Photo via Pixabay
Photo via Pixabay

A federal appeals court, weighing in Monday in a tax dispute involving billionaire Broadcom co-founder Henry Nicholas, reversed a summary judgment ruling in favor of the government and sent the case back to a trial judge.

The case began with Broadwood Investment Fund and several other similar investment funds challenging the Internal Revenue Service’s rejection of tax losses.

U.S. District Judge David O. Carter granted the government’s motion for summary judgment in September 2012, saying the investment funds were “sham partnerships” to benefit Nicholas by allowing him to claim losses he could write off.

The Ninth Circuit Court of Appeals, in a non-published opinion that does not establish precedence, ruled Carter erred in his ruling because it was not established that the investments were sure losers to help Nicholas avoid taxes.

The investment fund officials “presented evidence that some of the investment materials projected that the partnerships could be profitable, and that the partners performed due diligence on the assets before acquiring them,” according to the Ninth Circuit ruling.

The IRS, however, “also presented substantial evidence in support of its determination that the partnerships were shams, and we express no opinion on how this issue ultimately should be resolved on the merits,” the ruling states. “But the genuine factual dispute as to the partners’ intent precludes summary judgment on the issue.”

— Wire reports 

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