Gonzales v. Franchise Tax Board CA1/5

BACKGROUND

The taxpayer, Thomas J. Gonzales II, died in December 2001. In July 2006, appellant, as personal representative of the taxpayer‟s estate, filed a complaint seeking refund of California personal income taxes under Revenue and Taxation Code, section 19385. The first cause of action sought a year 2000 tax refund based on an alleged capital loss of over $142 million in a bond transaction. The second cause of action, which concerned the 2001 tax year, was withdrawn in June 2008. In July 2008, appellant filed a tax refund action in the United States District Court for the Northern District of California (federal action). That federal action sought a federal tax refund due to disallowance of the same $142 million capital loss at issue in the

1 present case. In March 2011, the federal district court granted summary judgment in favor of the federal government. The federal district court explained that the critical issue was whether appellant could prove the taxpayer entered into the transaction primarily for profit. The court concluded appellant had not submitted evidence creating a triable issue of fact on that issue. In September 2012, the Ninth Circuit affirmed the district…