NPR Investments, L.L.C. v. United States

The United States appealed the district court's holding in a Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), 26 U.S.C. 6221-6234, proceeding that valuation misstatement and substantial understatement tax penalties were inapplicable to NPR. The court concluded that, in this partnership-level proceeding, (1) valuation misstatement penalties under section 6662(e) and (h) were applicable; (2) a substantial underpayment penalty under section 6662(d) was applicable because there was no substantial authority for the tax treatment of the transactions at issue; (3) NPR failed to carry its burden of establishing a reasonable-cause defense under section 6664; and (4) the Taxpayers' respective, individual reasonable-cause defenses under section 6664 were partner-level defenses that the district court did not have jurisdiction to consider. Accordingly, the court affirmed the district court's judgment regarding the finality of the notice of a Final Partnership Administrative Adjustment (FPAA); reversed regarding the valuation misstatement and substantial underpayment penalties; reversed regarding NPR's reasonable-cause defense; and vacated regarding Taxpayers' reasonable-cause defenses. View "NPR Investments, L.L.C. v. United States" on Justia Law