Publication
International arbitration report
In this edition, we focused on the Shanghai International Economic and Trade Arbitration Commission’s (SHIAC) new arbitration rules, which take effect January 1, 2024.
Docketed federal tax cases
United States | Publication | August 2024
| Case | Court | Primary Issue(s) | Status/Result | Lawyer(s) |
|---|---|---|---|---|
| Rowan Companies, LLC v. United States | Southern District of Texas | Whether IRS must pay refund approved by Joint Committee on Taxation | Pending |
|
| Ensco International Inc. v. United States | Southern District of Texas | Whether IRS must pay refund agreed to during IRS examination as part of Compliance Assurance Process | Pending | |
| Suo Bin Chen and Yan Jiang v. Commissioner | Tax Court | Collection due process rights, underlying tax liability, and penalties | Pending | Robert C. Morris
|
| Polycom, LLC v. United States | Court of Federal Claims | Entitlement to alternative minimum tax refundable credit | Government. conceded | |
| Diamond Offshore Drilling, Inc. v. United States | Southern District of Texas | Entitlement to foreign tax credit and statute of limitation issues | Settled | |
| Roseta v. Commissioner | Tax Court | Whether the taxpayer received a taxable distribution | Government conceded | Robert C. Morris |
|
Noble Drilling Corporation v. United States |
Southern District of Texas | Entitlement to foreign tax credit for foreign taxes paid to Mexico and other foreign jurisdictions | Settled | |
| HP Inc. v. United States | Court of Federal Claims | Overpayment interest | Government conceded | |
|
Delek US Holdings, Inc. v. United States of America 32 F. 4th 495 (6th Cir. 2022) |
Sixth Circuit Court of Appeals | Income tax treatment of Section 6426 alcohol and biodiesel mixture credits | Judgment affirmed | Robert C. Morris |
| JSB Montana, Inc. v. Commissioner and 12 related cases | Tax Court | Whether IRS Appeals could consider consolidated or “test case” settlement of related Collection Due Process cases | Pending | |
|
Delek US Holdings, Inc. v. United States of America 127 AFTR 2d 2021-641 (M.D. Tenn. 2021) |
Middle District of Tennessee | Income tax treatment of Section 6426 alcohol and biodiesel mixture credits | Judgment for government | Robert C. Morris |
| Lorance & Thompson, A Professional Corporation v. Commissioner | Tax Court | Excise taxes and failure-to-file and failure-to-pay penalties with respect to a terminated defined benefit pension plan | Government conceded two of three years; settled third year | |
|
Baker Hughes Incorporated v. United States of America 943 F.3d 255 (5th Cir. 2019) |
Fifth Circuit Court of Appeals | Whether payment to a foreign subsidiary qualifies for either a bad debt deduction or ordinary and necessary business expense | Judgment affirmed | |
| United States v. Rao Desu | District of New Jersey | Conspiracy of tax evasion for cash skim from two independently owned pharmacies. | Judgment for government | Mayling C. Blanco |
| The Diversified Group Incorporated, et al. v. Commissioner | Tax Court | In Collection Due Process cases, whether taxpayers may dispute liability for penalties under pre-2004 section 6707; penalty approval under section 6751(b) | Pending | |
| Estate of Abraham Damast, Deceased, Gary Damast, Adrienne D. Wilson, Executors and Donald A. Damast, Administrator CTA v. Commissioner | Tax Court | Estate and gift taxes in connection with sale of receivables from split dollar life insurance transactions; accuracy-related penalties | Settled | |
| Jacques E. Bouchez and Cristina C. Bouchez v. United States | Southern District of Texas | Whether revisions to ending inventory and cost of goods sold were an unauthorized accounting method change | Government conceded legal issue; settled calculation issues | |
| Individual who was the co-owner of a pharmacy and was the target of a federal criminal tax grand jury investigation | U.S. Attorney’s Office for the District of New Jersey | Tax evasion resulting from multi-year cash skim from pharmacy business | Declination of charges | Mayling C. Blanco |
| Nickowski v. Commissioner | Tax Court | Whether amounts received by the taxpayer were taxable as divided income | Settled | |
| 1 Your Front Desk Service, Inc. v. Commissioner | Tax Court | Whether the IRS could increase the amount of sales reported by the company, plus miscellaneous other issues | Settled | |
|
The Diversified Group Incorporated and James Haber v. United States 841 F.3d 975 (Fed. Cir. 2016) |
Federal Circuit Court of Appeals | Whether pre-2004 section 6707 penalties are divisible taxes and thus subject to Court of Federal Claims’ jurisdiction | Judgment affirmed | |
