Justia Tax Law Opinion Summaries

During the savings-and-loan crisis in the 1970s and 1980s, many “thrift” institutions failed. The Federal Savings and Loan Insurance Corporation, as insurer and regulator, encouraged healthy thrifts to take over failing ones in “supervisory mergers.” FSLIC provided incentives, including allowing acquiring thrifts to operate branches in states other than their home states and “RAP” rights. Regulations mandated that each thrift maintain a minimum capital of at least 3% of its liabilities, an obstacle for healthy thrifts acquiring failing ones. RAP permitted acquiring thrifts to use Generally Accepted Accounting Principles to treat failing thrifts’ excess liabilities as “supervisory goodwill,” which could be counted toward the acquiring thrifts’ minimum regulatory capital requirement and amortized over 40 years. Home Savings entered into supervisory mergers. Branching and RAP rights are considered intangible assets for tax purposes and are generally subject to abandonment loss and amortization deductions. In 2008, Home’s successor, WMI, sought a refund for tax years 1990, 1992, and 1993 based on the amortization of RAP rights and the abandonment of Missouri branching rights, proffering valuation testimony from its expert, Grabowski, about fair market value. The Ninth Circuit found WMI did “not prove[], to a reasonable degree of certainty, Home’s cost basis in the Branching and RAP rights.” WMI also filed suit in the Claims Court, seeking a refund for tax years 1991, 1994, 1995, and 1998, based on the amortization of RAP rights and the abandonment of Florida, Illinois, New York, and Ohio branching rights, with a valuation report from Grabowski. The Federal Circuit affirmed the Claims Court's rejection of the claims; Grabowski’s assumptions about the nature of RAP rights were inconsistent with market realities and, at times, unsupported. View "WMI Holdings Corp. v. United States" on Justia Law

During the savings-and-loan crisis in the 1970s and 1980s, many “thrift” institutions failed. The Federal Savings and Loan Insurance Corporation, as insurer and regulator, encouraged healthy thrifts to take over failing ones in “supervisory mergers.” FSLIC provided incentives, including allowing acquiring thrifts to operate branches in states other than their home states and “RAP” rights. Regulations mandated that each thrift maintain a minimum capital of at least 3% of its liabilities, an obstacle for healthy thrifts acquiring failing ones. RAP permitted acquiring thrifts to use Generally Accepted Accounting Principles to treat failing thrifts’ excess liabilities as “supervisory goodwill,” which could be counted toward the acquiring thrifts’ minimum regulatory capital requirement and amortized over 40 years. Home Savings entered into supervisory mergers. Branching and RAP rights are considered intangible assets for tax purposes and are generally subject to abandonment loss and amortization deductions. In 2008, Home’s successor, WMI, sought a refund for tax years 1990, 1992, and 1993 based on the amortization of RAP rights and the abandonment of Missouri branching rights, proffering valuation testimony from its expert, Grabowski, about fair market value. The Ninth Circuit found WMI did “not prove[], to a reasonable degree of certainty, Home’s cost basis in the Branching and RAP rights.” WMI also filed suit in the Claims Court, seeking a refund for tax years 1991, 1994, 1995, and 1998, based on the amortization of RAP rights and the abandonment of Florida, Illinois, New York, and Ohio branching rights, with a valuation report from Grabowski. The Federal Circuit affirmed the Claims Court's rejection of the claims; Grabowski’s assumptions about the nature of RAP rights were inconsistent with market realities and, at times, unsupported. View "WMI Holdings Corp. v. United States" on Justia Law

Neither Nev. Rev. Stat. 361.227(2)(b) nor Nev. Rev. Stat. 361.227(5)(c) required the Washoe County Assessor to value fully developed but unsold condominium units as a single unit or to apply the discounted cash flow method to determine their full cash value.The State Board of Equalization found that the county assessor properly assessed each unsold condominium unit at issue based on its retail price. On appeal, Appellant argued that because the condominium building qualified as a subdivision, the unsold condominium units should have been valued together as a single unit and discounted to determine the net sellout or wholesale value to a single buyer. The district court upheld the State Board’s decision. The Supreme Court affirmed, holding that the State Board did not apply a fundamentally wrong principle in assessing the condominiums as individual units and utilizing the sales comparison method to ensure that the taxable value did not exceed the full cash value. View "Montage Marketing, LLC v. Washoe County ex rel. Washoe County Board of Equalization" on Justia Law

Neither Nev. Rev. Stat. 361.227(2)(b) nor Nev. Rev. Stat. 361.227(5)(c) required the Washoe County Assessor to value fully developed but unsold condominium units as a single unit or to apply the discounted cash flow method to determine their full cash value.The State Board of Equalization found that the county assessor properly assessed each unsold condominium unit at issue based on its retail price. On appeal, Appellant argued that because the condominium building qualified as a subdivision, the unsold condominium units should have been valued together as a single unit and discounted to determine the net sellout or wholesale value to a single buyer. The district court upheld the State Board’s decision. The Supreme Court affirmed, holding that the State Board did not apply a fundamentally wrong principle in assessing the condominiums as individual units and utilizing the sales comparison method to ensure that the taxable value did not exceed the full cash value. View "Montage Marketing, LLC v. Washoe County ex rel. Washoe County Board of Equalization" on Justia Law

