United States Second Circuit

In a suit by a taxpayer partner challenging IRS notices of adjustment reallocating a large percentage of the partnership's income for the years 1993 to 1998 to the taxpayer away from two Dutch banks that had purchased an interest in the partnership, and imposing a penalty for underpayment, the district court's judgment in favor of the taxpayer is reversed, where: 1) the banks' interest was not a capital interest for purposes of qualifying them as partners within the meaning of IRC section 704(e)(1); and 2) the taxpayer failed to point to substantial authority supporting its position, so that the government was entitled to impose a penalty on the taxpayer for substantial understatement of income.

Appellate Information

• Decided 01/24/2012
• Published 01/24/2012

Judges

• Leval

Court

• United States Second Circuit

Counsel

• For Appellant:
  
• William F. Nelson, Francesca U. Tamami