104 T.C.M. 360
Tax Ct.2012Background
- Petitioner challenging FPAA adjustments against BLAK Investments and related partnership items for 2001.
- Prior opinion held the 2001 period open under section 6501(c)(10) due to listed-transaction disclosure issues.
- Petitioner conceded BLAK Investments was a sham lacking economic substance and that 20% accuracy-related penalty applies to the underpayment.
- Dispute narrowed to whether a 40% gross valuation misstatement penalty applies for the alleged overstatement.
- The court previously noted Bergmann v. Commissioner and Keller v. Commissioner as controlling precedent on the 40% penalty question.
- The court granted petitioner summary judgment on the 40% penalty issue, aligning with Keller and Bergmann and following Golsen.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 40% gross valuation misstatement applies | Blak argues no 40% penalty because losses stem from sham/economic-substance lack. | Comm'r argues regulation 1.6662-5(g) and related precedents support 40% if misstatement exists. | 40% penalty not applicable; Keller controls; grant summary judgment for petitioner |
Key Cases Cited
- Keller v. Commissioner, 556 F.3d 1056 (9th Cir. 2009) (deference issue; rounding of overstatement; sets framework for 40% penalty applicability)
- Bergmann v. Commissioner, 137 T.C. 136 (2011) (followed Keller on 40% penalty; Golsen-based alignment with circuit ruling)
- McCrary v. Commissioner, 92 T.C. 827 (1989) (concessions unrelated to value/basis do not trigger gross valuation misstatement penalty)
- Petaluma FX Partners, LLC v. Commissioner, 131 T.C. 84 (2008) (recognizes penalty when underpayment stems from economic-substance noncompliance)
- Vasquez v. Hillery, 474 U.S. 254 (1986) (stare decisis considerations and deference principles for precedents)
- Mayo Foundation for Medical Educ. & Research v. United States, 131 S. Ct. 704 (2011) (Chevron deference framework affecting regulatory interpretation)