|
James Haber v. United States 823 F.3d 746 (2d Cir. 2016) |
Second Circuit Court of Appeals | Validity of IRS summons issued while a Justice Department referral was in effect; whether summons was in aid of collection | Judgment affirmed | |
| BRC Operating Company v. Commissioner of Internal Revenue | Tax Court | Validity of Treasury Regulations extending the economic performance requirement to cost of goods sold; accuracy-related penalties and penalty approval under section 6751(b); whether taxpayer may claim deduction for accrued expenditures | Trial pending on deduction issues; IRS conceded penalty issue as part of settlement | |
| Bluescape Resources Company v. Commissioner of Internal Revenue | Tax Court | (1) Validity of Treasury Regulations extending the economic performance requirement to cost of goods sold, (2) worthlessness deductions for leases; (3) availability of mark-to-market method of accounting; (4) accuracy-related penalties, (5) penalty approval under section 6751(b); and (6) whether taxpayer may claim deduction for accrued expenditures | Trial pending on deduction issues; settled worthlessness, mark-to-market, and penalty issues | |
|
Baker Hughes Incorporated v. United States of America 121 AFTR 2d 2018-2113 (S.D. Tex. 2018) |
Southern District of Texas | Whether payment to a foreign subsidiary qualifies for either a bad debt deduction or ordinary and necessary business expense | Judgment for government | |
|
ADAMS Challenge (UK) Limited v. Commissioner of Internal Revenue 154 T.C. No. 3 (2020) |
Tax Court | Whether a foreign company (1) has income connected with a U.S. trade or business or permanent establishment, and (2) is entitled to deductions and credits under a Tax Treaty; validity of Treasury Regulations requiring foreign corporations to file a tax return by a date certain to claim deductions | Judgment for government | Robert C. Morris |
| Barbara B. Allbritton, Individually and as Co-Executor of the Estate of Joe L. Allbritton, Deceased v. United States of America | Southern District of Texas | Constructive property distributions of artwork and antiques from a closely-held corporation; rental value for use of corporate properties. | Settled | |
| Citizen of Panama who was the owner of an international cattle transport business and was the target of a federal criminal tax and money laundering grand jury investigation | U.S. Attorney’s Office for the Southern District of Florida | International money laundering scheme and filing false corporate and individual returns relating to receipt of funds | Declination of charges | Mayling C. Blanco |
| Anthony W. Wang & Lulu C. Wang v. Commissioner | Tax Court | Whether sales of automobiles were subject to collectible capital gains rate | Government conceded | |
| Bruce L. Downey & Deborah H. Downey v. Commissioner | Tax Court | Valuation of LLC interests which were sold to trusts for purposes of determining gift tax liability and/or accuracy-related penalties | Settled | |
| Perpetual Corporation, Inc. v. United States of America | Southern District of Texas | Gain from the purported distribution of artwork to a shareholder, and/or the expiration of the statute of limitations for assessment | Government conceded | |
|
Humboldt Shelby Holding Corporation and Subsidiaries v. Commissioner 606 F. App’x 20 (2d Cir. 2015) |
Second Circuit Court of Appeals | Correct legal standard in analyzing the economic substance doctrine | Judgment affirmed |
Jasper G. Taylor III Richard L. Hunn |
|
James Haber v. United States 115 A.F.T.R. 2d 2015-2221 (S.D.N.Y. 2015) |
Southern District of New York | Validity of IRS summons issued while a Justice Department referral was in effect; whether summons was in aid of collection | Judgment for government; taxpayer appealed | |
| ADAMS Offshore Services, Ltd. v. Commissioner of Internal Revenue | Tax Court | Whether a foreign company (1) has income connected with a U.S. trade or business or permanent establishment, and; (2) timely filed its Tax Court petition outside of the general 150-day filing period | Judgment for taxpayer on timely filing issue; Government conceded the U.S. trade or business / permanent establishment issues | Robert C. Morris |
| Kathy S. Hodge v. Commissioner of Internal Revenue | Tax Court | Economic development credits, residency issues, and/or penalties | Settled residency issue; government conceded penalty issue as part of settlement | Robert C. Morris |
| Jim C. Hodge v. Commissioner of Internal Revenue | Tax Court | Economic development credits, residency issues, and/or penalties | Settled residency issue; government conceded penalty issue as part of settlement | Robert C. Morris |
