Логин или email Регистрация Пароль Я забыл пароль

Войти при помощи:

Судебные дела / Зарубежная практика  / Leonard A. ADKERSON, et al., Plaintiffs, v. UNITED STATES of America, Defendant. Merrilyn Barker, et al., Plaintiffs, v. United States of America, Defendant., 168 F.Supp.2d 1142, Nos. C-95-4229 MHP, C-95-4262 MHP., United States District Court, N.D. California., June 13, 2001

Leonard A. ADKERSON, et al., Plaintiffs, v. UNITED STATES of America, Defendant. Merrilyn Barker, et al., Plaintiffs, v. United States of America, Defendant., 168 F.Supp.2d 1142, Nos. C-95-4229 MHP, C-95-4262 MHP., United States District Court, N.D. California., June 13, 2001


Leonard A. ADKERSON, et al., Plaintiffs, v. UNITED STATES of America, Defendant. Merrilyn Barker, et al., Plaintiffs, v. United States of America, Defendant.

168 F.Supp.2d 1142

Nos. C-95-4229 MHP, C-95-4262 MHP.

United States District Court, N.D. California.

June 13, 2001.

Thomas Moore, U.S. Attorney's Office, San Francisco, CA, for plaintiff.

Benjamin W. Gale, San Rafael, CA, for defendant.


PATEL, Chief Judge.

In 1995, plaintiffs Leonard Adkerson, Merrilyn Barker and others (collectively "plaintiffs"), brought these actions against defendant United States of America ("gov╜ernment") alleging that the government collected tax penalties from plaintiffs un╜der 26 U.S.C. ╖ 6621(c) without proper authority. 1 Now before the court is the government's motion for summary judg╜ment. Having considered the parties' ar╜guments and submissions, and for the rea╜sons set forth below, the court enters the following memorandum and order.


1. In 1996, the court consolidated C 95-4229 and C 95-4262 as plaintiffs in both actions invested in the same enterprises and the tax consequences complained of are the same.



Gold Depository and Loan Company, Inc. ("GD & L") devised and operated a tax shelter called the Dry Cargo Marine Container Purchase Program ("GD & L program") under which a typical investor might buy $100,000 worth of marine cargo containers with just $4,000 down. 2 GD & L arranged for financing of the unpaid balance. GD & L advised investors that they could then take an investment tax credit of 10% or $10,000, as well as a depreciation deduction of $15,000, on their tax return for the year of investment.


2. Facts regarding GD & L are taken from United States v. Laurins, 857 F.2d 529, 534 (9th Cir.1988), which upheld the conviction of Alex Laurins, GD & L managing director, for obstruction of justice and aiding, abetting and causing contempt of court arising out of the I.R.S.' investigation of GD & L's operations.


As described in the court's memoran╜dum and order of July 22, 1996 denying the government's motion to dismiss for failure to state a claim, plaintiffs were limited partners in either Sunshine Trans╜portation Systems ("Sunshine"), Stanley Transport Services ("Stanley"), STS Trucking Service ("STS"), Shamrock Transport Service ("Shamrock"), H.V. En╜terprises ("HY."), or in a combination of these partnerships. Sunshine, Stanley, STS, and Shamrock (collectively "the trucking partnerships") were formed in 1982. H.V. was formed in 1983. Plaintiffs invested in the trucking partnerships and H.V. predominantly for economic profit rather than for tax savings.

Under the control of general partner Harold Coffin ("Coffin"), the trucking partnerships invested approximately half their funds in the GD & L program, with the understanding that GD & L would facilitate the trucking partnerships' pur╜chase and lease of dry cargo marine con╜tainers. The trucking partnerships invest╜ed the remaining portion of their funds in heavy trucks and trailers, a venture relat╜ed to plaintiffs' goal of purchasing and leasing cargo containers. H.V. invested approximately half its funds in GD & L and half in a company that manufactured and sold tape recorders.

In their 1982 tax returns, plaintiffs who had invested in the trucking partnerships claimed tax credit and losses pursuant to information received from the trucking partnerships regarding investments in the GD & L program. Some of the plaintiffs carried back investment tax credits to 1979, 1980 and 1981. In their 1983 tax returns, those plaintiffs who invested in H.V. claimed tax credits and deductions pursuant to information received from H.V. regarding investments in the GD & L program. Some of these plaintiffs carried back investment tax credits to 1980, 1981 and 1982.

