Shasta Strategic Investment Fund LLC v. United States
Opinion
Lead Opinion
Seeborg, J.
ORDER ON SUPPLEMENTAL MOTIONS FOR SUMMARY JUDGMENT
I. INTRODUCTION
Pursuant to the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”), petitioners initiated these proceedings to challenge the government’s treatment of partnership items in their 1999 and 2000 tax returns. In Final Partnership Administrative Adjustments (“FPAAs”) issued by the government, petitioners were denied *897 tax losses incurred in connection with their participation in a complex financial product known as a Bond Linked Issue Premium Structure (“BLIPS”)- After a lengthy stay and subsequent discovery, the government moved for summary judgment. In an order issued on July 31, 2014 (the “July Order” or the “Order”), the BLIPS transactions were determined to lack economic substance and findings were made regarding the provisional applicability of certain tax penalties at the partnership level.
The government now moves a second time for summary judgment as to the provisional applicability of the substantial understatement penalty. Petitioners have filed their own motion for summary judgment seeking findings that discrete losses and expenses incurred in connection with the BLIPS transactions have…