| Steven A. Carr v. Commissioner | Tax Court | Taxability of disbursements received in connection with estate administration | Government conceded | |
|
The Diversified Group Incorporated and James Haber v. United States 123 Fed. Cl. 442 (2015) |
Court of Federal Claims | Whether pre-2004 section 6707 penalties are divisible taxes and thus subject to Court of Federal Claims’ jurisdiction | Judgment for government; case appealed | |
| Robert L. Allbritton and Elena H. Allbritton v. Commissioner of Internal Revenue | Tax Court | Fair rental value of property | Settled | |
| Benjamin and Sharon Soleimani v. Commissioner | Tax Court | Appropriateness of tax losses due arising from the expropriation of property by Iranian government. | Pending | Mayling C. Blanco |
| James Haber, Transferee v. Commissioner | Tax Court | Transferee liability and alter ego or agent | Settled | |
| Gerdau Macsteel Inc. and Affiliated Subsidiaries v. Commissioner | Fifth Circuit Court of Appeals | Whether corporate restructuring transactions involving assumption of contingent liabilities resulted in capital losses; accuracy-related penalties | Settled |
Jasper G. Taylor III Richard L. Hunn |
| Estate of Harold N. Carr, Deceased, Steven Addison Carr, Independent Executor, v. Commissioner of Internal Revenue | Tax Court | Valuation of oil and gas producing properties | Settled | Robert C. Morris |
|
Crescent Holdings LLC, Arthur W. & Joleen H. Fields, A Partner Other Than the Tax Matters Partner v. Commissioner 141 T.C. 477 (2013) |
Tax Court | Whether an individual should be treated as a partner for purposes of allocating partnership items (represented tax matters partner) | Split decision | |
| MT Avenue Investor Partners, MJT Park Investors, Inc., Tax Matters Partner v. Commissioner et al. | Tax Court | Whether taxpayers are liable for accuracy-related penalties with respect to partnership transactions involving swaps and options | Settled | |
|
Merck & Co,. Inc. v. United States 652 F.3d 475 (3d Cir.2011) |
Third Circuit Court of Appeals | Whether (1) a transaction can be recharacterized as a loan under the economic substance doctrine, step-transaction doctrine, or substance over form doctrine, and (2) the IRS had impermissibly discriminated against a taxpayer by denying it equal treatment with another taxpayer | Judgment affirmed | |
| YRC Regional Transportation Inc. and Subsidiaries f.k.a. USF Corporation & Subsidiaries v. Commissioner | Tax Court | Worthless stock or debt deduction with respect to stock of a subsidiary | Settled | |
| United American Housing & Education Foundation v. United States of America | District of Columbia | Declaratory judgment action regarding whether IRS could retroactively revoke the tax-exempt status of an entity | Settled | Robert C. Morris |
|
Valero Energy Corp. v. United States 569 F.3d 626 (7th Cir. 2009) |
Seventh Circuit Court of Appeals | Tax shelter exception to section 7525 tax practitioner privilege | Judgment affirmed | |
| Carol Whalen v. Commissioner | Fifth Circuit Court of Appeals | Whether IRS erred in failing to credit taxpayer with federal income tax withholding for amount that was remitted to IRS during tax year at issue | Settled | |
| Eugene Campbell 2004 Revocable Trust, James H. Jasper, Trustee, Charles E. Campbell II Trust, James H. Jasper, Trustee, et al. v. Commissioner | Tax Court | Whether IRS erred in determining that upon the death of decedent direct skips occurred when assets were distributed, resulting in additional GST tax | Settled | |
| Estate of Charles E. Campbell, Deceased, Judy Stark Campbell, Independent Executrix v. Commissioner | Tax Court | Valuation of interests in limited partnerships and limited liability companies | Settled | |
|
The Markell Company, Inc. v. Commissioner T.C. Memo. 2014-86 |
Tax Court | Whether option transactions, corporate transactions, and partnership transactions lacked economic substance; accuracy-related penalties | Judgment for government | |
| Vance Finance and Holding Corporation and Subsidiaries v. Commissioner | Tax Court | Whether option transactions, corporate transactions, and partnership transactions lacked economic substance; accuracy-related penalties | Case dismissed on taxpayers’ motion | |
|
Valero Energy Corp. v. United States 2007 U.S. Dist. LEXIS 81526 (N.D. Ill. Aug. 23, 2007) 2008 U.S. Dist. LEXIS 105609 (N.D. Ill. Aug. 26, 2008) |
Northern District of Illinois | IRS summons; section 7525 tax practitioner privilege and tax shelter exception | Split decision | |
|
Shell Petroleum Inc. v. United States 2008 U.S. Dist. LEXIS 51180 (S.D. Tex. July 3, 2008) |
