Foothill Ranch Company Partnership, Buck Equities, Ltd., Tax Matters Partner - Page 9

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          (holding that a nonparty could not be a "prevailing party" under            
          EAJA).                                                                      
               Respondent contends that only those persons or entities                
          whose tax liabilities are affected by the outcome of the                    
          proceeding are eligible to receive an award.  Because petitioner            
          and Hon Family Ventures, Ltd., are pass-through entities,                   
          respondent contends that the Court should require petitioner's              
          and Hon Family Ventures, Ltd.'s partners to establish that they             
          meet the net worth requirements.  Respondent further contends               
          that if petitioner's and Hon Family Ventures, Ltd.'s partners are           
          pass-through entities, the "look-through" process must continue             
          until it reaches a person or entity whose tax liability is                  
          affected by the outcome of the proceeding.  Respondent's proposed           
          "look-through rule", however, contradicts the congressional                 
          determination that a partnership may receive litigation costs.              
          EAJA, 28 U.S.C. sec. 2412(d)(2)(B) (1994) (stating that a party             
          includes "any partnership" that meets the net worth and number of           
          employee requirements).                                                     
               Pursuant to EAJA and the TEFRA partnership rules, we hold              
          that first-tier partners that meet the net worth requirements are           
          eligible to receive an award.  Petitioner, Hon Family Ventures,             
          Ltd., and Hon Property Investments, Inc., have established that             
          they meet the net worth requirements.  Accordingly, they are                
          prevailing parties.  No evidence has been submitted relating to             
          the net worth of either Hon Family Trust or Hon Irrevocable                 




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