- Ag Docket
This case involved a tax shelter and the associated penalties that come along with engaging in such transactions. The taxpayer, a partnership that had partners participating in the shelter, claimed to have a reasonable belief based on the law and facts involved that its transactions were permissible under the tax laws and that it would likely prevail if challenged. The taxpayer didn't rely on the advice of counsel, so claimed that it had not waived the attorney-client privilege. That determination hinged on the state of mind of the managing partner. IRS argued that opinions of tax lawyers were necessary to determine whether the managing partner conducted an independent review of the law and facts or relied on what he had read in the legal applicable legal opinions. IRS argued that the taxpayer waived the attorney-client privilege by raising the issue and putting the managing partner's state of mind in issue. The court agreed, noting that a tax penalty defense that involves a subjective state of mind, requires IRS access to relevant evidence to either prove or disprove that particular intent. Ad Investment 2000 Fund LLC, et al. v. Comr., 142 T.C. No. 13 (2014)
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