Southern District of Texas | Whether the IRS could deny losses on the grounds that a related transaction lacked a business purpose and economic substance | Judgment for taxpayer | |
| HBS Investments, LLC, Humboldt Corporation, A Partner Other Than the Tax Matters Partner v. Commissioner | Tax Court | Validity of notice of final partnership administrative adjustment | Case dismissed for lack of jurisdiction on unopposed motion | |
|
Humboldt Shelby Holding Corporation and Subsidiaries v. Commissioner T.C. Memo. 2014-47 |
Tax Court | Whether option transactions and partnership transactions lacked economic substance; accuracy-related penalties | Judgment for government | |
|
Schering-Plough Corp. v. United States 2007 WL 4264542 (D. N.J. Dec. 3, 2007) 651 F. Supp. 2d 219 (D. N.J. 2009) |
District of New Jersey | Whether (1) a transaction can be recharacterized as a loan under the economic substance doctrine, step-transaction doctrine, or substance over form doctrine, and (2) the IRS had impermissibly discriminated against a taxpayer by denying it equal treatment with another taxpayer | Judgment for government | |
| Ironbridge Corp. And Subsidiaries f.k.a. Pitt-Des Moines, Inc., et al. v. Commissioner | Tax Court | Whether option transactions, corporate transactions, and partnership transactions lacked economic substance; accuracy-related penalties | Case dismissed on taxpayers’ motion | |
|
Carol Whalen v. Commissioner T.C. Memo. 2009-37 |
Tax Court | Whether IRS erred in failing to credit taxpayer with federal income tax withholding for amount that was remitted to IRS during tax year at issue | Judgment for government; case settled on appeal | |
| Iron Investments 2002 LLC, Ironbridge Corp., A Partner Other Than the Tax Matters Partner v. Commissioner | Tax Court | Validity of notice of final partnership administrative adjustment | Case dismissed for lack of jurisdiction on unopposed motion | |
| MC Investments 2002 LLC, Markell Corporation, A Partner Other Than the Tax Matters Partner v. Commissioner | Tax Court | Validity of notice of final partnership administrative adjustment | Case dismissed for lack of jurisdiction on unopposed motion | |
| VCO Investments LLC, Vance Finance and Holding Corp., A Partner Other Than the Tax Matters Partner v. Commissioner | Tax Court | Validity of notice of final partnership administrative adjustment | Case dismissed for lack of jurisdiction on unopposed motion | |
| New Capital Fire, Inc. v. Commissioner | Tax Court | Whether corporate transactions failed to qualify as an F reorganization, resulting in step-up in basis for successor corporation | Pending | |
| Estate of Judith J. Leftwich Calder, Deceased, Howard C. Calder, Personal Representative v. Commissioner | Tax Court | Estate tax marital deduction for qualified terminal interest property | Settled | |
| John H. & Katherine E. Powers v. Commissioner | Tax Court | Disallowance of professional fees as related to transactions lacking economic substance, flow-through losses for lack of substantiation; accuracy-related penalties | Settled | |
| Rebecca L. LeBlanc v. Commissioner | Tax Court | Disallowance of professional fees as related to transactions lacking economic substance; accuracy-related penalties | Settled | |
| Lewis Nicholas Powers v. Commissioner | Tax Court | Disallowance of professional fees as related to transactions lacking economic substance; accuracy-related penalties | Settled | |
| La Git 88 Trust, Kenneth A. Keeling, Trustee v. Commissioner | Tax Court | Disallowance of professional fees as related to transactions lacking economic substance; accuracy-related penalties | Settled | |
| AFFCO Investments 2001, L.L.C., AFFCO L.L.C., Tax Matters Partner v. United States | Eastern District of Louisiana | Whether partnership and option transactions lacked economic substance; accuracy-related penalties | Settled | |
| Starlike Properties, Inc. v. Commissioner | Tax Court | Whether option transactions lacked economic substance; accuracy-related penalties | Settled | |
| Igor M. & Jeanne M. Olenicoff v. Commissioner | Tax Court | Whether taxpayers had unreported income; civil fraud penalties | Settled | |
| HE Sargent, Inc. v. United States | Court of Federal Claims | Whether taxpayer owed employment taxes with respect to vehicle rental payments that it made to its employees for use of their vehicles | Settled | |
| William B. & Anne H. Russell v. Commissioner | Tax Court | Valuation of shares of stock for gift tax purposes | Settled | |
