Briefing Completed and Oral Argument Set in Historic Boardwalk Case

[Note:  Miller and Chevalier represents amicus National Trust for Historic Preservation in this case]

The government has filed its reply brief in the Historic Boardwalk case in the Third Circuit.   (See our prior report and the other briefs here.)  The brief mostly goes over the same ground as the opening brief in seeking to deny section 47 historic rehabilitation credits to the private investor partner in the partnership that rehabilitated East Hall on the Atlantic City boardwalk.  It attempts to side-step the Ninth Circuit’s economic substance analysis in Sacks by arguing that the Third Circuit did not explicitly … Read More

Third Circuit Considering Historic Rehabilitation Tax Credits in Historic Boardwalk Case

[Note:  Miller and Chevalier represents amicus National Trust for Historic Preservation in this case]

We present here a guest post by our colleague David Blair who has considerable experience in this area and authored the amicus brief in this case on behalf of the National Trust for Historic Preservation.

The government has appealed to the Third Circuit its loss before the Tax Court in Historic Boardwalk Hall, LLC v. Comm’r, which involves a public/private partnership that earned historic rehabilitation tax credits under Code section 47.  The partnership rehabilitated East Hall, which is located on the boardwalk in Atlantic City.  … Read More

Update on GI Holdings

In our earlier discussion of the disguised sale cases, we noted that the federal district court in New Jersey had issued an unpublished opinion in the GI Holdings case that applied the disguised sale rule of 26 U.S.C. § 707(a)(2)(B) to undo a transaction.  We noted that there was not yet an appealable order in that case, but at some point an appeal to the Third Circuit was possible.  It now appears that the case has been settled and will be formally dismissed in the coming weeks.  Thus, there will be no appeal to the Third Circuit, and the Fourth Circuit’s … Read More

Fourth Circuit Reverses Tax Court in Virginia Historic

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

Reply Brief Filed in Virginia Historic

The government filed its reply brief in Virginia Historic Tax Credit Fund 2001, LLC v. Commissioner, No. 10-1333 (4th Cir.), on September 1, 2010.  The brief is linked below.  See our prior coverage of this partnerships/disguised sale case here and here and here.

In its reply, the government argues that the tax characterization of the investor transactions, i.e., whether the investments were equity contributions or merely the purchase of state tax credits, is subject to the de novo standard of review.  Accordingly, the government contends that the Tax Court’s determination that the taxpayers were bona fide equity investors … Read More

State of Virginia Weighs in Against the IRS in Virginia Historic

Virginia has filed an amicus brief in the Fourth Circuit in support of the taxpayers in the Virginia Historic case.  (See here and here for previous coverage of the appeal).  The brief focuses primarily on policy, arguing that Virginia created these tax credits to facilitate historic preservation and expected that partnership vehicles might be necessary for businesses and individuals to make use of the credits.  According to the Commonwealth, “the IRS’s aggressive position threatens the effectiveness of the program and its benefits for all Virginians.”  Although the amicus brief is light on analysis of the federal tax issues, it may … Read More

Appellees’ Response Filed in Virginia Historic

The Appellees filed their response brief yesterday in Virginia Historic Tax Credit Fund 2001 LP v. Comm’r, No. 10-1333 (4th Cir.) (linked below).  Our previous discussion of the case is here.

The government has advanced two basic arguments.  First, it argues that the partners of the state tax credit partnerships were not bona fide partners that made capital contributions; rather, the government contends, the alleged partners were, in substance, purchasers of state tax credits.  As such, the proceeds of these sales transactions are gross income to the partnerships, not non-taxable contributions to capital.  In making this argument, the … Read More

Fourth Circuit Briefing Underway in Partnership Disguised Sale Case

The Tax Court and the U.S. District Court in New Jersey recently issued the first two opinions construing I.R.C. section 707(a)(2)(B), which is somewhat remarkable given that the partnership disguised sale rules have been on the books since 1984. See Va. Historic Tax Credit Fund 2001 LP v. Comm’r, T.C. Memo 2009-295; United States v. G-I Holdings Inc. (In re: G-I Holdings, Inc.), 2009 U.S. Dist. LEXIS 115850 (D.N.J. Dec. 14, 2009).  The Government has appealed the Tax Court’s decision in Virginia Historic to the Fourth Circuit.

In Virginia Historic, the Tax Court rejected the IRS’s challenge to the … Read More