Attorney-at-Law

IS IRS NOT DRUNK?

In Uncategorized on 07/08/2018 at 00:07

I ask that question because IRS refused to make deals in mines. A year ago, I quoted Aristophanes’ 424 BC smash hit The Knights, where the lead says “When I get drunk I make deals in mines.”

But in Telos CLO 2007-02, et al., Docket No. 6779-17, filed 7/6/18, Judge Chiechi wants IRS to step into the Agora and explain why it refuses to be bound by the appeal to DC Cir in Grecian Magnesite, Industrial & Shipping Co., SA v. Commissioner of Internal Revenue, 149 T.C. No. 3 (2017), appeal docketed, No. 17-1268 (D.C. Cir. Dec. 18, 2017) (Grecian Magnesite).

Grecian Mag had a lot to do with deals in mines. See my blogpost “It’s Not FIRPTA,” 7/13/17, where I dig up (sorry, guys) the whole story.

Judge Chiechi thinks the outcome in the Grecian Mag appeal might settle this case too, as both Telos and Grecian Mag relate “…to the issue of whether gain or loss of a foreign corporation from the sale or exchange of an interest in a partnership that conducts a trade or business in the U.S. is gain effectively connected with such trade or business or loss allowable to such gain. That is an issue common to the instant cases and Grecian Magnesite. Moreover, the appeal in the instant cases would generally lie to the U.S. Court of Appeals for the District of Columbia Circuit.” Order, at p. 1.

Especially is IRS’ sobriety odd because IRS is the appellant in the Grecian Mag case, and the 2017 tax reform act specifically overrules the holding in Grecian Mag by providing that sale of a US partnership interest by an offshore is an asset sale. Thus, Rev. Rul. 91-32, 1991-1 C. B. 107, which got such a pummeling in Grecian Mag, is back on its feet and punching hard. And Congress gave IRS a trump card to play (sorry again, guys).

If the issue is retroactivity, that’s in play whatever happens with Grecian Mag in DC Cir. Whatever the outcome in IRS’ fight with Telos in Tax Court, they’re off to DC Cir.

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