| Tiger Bay Limited Partnership, IPS Avon Park Corporation, A Partner Other Than the Tax Matters Partner v. Commissioner | Tax Court | Whether taxpayers’ sale of power purchase agreements constituted a termination, thus ineligible for capital gains treatment; whether consent to extend period of limitations was valid | Settled | |
| United States v. Jayne Taylor | Ninth Circuit Court of Appeals | Whether IRS summonses were overbroad, vague, and petitions to enforce brought in bad faith | Settled | |
| United States v. Jayne Taylor | Central District of California | Whether IRS summonses were overbroad, vague, and petitions to enforce brought in bad faith | Judgment for government; settled on appeal | |
|
Shell Petroleum, Inc. v. United States 319 F.3d 1334 (Fed. Cir. 2003) |
Federal Circuit Court of Appeals | Whether hydrocarbons constituted tar sands for purposes of tax credit for nonconventional fuels under section 29 | Judgment affirmed | Charles W. Hall |
| Olen Residential Realty Corp., (f.k.a. The Olen Company) and Subsidiaries, et al. v. Commissioner | Tax Court | Disallowance of interest expense and treatment of bank deposits as income to taxpayers based on allegation that third party was foreign related party; accuracy-related penalties | Settled | |
|
Gerdau Macsteel Inc. and Affiliated Subsidiaries v. Commissioner 139 T.C. 67 (2012) |
Tax Court | Whether corporate restructuring transactions involving assumption of contingent liabilities resulted in capital losses; accuracy-related penalties | Judgment for government on tax issue, split decision on penalties; case settled on appeal | |
| The Diversified Group Incorporated and Subsidiaries, et al. v. Commissioner | Tax Court | Whether equipment rental expenses from sale-leaseback transactions were deductible as business expenses; whether the transactions lacked economic substance | Settled | |
|
Browning-Ferris Industries, Inc. v. United States 233 F. Supp. 2d 1223 (D. Ariz. 2002) |
District of Arizona | Whether settlement converted investment tax credit into nonpartnership item | Judgment for taxpayer | Stephen A. Kuntz |
|
Riggs National Corp. v. Commissioner 295 F.3d 16 (D.C. Cir. 2002) |
District of Columbia Circuit Court of Appeals | Foreign tax credit for foreign withholding taxes related to Brazilian loans | Judgment for taxpayer | Charles W. Hall |
|
Prudential Overall Supply v. Commissioner T.C. Memo. 2002-103 |
Tax Court | Whether the IRS abused its discretion in imposing a change of accounting method requiring taxpayer to capitalize and depreciate industrial laundry items | Judgment for taxpayer | |
|
Succession of Helis v. United States 88 A.F.T.R. 2d 2001-5199 (Fed. Cl. 2001) 52 Fed. Cl. 745 (2002) 56 Fed. Cl. 544 (2003) |
Court of Federal Claims | Valuation of oil and gas partnership interest; administrative expense deductions for excess interest and executor and attorneys’ fees | Judgment for taxpayer on all issues except excess interest deduction | |
| Estate of Ruth Baker, Deceased, Mary E. Knowles, f.k.a. Mary Elizabeth Baker, Co-Executrix and Cody Dutton, Co-Executor v. Commissioner | Tax Court | Discounts for interests in family limited partnership in estate tax case | Settled | |
|
Laborers’ International Union of North America v. Commissioner T.C. Memo. 2001-171 |
Tax Court | Unrelated business taxable income; statute of limitations | Judgment for taxpayer | |
|
Shell Petroleum, Inc. v. United States 50 Fed. Cl. 524 (2001) |
Court of Federal Claims | Whether hydrocarbons constituted tar sands for purposes of tax credit for nonconventional fuels under section 29 | Judgment for government | Charles W. Hall |
| Estate of Hubbard v. Commissioner | Tax Court | Estate tax valuation of satellite television assets | Settled | Charles W. Hall |
|
Union Texas International Corp. v. Commissioner 110 T.C. 321 (1998) |
Tax Court | Windfall profits tax: whether taxpayer was independent producer for purposes of limitations on percentage depletion; net interest limitations on calculation of tax | Split decision | |
|
Shell Petroleum, Inc. v. United States 996 F. Supp. 361 (D. Del. 1997) |
District of Delaware | Whether hydrocarbons constituted tar sands for purposes of tax credit for nonconventional fuels under section 29 | Judgment for government | Charles W. Hall |
|
Coca-Cola Co. v. Commissioner 106 T.C. 1 (1996) |
Tax Court | Computation of combined taxable income for purposes of credit under section 936 for operations in a U.S. possession | Judgment for taxpayer | Charles W. Hall |
| TRT Holdings, Inc. v. Commissioner | Tax Court | Whether transaction qualified as tax free reorganization | Settled |
Co-Head of Tax, United States Office Administrative Partner, Houston
Email
robert.morris@nortonrosefulbright.com
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