Summary
In Transcapital Leasing Associates 1990-11 LP v. United States, 246 Fed. Appx. 266 (5th Cir. 2007), the court stated it was "unnecessary to adopt either variant of the sham transaction doctrine" "because the transaction lacked a genuine business purpose and was economically insubstantial.
Summary of this case from Duffie v. U.S.Opinion
No. 06-50682.
August 23, 2007.
William Reeder Cousins, III, Michael Todd Welty, Meadows, Collier, Reed, Cousins Blau, Dallas, TX, Renee Forinash McElhaney, Arthur A. Perez, Matthew S. Parkin, Cox, Smith Matthews, San Antonio, TX, for Plaintiffs-Appellants.
Kenneth L. Greene, Richard Thane Morrison, Deputy Assistant Attorney General, Francesca Ugolini Tamami, U.S. Department of Justice Tax Division Appellate Section, Gilbert S. Rothenberg, U.S. Department of Justice, Washington, DC, for Defendant-Appellee.
Appeal from the United States District Court for the Western District of Texas, No. 5:01-CV-881.
Before JONES, Chief Judge, and REAVLEY and SMITH, Circuit Judges.
The court has considered appellants' position in light of the briefs, the oral argument, and pertinent portions of the record. We find no reversible error of fact or law and affirm for essentially the reasons stated by the district court. Because the transaction lacked a genuine business purpose and was economically insubstantial, it is unnecessary for us to adopt either variant of the sham-transaction doctrine currently used by the courts of appeals. See Compaq Computer Corp. Subsidiaries v. Comm'r, 277 F.3d 778, 781-82 (5th Cir. 2001) (noting the competing variants outlined in Rice's Toyota World, Inc. v. Comm'r, 752 F.2d 89 (4th Cir. 1985), and ACM P'Ship v. Comm'r, 157 F.3d 231 (3d Cir. 1998)). We also express no opinion on the ancillary question whether the business-purpose analysis of an alleged sham transaction that is a § 6221 partnership tax matter focuses on the subjective motivation of the taxpayer partner or the flowthrough partnership entity. See 26 U.S.C. § 6221.
AFFIRMED.