Comm'r. of Int'l. Rev. v. JT USA, LP, No. 09-70219

Dismissal of Appeal From Interlocutory Tax Order

In Comm'r. of Int'l. Rev. v. JT USA, LP, No. 09-70219, the IRS's appeal from a tax court's interlocutory order in a partnership tax proceeding, the court dismissed the appeal where the court lacked appellate jurisdiction under either the practical finality doctrine or the collateral order doctrine.

As the court wrote:  "John Ross Gregory and his wife Rita founded JT USA, LP, a limited partnership, in the 1970s. In 2000, the Gregorys accepted an offer to sell the company that would result in a $32 million capital gain. According to the IRS, the Gregorys decided to engage in a so-called Son-of-BOSS transaction¹ to avoid the capital gains that they would otherwise incur. In furtherance of this scheme, the IRS alleges, the Gregorys transferred ownership of JT USA to two different entities (JT Racing, Inc., an S corporation, and JT Racing, LLC, a limited liability company), both of which they controlled. That same year, JT USA engaged in a series of transactions generating a $32.5 million loss. As a result, JT USA did not pay any capital gains taxes in 2000."

Related Resources

• Read the Ninth Circuit's Decision in Comm'r. of Int'l. Rev. v. JT USA, LP, No. 09-70219