In 1984, pursuant to 26 U.S.C. sections 6221, 6223, the Commissioner of the Inter╜nal Revenue Service ("I.R.S.") began an audit of the trucking partnerships. The next year, under the same authority, the I.R.S. began an audit of H.V. After discov╜ering that the entire GD & L program was a fraud, namely because GD & L never purchased any cargo containers, the I.R.S. disallowed all the tax credits and many of the losses claimed by plaintiffs in connec╜tion with GD & L. The I.R.S. also assessed penalties pursuant to former Internal Rev╜enue Code ("I.R.C.") section 6621(c), codi╜fied at 26 U.S.C. ╖ 6621(c). 3 In making the penalty assessments, the I.R.S. calcu╜lated interest on the disallowed credits and losses at the increased rate reserved for tax-motivated investments. Plaintiffs paid the penalties in full but thereafter filed claims with the I.R.S. for a refund of the payments. The I.R.S. denied those claims.


3. Section 6621(c) was repealed by the Omni╜bus Budget Reconciliation Act of 1989, Pub.L. 101-239, ╖ 7721(6), 103 Stat. 2106, 2399 (1989). The repeal affected tax returns due after Dec. 31, 1989 and thus does not affect this action. See Omnibus Budget Reconcilia╜tion Act of 1989 ╖ 7721(d).


Plaintiffs admit that no dry cargo con╜tainers ever existed, but claim that they were victims of GD & L's fraud, not know╜ing participants. Plaintiffs contend that on Coffin's advice they invested in the trucking partnerships and H.V. in good faith, and only subsequently learned that the containers did not exist. As evidence of their good faith and profit motive, plain╜tiffs who invested in the trucking partner╜ships maintain that these partnerships ac╜tually purchased trucks and semi-trailers and operated a trucking business. These plaintiffs claim that this part of the trucking partnerships' business operated at a profit for approximately two years.

In November 1995, plaintiffs filed these actions pursuant to 26 U.S.C. section 7422, which permits certain actions "for the re╜covery . . . of any penalty claimed to have been collected without authority." 26 U.S.C. ╖ 7422(a). Plaintiffs claim that the government had no authority to assess the tax penalties because plaintiffs did not in╜vest in the trucking partnerships or H.V. to achieve tax savings.


I. Increased Interest

The I.R.C. provides that if a "tax im╜posed by [the Code] is not paid on or before the last date prescribed for pay╜ment, interest on such amount at the un╜derpayment rate established under section 6621 shall be paid for the period from such last date to the date paid." 26 U.S.C. ╖ 6601(a). 26 U.S.C. section 6621(c) im╜poses an increased rate of interest for "any substantial underpayment attributable to tax motivated transactions." 26 U.S.C. ╖ 6621(c)(1) (imposing interest rate of "120 percent of the underpayment rate estab╜lished under this subsection"). The stat╜ute defines "substantial underpayment at╜tributable to tax motivated transactions" as "any underpayment of taxes . . . for any taxable year which is attributable to 1 or more tax motivated transactions if the amount of the underpayment for such year so attributable exceeds $1,000." 26 U.S.C. ╖ 6621(c)(2). Tax motivated transactions include "any sham or fraudulent transac╜tion." 26 U.S.C. ╖ 6621(c)(3)(A)(v).

"A transaction is a sham if it has no purpose or economic effect other than the creation of a tax deduction." Bail Bonds by Marvin Nelson v. Commissioner, 820 F.2d 1543, 1548 (9th Cir.1987); see also Sochin v. Commissioner, 843 F.2d 351, 354 (9th Cir.1988) (to find that a transaction was a sham, court must determine "wheth╜er the transaction had any practical economic effects other than the creation of income tax losses"). In this inquiry, courts "typically focus on the subjective aspect of whether the taxpayer intended to do anything other than acquire tax deduc╜tions, and the objective aspect of whether the transaction had any economic sub╜stance other than creation of tax benefits." Sacks v. Commissioner, 69 F.3d 982, 987 (9th Cir.1995); see also Casebeer v. Com╜missioner, 909 F.2d 1360, 1363 (9th Cir. 1990) (quoting Bail Bonds, 820 F.2d at 1549) (in determining whether transaction is a sham court asks: 1) has the taxpayer shown that it had a business purpose for engaging in the transaction other than tax avoidance? 2) has the taxpayer shown that the transaction had economic substance beyond the creation of tax benefits?). It is clear, however, that "this formulation can╜not be used as a ' rigid two-step analysis.' " Sacks, 69 F.3d at 988 (quoting Casebeer, 909 F.2d at 1363). Rather, "it is proper for the court to look at all elements of the transaction at issue." Casebeer, 909 F.2d at 1366.

