In Uncategorized on 03/04/2022 at 15:48

Reading Judge Pugh’s quietus to Global Asset Fund 2009, LLC, Global Asset Recovery, LLC, Tax Matters Partner, Docket No. 25108-17, filed 3/4/22, put me in mind of the late Arthur Kopit’s 1962 Drama Desk winner. This was another of the phony Distressed Asset/Distressed Debt marriages, disguised as partnerships, colloquially known as DADs, of the type made famous by the wrong Mr. Rogers.

Of course, said “partnership” needn’t be dissolved, because it never existed. “…the partner contributions of Brazilian credit card receivables to Global Asset Fund 2009, LLC, in taxable year 2009, upon which the Bad Debt Deduction was claimed, were not valid partner contributions.

“…the partners of Global Asset Fund 2009, LLC, did not join together for a business purpose in taxable year 2009 and consequently, no partnership was formed or existed in that year.” Order, at p. 2.

Wherefore, Global Asset transactions “…are disregarded under the economic substance, substance over form, and step transaction doctrines with regard to its taxable year 2009.” Order, at p. 2.

So Judge Pugh erases $18.5 million of deductions.

But there’s bad news and good news.

First, the bad news. 40% gross overvaluation chop for $18 million, and 20% underpayment for the rest.

Now the good news. “…$8,189 of Other Income reported by Global Asset Fund 2009, LLC, on its 2009 tax return is reclassified as Portfolio Income (Loss) Interest and treated as investment income included in portfolio income. As set forth above, Global Asset Fund 2009, LLC, is disregarded as a partnership for its taxable year 2009 and, consequently, its Portfolio Income (Loss) Interest of $8,189 shall be included in the gross income of its partners based upon their proportionate ownership interests in Global Asset Fund 2009, LLC, as directly and separately owned by them.” Order, at p. 2.


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