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Tax Law Case Summaries

[12/04] Marathon Petroleum Corporation v. Secretary of Finance for the State of Delaware
Reversing the district court's conclusion that private parties cannot invoke federal common law to challenge a state's authority to escheat property, but holding that the case was not ripe for judgment and vacating the prior order of dismissal for its reentry as a dismissal without prejudice to permit the claim's pursuit at a later time, if appropriate.

[12/04] Gonzalez v. City of Norwalk
Affirming the trial court's grant of a demurrer without leave to amend in the case of plaintiffs complaining about a tax applied to phone service because the ordinance did not violate Propositions barring local governments from imposing taxes without voter approval because changes to the law did not impose, extend, or increase tax and only made a technical change.

[11/28] City of Fontana v. California Department of Tax and Fee Administration
Reversing a trial court order reallocating local sales tax that had been remitted to Cities A and B to City C, a decision that had overturned the decision of the State Board of Equalization, because it is within the Board's authority to determine where sales of personal property occur and designate the municipality that will receive any tax collected by the Board and the decision was within the Board's administrative expertise and discretionary authority to make such a determination.

[11/09] San Diegans for Open Government v. Public Facilities Financing Authority of the City of San Diego
Reversing the trial court's dismissal of a plaintiff's complaint because plaintiff taxpayers had standing under Government Code section 1092 to challenge a municipal ordinance authorizing the issuance of bonds to refinance the defendant's obligations with respect to the construction of a baseball park on the grounds that participants in the proposed transaction violated conflict of interest provisions of the law.

[11/09] Hewlett Packard Company and Consolidated Subsidiaries v. Commissioner of Internal Revenue
Affirming the tax court's decision on a petition for redetermination of federal income tax deficiencies that turned on whether an investment by HP could be treated as equity they could claim as foreign tax credits because the tax court did not err in characterizing HP's investment as a debt or in determining that HP's purported capital loss was actually a fee paid for a tax shelter, and was therefore ineligible for deduction.

[11/03] Clemens v. Qwest Corp.
In a labor and employment action, the district court's order denying an adjustment in plaintiff's damages award from a successful discrimination suit, to account for increased tax liabilities from his lump-sum back-pay award, is vacated and remanded where district courts may, at their discretion, 'gross up' a lump-sum payment in employment discrimination suits to account for a prevailing employee's resulting increased tax liability.

[10/10] JetSuite, Inc. v. County of Los Angeles
Affirming the trial court's denial of a writ petition by an air taxi service seeking to avoid tax liability in Los Angeles because it claimed to be based out of Utah despite spending more than 60 percent of their time in Los Angeles because there was substantial evidence supporting the finding that the company failed to prove that any other state had acquired tax situs over the jets.

[09/27] Luz Solar Partners Ltd. III v. San Bernadino County
Affirming the decision of the Assessment Appeals Board of San Bernadino County relating to the assessed value of real property improved with solar energy generating systems for tax purposes.

[09/26] Hyatt v. Yee
Affirming a district court ruling that the Tax Injunction Act prevents it from enjoining, suspending, or restraining the assessment, levy, or collection of a tax under State law where a plain, speedy, and efficient remedy may be had in state court.

[09/20] US v. Brooks
Modifying orders relating to the conviction of a man for multiple counts of securities fraud, mail and wire fraud, obstruction of justice, and tax offenses because the convict's death resulted in the abatement of the counts of conviction, forfeiture, fine, special assessment , and restitution for offenses contested at trail, but the forfeiture of a bail bond did not abate, nor did the convictions and order of restitution imposed on tax counts.

[08/31] In Re DBSI, Inc.
Affirming decisions by the bankruptcy court and district court that the Congress had unambiguously abrogated sovereign immunity as it relates to actions associated with bankruptcy, an abrogation that extends to derivative 'applicable laws' such as Idaho's Uniform Fraudulent Transfer Act and the government could not rely on sovereign immunity to prevent the avoidance of the tax payments at issue.

[08/28] California Cannabis Coalition v. City of Upland
Affirming a Court of Appeals judgment that article XIII C of the California Constitution, limiting the ability of local governments to tax, does not constrain voter constitutional powers to propose and adopt initiatives or raise taxes by such initiatives in the case of a city ordinance banning medical marijuana dispensaries and requiring an annual licensing and inspection fee of $75,000.

[08/07] Russell City Energy Company, LLC v. City of Hayward
Reversing an order sustaining a city's demurrer without leave to amend and dismissing a complaint to the extent that the order denied the plaintiff leave to amend in an action relating to an agreement between an energy company and a city whose terms may have violated the California Constitution because a quasi-contractual restitution claim would be permitted even if the Payments Clause at issue is unconstitutional.

[07/18] The Container Store v. US
Reversing and remanding the final judgment of the United States Court of International Trade case granting summary judgment to the government because the subject modular storage unit imports were improperly classified as mountings and fittings rather than as parts of unit furniture.

[07/05] Matuszak v. Commissioner of Internal Revenue
Affirming that the issue of the failure to file a petition for innocent spouse relief from IRS actions during the statutorily provided period deprives the Tax Court of jurisdiction to review such a claim.

[06/29] 926 North Ardmore v. County of L.A.
Affirming the appellate court's denial of the plaintiff's refund claim in a case where Los Angeles imposed a documentary transfer tax on a written instrument transferring beneficial ownership among parties and holding that such a tax can be imposed where there is a transfer of legal beneficial ownership made for consideration.

[06/29] DuQuesne Light Holdings, Inc. v. Commissioner of Internal Revenue
Affirming the Tax Court's application of the Ilfield doctrine in holding that the double deduction for losses incurred by the subsidiary of a company was improper and disallowing $199 million of those losses.

[06/29] Jacks v. City of Santa Barbara
In a case relating to a surcharge added to energy bills that the city claimed was a fee for the use of public services which taxpayers characterized as a tax imposed without voter approval the court affirmed the appellate decision reversing the trial court's grant of motion for judgment on the pleadings, but reversed the appellate court's order granting summary adjudication to the plaintiffs.

[06/26] Said Hassen v. Government of the Virgin Islands
The dismissal of a wrongful levy claim against the US Virgin Islands was affirmed because the appellants had failed to exhaust their administrative remedies.

[06/15] US v. Hernandez
Conviction for transportation of firearms into his state of residence in violation of 18 U.S.C. section 922(a)(3) is reversed where, although the prohibition on the transportation of guns in section 922(a)(3) is not subject to the heightened willfulness requirement used in some tax and structuring laws, there is a substantial likelihood that the defendant was convicted for the act of transporting guns with the intent to commit a later crime rather than the one with which he was charged.

[06/14] City of Big Bear Lake v. Cohen
In a dispute arising out of the Dissolution Law? (Assembly Bill 1X 26), which immediately froze redevelopment agencies and provided that only existing enforceable obligations of the former redevelopment agency could be paid from the funds held by the redevelopment agency and from future tax increment revenue, the trial court's judgment is affirmed and modified where: 1) the contested transactions did not create enforceable obligations of the former redevelopment agency; 2) the Dissolution Law's invalidation of sponsor agreements does not violate the California Constitution; 3) it is irrelevant that City of Big Bear Lake claims it no longer possesses the funds it received from the former redevelopment agency; and 4) consistent with the decision in City of Bellflower v. Cohen (2016) 245 Cal.App.4th 438, the statutory remedy of offsetting City of Big Bear Lake's sales, use, and property taxes to capture the $2.6 million is unconstitutional.

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