"[I]t is well established that the determination of an existing profit motive is made at the partnership level and does not address the subjective intent of the particular partner in question." Hill v. Commissioner, 204 F.3d 1214, 1218 (9th Cir.2000); see also Copeland v. Commis╜sioner, 2000 WL 765171 (T.C.2000) (stating "in analyzing the economic substance and the profit objective of limited partnership investments, in particular, individual ac╜tions of limited partners are not the focus of the analysis;" holding "[i]n light of the lack of profit objective and the lack of economic substance associated with the ac╜tivities and investments of the . . . limited partnerships, petitioners are liable for in╜creased interest under section 6621(c)."). "For limited partnerships the criterion is whether the general partner sought to make profits for the partnership." Arrow╜head Mountain Getaway, Ltd. v. Commis╜sioner, 1995 WL 35359 (T.C.1995); see also Wolf v. Commissioner, 4 F.3d 709, 713 (9th Cir.1993) ("[p]rofit must be the predominant, primary or principal objec╜tive of the general partner"). The- mere fact an investor took into consideration the beneficial tax aspects of an investment does not establish that the transaction was a sham; instead, the question is whether the transaction had economic substance. Sacks, 69 F.3d at 991.

Upon finding that the transaction was a sham or fraudulent, the Commis╜sioner may impose increased interest irre╜spective of the subjective intent of the taxpayer. See Hill, 204 F.3d at 1220 (holding imposition of increased interest was proper when partnership lacked profit motive as " `tax-motivated transactions' set out in ╖ 6621(c)(3)(A) show a legislative pattern established by Congress which treats violations of certain code sections as implicit violations of ╖ 6621(c)" without re╜quiring "inquiry into the subjective state of mind of the individual making the claim").

Taxpayers bear the burden of proof when disputing the I.R.S.' application of the increased interest rate. See Hill, 204 F.3d at 1220.

II. Summary Judgment

Summary judgment is proper when the pleadings, discovery and affidavits show that there is "no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Material facts are those which may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute as to a material fact is genuine if there is suffi╜cient evidence for a reasonable jury to return a verdict for the nonmoving party. Id. The moving party for summary judgment bears the burden of identifying those portions of the pleadings, discovery and affidavits that demonstrate the absence of a genuine issue of material fact. See Celo╜tex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). On an issue for which the opposing party will have the burden of proof at trial, the moving party need only point out "that there is an absence of evidence to support the non╜moving party's case." Id.

Once the moving party meets its initial burden, the nonmoving party must go be╜yond the pleadings and, by its own affida╜vits or discovery, "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Mere allega╜tions or denials do not defeat a moving party's allegations. Id.; see also Gasaway v. Northwestern Mut. Life Ins. Co., 26 F.3d 957, 960 (9th Cir.1994). Nor is it sufficient for the opposing party simply to raise issues as to the credibility of the moving party's evidence. See Nat'l Union Fire Ins. Co. v. Argonaut Ins. Co., 701 F.2d 95, 97 (9th Cir.1983). If the nonmoving party fails to show that there is a genuine issue for trial, "the moving party is entitled to judgment as a matter of law." Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548.

On a motion for summary judgment, the court does not make credibility determina╜tions, for "the weighing of evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Liberty Lobby, 477 U.S. at 249, 106 S.Ct. 2505. Inferences to be drawn from the facts must be viewed in the light most favorable to the party opposing the motion. See Masson v. New Yorker Mag╜azine, 501 U.S. 496, 520, 111 S.Ct. 2419, 2435, 115 L.Ed.2d 447 (1991).


The government argues that this is an easy case. All parties agree that the GD & L scheme was nothing more than a fraud. In fact, its deviser was convicted of crimes arising out of this scheme and sen╜tenced to a prison term. See United States v. Laurins, 857 F.2d 529, 534 (9th Cir.1988). The government contends that as the GD & L investment arrangement was a sham, and section 6621(c)(3)(A)(v) permits the I.R.S. to impose an interest penalty when a sham is found, the I.R.S. acted within its discretion in imposing the interest penalty regardless of the taxpay╜ers' subjective intent.

