Justia Trusts & Estates Opinion SummariesArticles Posted in U.S. Federal Circuit Court of Appeals
Dachniwskyj v.Office of Pers. Mgmt.
Theresa was married to Myron when he retired from the federal government in 1989. Myron elected to receive a reduced annuity and named Theresa to receive a survivor annuity. In 1998, they divorced. Myron married Roksoliana. Myron received annual notices from the Office of Personnel Management explaining that if he wanted to provide survivor benefits to a spouse that he married after retirement, he had to send a signed request within two years after the date of marriage. In 2002 Myron sent a letter requesting survivor annuity benefits for Roksoliana. OPM denied Myron’s request as not submitted within two years of his marriage and instructed Myron to send his divorce decree to change or eliminate the survivor election previously made. In 2006 Myron sent the divorce decree and the certificate documenting his marriage to Roksoliana. OPM sent notification that his election to transfer full survivor benefits to his new spouse was effective immediately. Myron died in 2009. OPM granted Roksoliana benefits and denied Theresa’s application. An ALJ reversed; the Merit Systems Protection Board affirmed. The Federal Circuit reversed, finding OPM’s annual notice insufficient to inform Myron of his rights and obligations and that the Board’s award to Theresa was not supported by substantial evidence. View "Dachniwskyj v.Office of Pers. Mgmt." on Justia Law
Alpha I, L.P. v. United States
Normally, if a partner contributes property, his basis in the partnership increases, and, when the partnership assumes a partner’s liability, his basis decreases. A Son-of-BOSS transaction recognizes acquisition (here, short-sale proceeds) and disregards acquisition of offsetting liability (obligation to close out the short-sale), to generate tax loss or reduce gain from sale of an asset. In their first such transaction, plaintiffs used partnerships to convert $66 million in taxable gain anticipated from stock sales into capital losses. Their partnership interests were held by tax-exempt charitable remainder unitrusts at the time of sale so that gain would escape taxation. The CRUTs terminated thereafter and assets were distributed to plaintiffs, purportedly tax free. The IRS determined that transfers to the CRUTs were shams to be disregarded; imposed basis and capital gain/loss adjustments, and alternative penalties; and asserted that the transactions did not increase amounts at risk under I.R.C. 465. Plaintiffs conceded capital gain and loss adjustments, but otherwise challenged the determinations. The Claims Court dismissed the determination that trust transfers were shams, believing it lacked jurisdiction; entered summary judgment in favor of plaintiffs on the ground that their concession to adjustments rendered valuation misstatement penalties moot; granted the government summary judgment on penalties for negligence, substantial under-statement, and failure to act in good faith; and imposed a penalty. The Federal Circuit reversed the dismissal, vacated summary judgment for plaintiff, and held that plaintiffs’ appeal was premature. View "Alpha I, L.P. v. United States" on Justia Law