Kenna Trading, LLC v. Comm'r
United States Tax Court
Brazilian retailers purportedly contributed distressed consumer receivables to a limited liability company, S, treated as a partnership for Federal income tax purposes. S claims carryover bases in these receivables under I.R.C. sec. 723. In 2004 S in turn contributed some of these Brazilian receivables to trading companies and contributed its interest in each trading company to a holding company.
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Brazilian retailers purportedly contributed distressed consumer receivables to a limited liability company, S, treated as a partnership for Federal income tax purposes. S claims carryover bases in these receivables under I.R.C. sec. 723. In 2004 S in turn contributed some of these Brazilian receivables to trading companies and contributed its interest in each trading company to a holding company. S claimed a cost of goods sold for each holding company equal to the basis of the receivables contributed. S then sold an interest in each holding company to an investor. The trading companies…
1Opinion of the Court
Wherry, Judge:
In 2003 John Rogers developed, marketed, and sold investments, which also allegedly provided potential tax shelter, whereby investors in a partnership structure could claim partially worthless bad debt deductions under section 1662 on certain distressed assets formerly owned by a Brazilian retailer. Those transactions did not produce the hoped-for tax benefits for the myriad of reasons outlined in our prior opinions and by the Court of Appeals for the Seventh Circuit. See Superior Trading, LLC v. Commissioner, 137 T.C. 70 (2011), supplemented by T.C. Memo. 2012-110, aff’d, 728…
2Cases cited42 opinions
- Cohan v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1930
- Gregory v. HelveringSupreme Court of the United States · 1935
- HIGBEE v. COMMISSIONER OF INTERNAL REVENUEUnited States Tax Court · 2001
- Commissioner v. Court Holding Co.Supreme Court of the United States · 1945
- Indopco, Inc. v. CommissionerSupreme Court of the United States · 1992
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3Cited by3 opinions
- Kenna Trading, LLC, Jetstream Business Limited, Tax Matters Partner v. CommissionerUnited States Tax Court · 2014
- Principal Life Insurance Company and Subsidiaries v. United StatesUnited States Court of Federal Claims · 2015
- Kenna Trading, LLC v. Comm'rUnited States Tax Court · 2014