Case Study: Rigas V. US

Law360, New York (August 29, 2011, 12:25 PM EDT) -- In Rigas v. United States, 2011-1 U.S.T.C ¶ 50,372 (S.D. Tex. 2011), the U.S. district court held that a partnership did not exist between an energy company (the “company”) and a limited partnership (the “manager”) that managed the company’s oil and gas properties (the “portfolio”). Instead, the court treated the manager as a service provider whose 20 percent profits interest was compensation for services taxable as ordinary income and not an allocation of income from a partnership that would have been taxable as a capital gain....
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