Statutory Interpretation Still Lives In Tax Cases

Law360, New York (January 29, 2014, 1:16 PM EST) -- In early December, the U.S. Supreme Court ruled that the substantial valuation misstatement penalty could be determined in a Tax Equity and Fiscal Responsibility Act audit and applied when the audited partnership was found to violate the economic substance doctrine.

To the Fifth Circuit, that meant that the partnership was a sham that did not exist for federal income tax purposes. Because the partnership did not exist, the partners could not have any basis in their partnership interest. When they reported having any basis at all,...
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