Briefing Complete in Mazzei

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May 20, 2019

The taxpayers have filed their reply brief in Mazzei, completing the briefing.  The reply brief is colorful–perhaps to a fault–in critiquing the government’s arguments.  For example: the issue is whether a Roth IRA can hold stock in a DISC “without suffering multitudinous nasties at the hands of the Commissioner”; the government’s arguments are “disingenuous” and “odd” and the Tax Court performed “judicial alchemy”; and the cases cited by the government are “as devoid of landing space herein as Noah’s crow” [actually a raven, according to the King James Bible].

Looking beyond the rhetoric, which is unlikely to make a favorable impression on the Ninth Circuit judges, the reply brief makes the same basic points as the opening brief.  See our prior reports here.  It argues that the transaction in question fully complied with the Code and is materially indistinguishable from the Summa Holdings/Benenson transaction that has survived IRS challenges in three other circuits.  The government’s position assertedly boils down to arguing that “the tax result was too good to be true,” and that argument does not respect Congress’s decision to allow the use of the FSC structure.  And the taxpayers state that the cases the government relies upon are “inappropriate to the unique characteristics inherent” in a FSC.

Oral argument is yet to be scheduled and likely will not occur for several months.

Mazzei – Taxpayer Reply Brief