Plaintiffs counter that. the investments at issue were not shams or fraudulent transactions within the meaning of section 6621(c), and thus the government improp╜erly applied the higher interest rate to plaintiffs. Plaintiffs admit that the GD & L transaction was a fraud, but not that it met the definition of a "sham or fraudulent transaction" as defined in the statute. Rather, plaintiffs claim that they were the victims of a massive fraud and should not be penalized for someone else's crime.

There is an inherent equitable appeal to plaintiffs' argument. Yet, equity alone cannot dictate this court's decision. The court must look to the language of the statute as interpreted by the Ninth Circuit to determine whether the I.R.S. properly imposed increased interest under section 6621(c)(3)(A)(v). Upon so doing, the court concludes that it cannot grant the govern╜ment's motion for summary judgment.

The government conflates the two inquiries facing the court. The fact that GD & L bilked investors does not neces╜sarily mean that the investment was a sham or fraudulent transaction for the purposes of the Internal Revenue Code. In making a sham determination for tax code purposes, the court must examine the subjective intent of the general partner. The court then imputes that intent to the partnership as a whole and to the limited partners as individuals. If after this inquiry the court finds there was no eco╜nomic purpose to the transaction other than to acquire tax benefits, the I.R.S. may impose increased interest without further investigation as to any individual partner's motives. See Hill , 204 F.3d at 1217; see also Thomas v. United States, 166 F.3d 825, 833, 834 (6th Cir.1999) (recognizing that Sixth Circuit precedent "focused on the taxpayers' motive as part of the analysis in deciding whether the transactions were shams," but that "by its plain language I.R.C. ╖ 6621(c) imposes no inquiry into the taxpayer's investment mo╜tive when the transaction is found to be a sham"); Anderson v. Commissioner, 62 F.3d 1266, 1274 (10th Cir.1995) (holding investor in GD & L program who stipu╜lated that the program was a sham could not challenge increased interest penalty as once a sham is found, "the taxpayer's mo╜tivation is irrelevant"); Chakales v. Com╜missioner, 79 F.3d 726, 728 (8th Cir.1996) (stating "Commissioner has authority . . . to assess [increased interest] penalty sim╜ply upon a finding that a transaction was a sham;" however, as Chakales had not demonstrated profit motive, court refused to reach issue of whether increased inter╜est could appropriately be applied to "an innocent victim of a fraudulent scheme who entered it in good faith for profit"); Keeler v. Commissioner, 243 F.3d 1212, 1221 (10th Cir.2001) ("[I]n light of our holding that the transactions at issue lacked economic substance and were not engaged in for profit, the Commissioner properly subjected taxpayer to an in╜creased interest rate under former I.R.C. ╖ 6621(c) (repealed 1989) on the ground that his underpayments were attributable to tax-motivated transactions."); Thomp╜son v. United States, 223 F.3d 1206, 1212 (10th Cir.2000) (imposing "strict liability on innocent, non-negligent investors who invest in a partnership that is later deter╜mined to be a sham" despite sympathy for taxpayers' plight as "section 6621(c) sim╜ply leaves no room for consideration of the individual taxpayer's motivation when the taxpayer concedes the transaction was a sham"); Karr v. Commissioner, 924 F.2d 1018, 1026 (11th Cir.1991) (holding be╜cause petitioner's activity "lacked econom╜ic substance, the Tax Court correctly de╜termined that the Karrs' tax liability is subject to the imposition of additional in╜terest pursuant to section 6621(c)").

Tn its order of July 22, 1996 denying the government's motion to dismiss, the court stated that it needed the benefit of a factu╜al record to determine whether the trans╜actions were shams. See Adkerson v. United States, 1996 WL 428348, *3 (N.D.Cal.199f) (citing Erhard v. Commissioner, 46 F.3d 1470, 1475 (9th Cir.) (af╜firming Tax Court's opinion, rendered af╜ter- six-week trial, that transactions lacked economic substance); Sochin v. Commis╜sioner, 843 F.2d 351, 355 (9th Cir.) (affirm╜ing Tax Court's conclusion, supported by twenty-eight pages of factual findings, that transactions were shams); Collins v. Com╜missioner, 857 F.2d 1383, 1385, 1387 (9th Cir.1988) (relying on Tax Court's nine pages of factual findings to affirm Tax Court's determination that taxpayers had no profit motive and that investments lacked economic substance)). That still holds true.