At issue was whether the Ohio use tax applied to Lafarge North America, Inc.’s purchases of fuel and repair parts for equipment used to break up and transport solidified slag, a by-product from molten ore during steelmaking, from the “slag mountain," a large slag mass. Whether the tax applied depended on whether the activity was part of Lafarge’s “manufacturing operation” under Ohio Rev. Code 5739.02(B)(42)(g).The Department of Taxation assessed a use tax and penalty against Lafarge for purchases for the equipment at issue. Lafarge challenged the assessment. The tax commissioner determined that the breaking up and transport of slag from the slag mountain preceded Lafarge’s manufacturing operation and that equipment used to move raw materials prior to the start of the manufacturing process was taxable. The Board of Tax Appeals affirmed the tax assessment and penalty. The Supreme Court reversed, holding that Lafarge’s manufacturing operation began once Lafarge cut slag from the mountain and continued as the material was crushed, placed in dump trucks, and transported to a screening plant. View "Lafarge North America, Inc. v. Testa" on Justia Law

The Eleventh Circuit denied petitioner's challenge to the tax court's dismissal of his petition for review for lack of jurisdiction. Petitioner argued that the IRS should have provided notice to him at his prison address when it intended to levy on a restitution-based assessment against him. The court held that petitioner did not file a request for a CDP hearing within 30 days and was thus not entitled to a hearing or a notice of determination. Furthermore, he had no right to request review by the tax court. The court also held that petitioner did not properly preserve his legislative history argument in the tax court because he first presented it in his motion to vacate the order of dismissal. Therefore, the tax court was within its discretion to deny his motion to vacate. View "Berkun v. Commissioner of Internal Revenue" on Justia Law

Plaintiffs Yvonne Reid and Serena Wong sued defendants the City of San Diego (City) and the San Diego Tourism Marketing District (TMD) in a putative class action complaint, challenging what they allege is "an illegal hotel tax." The trial court sustained Defendants' demurrer without leave to amend on statute of limitations and other grounds. The Court of Appeal affirmed, concluding some of the causes of action were time-barred and the remainder failed to state facts constituting a cause of action. View "Reid v. City of San Diego" on Justia Law

The Parker County Appraisal District did not employ a facially unlawful means of appraising Taxpayers’ property, which appeared to derive much of its market value from saltwater disposal wells in which wastewater from oil and gas operations could be injected and permanently stored underground.When valuing for tax purposes Taxpayers’ tracts of land in Parker County, the Parker County Appraisal District assigned one appraised value to the wells and another appraised value to the land itself. Taxpayers argued before the trial court that the Tax Code did not permit the County to appraise the wells separately from the land itself where both interests are owned by the same person and have not been severed into discrete estates. The trial court granted summary judgment for Taxpayers. The court of appeals reversed. The Supreme Court affirmed, holding (1) there was nothing improper in the District’s decision to separately assigned and appraise the surface and the disposal wells, which were part of Taxpayers’ real property and contributed to its value; and (2) the Tax Code does not prohibit the use of different appraisal methods for different components of a property. View "Bosque Disposal Systems, LLC v. Parker County Appraisal District" on Justia Law

At issue was the meaning of the term “day” as used in Ariz. Rev. Stat. 28-8336, which establishes a license tax for “a nonresident whose aircraft is based in this state for more than ninety days but less than two hundred ten days in a calendar year.”The court of appeals determined that “day” means “any calendar day during which the aircraft was on the ground in Arizona for any period of time.” The Supreme Court reversed and remanded the case to the tax court of further proceedings, holding (1) the meaning of “day” can ultimately be construed only in the context of the days an aircraft is “based in” the state; and (2) because the parties did not fully address, nor did the tax court decide, the meaning of the term “based in,” the issue cannot be fully resolved on the current record. View "BSI Holdings LLC v. Arizona Department of Transportation" on Justia Law

In 2011, Dr. Parmar died, leaving an estate valued at more than $5 million. Plaintiff was appointed as executor of the estate. At the time of Parmar’s death, the estate was not subject to taxation under the Estate Tax Act, 35 ILCS 405/1. Two days after Parmar’s death, the state revived the tax for the estates of persons who died after December 31, 2010. Plaintiff filed the estate’s Illinois estate tax return and paid the tax liability. Plaintiff eventually filed a second amended return, claiming that the amendment to the Estate Tax Act did not apply to his mother’s estate and no tax was due, then filed a purported class action challenging the retroactivity and constitutionality of the Act. Plaintiff requested a declaration that the Estate Tax Act applies only to the estates of persons who died on or after the amendment’s effective date or that the Estate Tax Act is unconstitutional. The Illinois Supreme Court upheld the suit’s dismissal for lack of jurisdiction; because the complaint seeks a money judgment against the state, it is barred under the State Lawsuit Immunity Act (745 ILCS 5/1). The complaint must be filed in the Illinois Court of Claims. The damages that plaintiff seeks go beyond the exclusive purpose and limits of the Estate Tax Refund Fund and potentially subject the state to liability. Plaintiff could have filed suit in the circuit court under the Protest Moneys Act (30 ILCS 230/1). View "Parmar v. Madigan" on Justia Law