Louis M. Giovanini v. United States

The United States Internal Revenue Service (“the Government” or “the Service”) appeals the district court’s grant of summary judgment in favor of taxpayer in an action for refund of assessed taxes paid by the taxpayer on account of “recaptured” federal investment tax credits. The district court held that taxpayer’s investment tax credits were not subject to recapture under Internal Revenue Code (“I.R.C.” or “the Code”) Section 47(a) because statutory exceptions contained in Section 47(b) applied. The Government argues that the district court erred in failing to apply Treas.Reg. § 1.47-4(a)(2).

The district court had jurisdiction pursuant to 28 U.S.C. § 1346 (a)(1). Our jurisdiction rests on 28 U.S.C. § 1291 . We review the grant of summary judgment de novo. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 629 (9th Cir.1987). We affirm.

I. FACTS

Giovanini and eight other individual investors formed a small business corporation, Metro-West, that provided cable television service. The corporation qualified as a Sub-chapter S corporation for its taxable year ending in 1980 and continued as a Subchap-ter S corporation through March 31, 1982. In that time…