Although the limited partners may have invested in GD & L with the intent of realizing a profit, they are bound by the motive of the partnership. See Vorsheck v. Commissioner, 933 F.2d 757, 758 (9th Cir.1991). That motive is determined by examining the subjective intent of general partner Coffin. The parties have present╜ed dueling affidavits, deposition testimony and documentary evidence as to Coffin's intent. As the court may not make credi╜bility determinations on a motion for sum╜mary judgment, and a determination of Coffin's subjective intent will in large part turn on his credibility, the court cannot now grant this motion. See, e.g., Bunch v. United States, 1995 WL 319204, *8 (D.Nev.1995) (denying government's mo╜tion for summary judgment as to increased interest for a sham transaction as taxpayer "may have reasonably concluded [at the time of his investment] that the Partner╜ship was primarily motivated for profit, and not merely for tax benefits"); Nichol╜son v. Commissioner, 1993 WL 128090 (T.C.1993) (rejecting government's conten╜tions that transactions were shams after finding petitioner's testimony credible in demonstrating that "transactions were in╜tended to have economic significance and not merely to evade taxation").

It does not bode well for plaintiffs that every court to consider the issue of in╜creased interest imposed on GD & L in╜vestors has found the GD & L program to be a sham and consequently imposed in╜creased interest. See, e.g., MePike v. Commissioner, 199,9 WL 55974 (T.C.1996) ("This Court has previously held that the container leasing program promoted by GD & L lacked economic substance and was a factual sham .... Petitioners intro╜duced no evidence that the container leas╜ing program was not a sham. According╜ly, the increased rate of interest applies to the underpayment attributable to all de╜ductions and credits taken with respect to the container program."); Schafer v. Com╜missioner, 1994 WL 652250 (T.C.1994) ("We have considered the GD & L contain╜er program in other cases, and have con╜cluded that the containers did not exist, the purported sales transactions were shams, and the program completely lacked economic substance." E.g., Marcinek v. Commissioner , T.C. Memo.1993-631; Anderson v. Commissioner, T.C. Memo. 1993-607; Falligan v. Commissioner , T.C. Memo.1993-606; Cleland v. Commission╜er , T.C. Memo.1993-589; Amsler v. Com╜missioner , T.C. Memo.1993-289 (the GD & L program was a factual sham); Shortal v. Commissioner , T.C. Memo.1992-560 ("the GD & L program was completely lacking in economic substance and was simply a sham"); Weiler v. Commissioner , T.C. Memo.1990-562. "Petitioner has not shown that his GD & L transaction is distinguishable from those in the cases cited above."). Cf. Pelham v. Commis╜sioner, 1993 WL 364820 (T.C.1993) (stating transaction has previously been found to be a sham, but that petitioner was not liable for addition to tax for negligence). However, each case must be judged on its specific facts, and therefore, the court will thoroughly explore the motives behind the various partnerships' investments with GD & L.

Given the conflicting evidence, the court finds that plaintiffs have demonstrated that there exists a genuine issue as to whether the transactions had practical eco╜nomic effects and thus whether the I.R.S. properly assessed the interest rate applica╜ble to tax motivated transactions. The action must proceed.


For the foregoing reasons, the court hereby DENIES defendant's motion for summary judgment.



Вы также можете   зарегистрироваться  и/или  авторизоваться  


Электронный документ: вчера, сегодня, завтра

Несколько последних публикаций экспертов Synerdocs были посвящены электронным документам в судах и развитию системы электронного правосудия. В настоящей статье хотелось бы подвести некоторый итог и поднять вопрос о будущем электронного правосудия в России. А оно, как вы понимаете, напрямую связано с электронными документами

Чек-лист для проверки электронного документа на юридическую значимость

В этом году мы много говорили о представлении электронных документов в суд, не скупились на советы и рекомендации. При этом давно не поднимали тему юридической значимости. Пожалуй, с этого стоило начать цикл статей про электронное правосудие. Предлагаю обсудить, из чего же складывается юридическая значимость любого документа, и на что стоит обратить внимание при проверке документа на соответствие требованиям действующего законодательства в области ЭДО. Информация будет полезна всем: кто уже работает с электронными аналогами и тем, кто только открывает для себя новую область знаний.