition is … Read More

Taxpayer Petitions for Rehearing in Grapevine

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April 15, 2011

The taxpayer has filed a petition for rehearing en banc in the Federal Circuit in Grapevine.  Because Grapevine is the first appellate decision to rely on the new regulations (see here), the petition focuses part of its argument on criticizing the Federal Circuit’s decision to defer to those regulations, especially after the same court in Salman Ranch had rejected the statutory interpretation embodied in the regulations.  The petition also argues that applying the regulations to Grapevine is unlawful, even if the regulations could be controlling in future cases, because Grapevine had already obtained a favorable judgment … Read More

Government Opening Brief Filed in Entergy

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April 14, 2011

The government has filed its opening brief in the Fifth Circuit in Entergy, seeking reversal of the Tax Court’s holding that the U.K. windfall tax is a “creditable” tax for purposes of the U.S. foreign tax credit.  See our previous report here.  The government argues that the Tax Court misapplied a three-part test set forth in the regulations for determining whether a foreign tax is creditable.  That test assesses whether the foreign tax has the “predominant character” of an income tax by examining whether it satisfies each of three requirements – relating to “realization,” “gross receipts,” and “net … Read More

The Ninth Circuit Rejects the Government’s Effort to Disregard “Economic Realities” in Washington Mutual

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April 8, 2011

[Note:  Miller & Chevalier is counsel to Washington Mutual in this case.]

In the past decade, the government has often defeated taxpayer claims that tax benefits flowed from certain transactions on the grounds that the economic substance of the transactions did not justify the tax benefits and that the taxpayer’s contrary arguments reflect a hypertechnical reading of the rules.  In Washington Mutual Inc. v. United States (9th Cir. No. 09-36109), the proverbial shoe was on the other foot.  A key element of the taxpayer’s business transaction was the receipt of regulatory rights in exchange for incurring the cost of relieving … Read More

Seventh Circuit Denies Rehearing in Beard

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April 8, 2011

The Seventh Circuit today denied the taxpayer’s rehearing petition in Beard.  Coupled with the Fourth Circuit’s denial of rehearing in Home Concrete a few days ago, this action removes the faint theoretical possibility of resolving the circuit conflict in the Intermountain cases short of the Supreme Court.  A petition for certiorari in Beard would be due on July 7.… Read More

Fourth Circuit Denies Rehearing in Home Concrete

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April 6, 2011

On April 5, the Fourth Circuit denied rehearing in Home Concrete, one of the Intermountain-type cases that went for the taxpayer.  This now becomes the first of the cases for which there is no recourse left other than seeking Supreme Court review.  The government is very likely to pursue that course of action.  A petition for certiorari would be due on July 5.… Read More

D.C. Circuit Leans Toward Government at Intermountain Oral Argument

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April 5, 2011

On April 5, the D.C. Circuit (Judges Sentelle, Randolph, and Tatel) heard oral argument in Intermountain and its companion case, UTAM.  The court’s questions generally indicated that the most likely outcome is a reversal of the Tax Court and another point for the government in the circuit court competition that is currently tied at 2-2.  (See our recent report on the Federal Circuit’s decision in Grapevine.)

Judge Randolph in particular was an advocate for the government’s position.  He dismissed the argument that Congress could be regarded as having adopted the Colony result under the doctrine of reenactment, … Read More