Russian Recovery Fund Limited v. United States

Taxation of partnership; bona fide partnership; 26 U.S.C. § 704; 26 U.S.C. § 721; FPAA; economic substance; step transaction; Culbertson; penalties; reasonable reliance on tax advice

OPINION

BRUGGINK, Judge.

This is a Tax Equity and Fiscal Responsibility Act (“TEFRA”) action seeking readjustment of partnership items involving what has come to be known as a “DAD” transaction. That is a distressed asset/debt (“DAD”) transaction in which losses suffered by .a tax indifferent entity are transferred to a partnership in exchange for an interest in that partnership, followed by the sale of that…