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earlier discussion of the disguised sale cases, we noted that the federal district court in New Jersey had issued an unpublished opinion in the GI Holdings case that applied the disguised sale rule of 26 U.S.C. § 707(a)(2)(B) to undo a transaction.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 … Read More

Court of Federal Claims Construes “Same Taxpayer” Requirement for Interest Netting

In Magma Power v. United States, Case No. 09-419T, the Court of Federal Claims tackled the arcane topic of interest netting.  The issue in Magma Power was a narrow question of statutory interpretation, but the broader topic of interest netting warrants a word of explanation. 

The government charges interest on tax underpayments at a higher rate (under section 6601) than it pays on tax overpayments.  Because it often takes several years or more to determine whether a taxpayer has an overpayment or underpayment for a particular tax year and the amount of that overpayment or underpayment, there are sometimes … Read More

Supreme Court Briefing Underway and Argument Date Set in Home Concrete

The Supreme Court has set January 17 as the date for the oral argument in Home Concrete, the case in which it will decide the “Intermountain” issues concerning the applicability of the six-year statute of limitations to overstatements of basis, on which we have reported extensively many times before.  (See here and here for a sample.)  In the meantime, the briefing has commenced with the filing of the government’s opening brief (linked below).

The brief covers what is mostly familiar ground at this point, but it does further develop some of the arguments that have emerged … Read More

Tenth Circuit Hears Oral Argument in Anschutz

On November 16, the Tenth Circuit heard oral argument in the Anschutz case, involving the taxpayers’ appeal from the Tax Court’s decision to collapse two transactions involving the use of prepaid variable forward contracts (“PVFCs”) and concurrent share lending agreements (“SLAs”), and treat them as a taxable sale of stock.  A fuller description of the case and the parties’ briefs can be found in our prior reports here and here.

The panel hearing oral argument was Chief Judge Briscoe (a Clinton appointee and former Kansas state court judge and Assistant U.S. Attorney), Senior Judge McKay (a Carter appointee who … Read More

NPR Calendared for Argument

The NPR case (involving penalty application and TEFRA issues in the context of a Son of BOSS transaction: see latest substantive discussion here) has been calendared for argument in New Orleans on December 7th in the East Courtroom.… Read More

Tax Court Addresses Character and Sourcing Issues for Golfer’s Endorsement Income

In what appears may be the first in a series of cases on the endorsement income of non-resident aliens, the Tax Court was tasked with characterizing and sourcing the endorsement income for golfer Retief Goosen.  The court’s decision may impact how other athletes and entertainers structure their endorsement deals and indicates how taxpayers should expect the IRS to source royalty income in similar cases. 

Goosen, a native South African who is a U.K. resident, is subject to U.S. tax because playing professional golf in the U.S. amounts to engaging in a U.S. trade or business.  He had endorsement agreements with … Read More

Supreme Court Briefs Filed in Kawashima

The petitioners’ and respondent’s briefs have been filed in Kawashima v. Holder, Sup. Ct. Docket No. 10-577, appealing 615 F.3d 1043 (9th Cir. 2010).  As described in our original post, that case involves the question of whether pleas to section 7206 offenses (subscribing to false statements and assisting same) are “aggravated felonies” that result in deportation under the immigration laws.  The case turns largely on the statutory interpretation of the relevant portion of 8 U.S.C. §1101(a)(43)(M).

The petitioners’ position is essentially the same as it was below (although more developed).  The primary argument is based on the language … Read More

Third Circuit Reverses Tax Court on Jurisdictional Issue in Sunoco

In our report on the oral argument in Sunoco, which took place back in January, we remarked that the Third Circuit panel seemed skeptical of the Tax Court’s decision, even if the panel had not yet mastered the complexities of the case.  It took more than eight months, but the Third Circuit has now issued a comprehensive opinion reversing the Tax Court and holding that it lacked jurisdiction to consider Sunoco’s claims for additional overpayment interest.  The court’s opinion tracks the government’s position fairly closely, and it accepts the government’s view that Estate of Baumgardner v. Commissioner, 85 … Read More

Supreme Court Agrees to Hear Home Concrete Case to Address Six-Year Statute Issues

The Court this morning granted certiorari in the Home Concrete case from the Fourth Circuit, thus paving the way for a definitive, nationwide resolution of the issues presented in the Intermountain cases.  We had previously indicated that it was more likely that the Court would hear the Beard case, since the petition in that case was filed first.  It is ironic that the Court chose to hear the Home Concrete case, since that is the one case that neither party urged the Court to take.  (The government asked the Court to grant Beard and hold the Home Concrete case, and … Read More

Ninth Circuit Rules for the Government in Samueli

The Ninth Circuit issued its opinion in Samueli v. Commissioner, Nos. 09-72457 and 09-72458, on September 15, 2011, largely affirming the Tax Court (opinion linked below, and see our prior coverage here).  In upholding the decision in favor of the IRS, the Ninth Circuit added a couple of wrinkles to the Tax Court’s rationale in responding to the taxpayers’ arguments on appeal.

The court first dispensed with the taxpayers’ argument that, contrary to the Tax Court’s finding, the transactions at issue did not reduce the purported lenders’ opportunity for gain (a statutory element of I.R.C. § 1058 non-recognition).  … Read More

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