Update on Canal Corp. and NPR Investments

Post by
January 21, 2011

In our prior post on these cases, we compared the different factual findings made by the courts in analyzing penalty exposure under section 6664 and discussed the very factual nature of a reasonable cause and good faith penalty defense.  Both cases were subsequently appealed.  Canal Corp.looks like it is going to settle with the Fourth Circuit granting a motion to hold the appeal in abeyance pending finalization of that settlement (the company is in bankruptcy).  Thus, those hoping for an appellate smack-down of the penalty supporting opinion from the Tax Court will be disappointed.  NPR Investments is a different story.  Briefs are due in that appeal (which lies in the Fifth Circuit) starting on February 19th.  So Government hopes of another Son-of-Boss penalty success live on.  If we see anything interesting, we will report on it.