Opinion
19514-17
08-14-2023
INTELLIGENT TRANSPORTATION & MONITORING WIRELESS, LLC, WARREN C. HAVENS, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Joseph Robert Goeke Judge
This case is calendared for trial on the Court's August 28, 2023, Special Session in San Francisco, California. Respondent has informed the Court of the tax matters partner (TMP) Mr. Warren Havens' death.
Mr. Havens' designation as TMP terminates upon his death. Treas. Reg. § 301.6231(a)(7)-1(1). To proceed with this case, the Court has the authority to appoint a TMP to carry out this proceeding (replacement TMP). Rule 250. A TMP so appointed has limited authority "for the limited purpose of the pending partnership action only." Rule 250, note, 90 T.C. 1370.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
We understand that Mr. Havens was the sole general partner of Intelligent Transport & Monitoring Wireless, LLC (ITMW) during the taxable years at issue. On the basis of the record, we have identified the following persons as having an interest in this case: ITMW's limited partner for taxable years 2010, 2011, and 2012, Berkeley Spectrum Investment Fund, LLC (Berkeley Spectrum), 770 Cragmont Ave, Berkeley, California, 94705, wholly owned by Channing Jones, limited partners for taxable years 2010, 2011, 2012, and 2014, Environmentel, LLC (Environmentel), 2509 Stuart St, Berkeley, California, 94705, wholly owned by Mr. Havens, and James Stobaugh, P.O. Box 62255, Sunnyvale, CA 94088, and the receiver appointed for ITMW by the Superior Court of California, County of Alameda, by Order dated November 16, 2015, (Receivership Order), Susan Uecker, 1613 Lyon St. Ste. A, San Francisco, California, 94115, the receiver. Ms. Uecker dealt with the IRS as TMP during the audit, which indicates she has an interest in the outcome of this proceeding.
In addition, an individual who is a partner at the time of the designation by the partnership may serve as TMP. Treas. Reg. § 301.6231(a)(7)-1(d). ITMW's continued existence and current ownership is unclear from the record including whether the receiver is treated as holding an ownership interest under the Receivership Order and/or California law.
The continued existence of ITMW is not required for this case to proceed. Chef's Choice Produce, Ltd. v. Commissioner, 95 T.C. 388 (1990).
In general, a nonpartner may not qualify to serve as TMP. See § 6231(a)(7) (allowing partnerships to designate only a general partner as TMP); Treas. Reg. § 301.6231(a)(7)-1(p)(3), (q) (allowing the Secretary of the Treasury to select a limited partner as TMP under certain circumstances). However, the Court's authority to appoint a TMP where our jurisdiction has been properly invoked is not controlled by the statute or regulations. Rather, it stems from our inherent authority to effectively manage the cases before us and to protect the parties. Cambridge Partners v. Commissioner, T.C. Memo. 2017-194; see Computer Programs Lambda, Ltd. v. Commissioner, 90 T.C. 1124, 1127 (1988). There is little guidance from caselaw on the exercise of the Court's authority under Rule 250, and we have found no case law that expressly precludes the Court from selecting the receiver as a replacement TMP to carry on the partnership proceeding that has been properly initiated by Mr. Havens as TMP regardless of whether the receiver holds an ownership interest.
This case is distinguishable from Cambridge Partner because here Mr. Havens as TMP filed the petition and invoked our jurisdiction. In Cambridge Partners, we dismissed a petition filed by the receiver for lack of jurisdiction. We found that the nonpartner receiver could not serve as TMP under section 6231(a)(7) to invoke our jurisdiction, and we could not exercise our authority under Rule 250 to appoint a TMP where we do not have jurisdiction over the case. We did not decide whether we could appoint a nonpartner receiver as a replacement TMP under Rule 250 where the petition was filed by a TMP who properly invoked our jurisdiction. Nor did we need to decide whether a state court could appoint a nonpartner receiver as TMP for judicial proceedings in federal court because the state court had terminated the receivership before we issued our opinion. A receiver also filed a petition in 1983 Western Reserve that we dismissed for lack of jurisdiction on the basis that the receivership order appointed the nonpartner receiver to serve as TMP only in administrative proceedings, not judicial proceedings. See 1983 Western Reserve Oil & Gas Co. v Commissioner, 95 T.C. 51, 57-59 (1990), aff'd without published opinion, 995 F.2d 235 (9th Cir. 1993). We did not address whether the receivership order could have designated the nonpartner receiver as TMP for purposes of a partnership proceeding in this Court.
Upon due consideration, it is
ORDERED that respondent's Motion for Continuance, filed August 7, 2023, is granted in that this case is stricken for trial from the August 28, 2023, San Francisco, California Special Session. It is further
ORDERED that if any person identified herein as having an interest in this proceeding, Mr. Jones, Mr. Stobaugh, Mr. Leong, or Ms. Uecker, is willing to serve as the replacement TMP for this proceeding, that person is to file a statement to such effect with this Court on or before September 15, 2023. It is further
ORDERED that respondent is directed to inform the Court of the last known addresses for Berkeley Spectrum, Environmental, Mr. Stobaugh, Mr. Leong, and Ms. Uecker if different from those listed on or before September 15, 2023. It is further
ORDERED that if the receiver is willing to serve as a replacement TMP, respondent and the receiver are directed to file with this Court on or before October 16, 2023, a memorandum stating their positions with respect to the appointment of a replacement TMP and their legal basis for such position including the appointment of the receiver as the replacement TMP, ITMW's continued existence and current ownership, and the authority granted to the receiver to qualify as TMP in this case under the Receivership Order and California law. It is further
ORDERED that in addition to the usual service upon the parties, the Clerk of the Court shall serve a copy of this Order on (1) Berkeley Spectrum Investment Fund, LLC, 770 Cragmont Ave, Berkeley, California, 94705, (2) Environmentel, LLC, 2509 Stuart St, Berkeley, California, 94705, (3) James Stobaugh, P.O. Box 62255, Sunnyvale, CA 94088 (4) Susan Uecker, 1613 Lyon St. Ste. A, San Francisco, California, 94115, and (5) Arnold Leong, 789 Parkhaven Way, Sacramento, CA 95831.