106 Ltd. v. Comm'r of IRS, No. 11-1242 (D.C. Cir. 2012)
Annotate this Case106 Ltd. (Partnership), a limited partnership, appearing through its tax matters partner David Palmlund, appealed a decision of the United States Tax Court upholding the imposition of a forty per cent accuracy-related penalty by the IRS. The IRS determined that the Partnership had utilized a so-called "Son of BOSS" tax shelter to overstate its basis in Partnership interests by approximately $3 million and to thereby reduce Palmlund's individual federal income tax liability by nearly $400,000. The sole issue before the D.C. Circuit was whether the Tax Court erred in determining that the Partnership failed to establish a reasonable cause defense to the accuracy-related penalty pursuant to 26 U.S.C. 6664(c)(1). The D.C. Circuit affirmed, holding that the Tax Court did not err in concluding that the Partnership failed to establish the reasonable cause defense to the forty per cent accuracy-related penalty.
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