Amicus Brief Filed in Boardwalk Hall Case

Published by Michael Novogradac on Thursday, December 29, 2011 - 12:00am

In October, the Internal Revenue Service submitted a brief to the Third Circuit Court of Appeals, asking the court to reverse the Tax Court’s decision in the case of Historic Boardwalk Hall LLC v. Commissioner. The IRS appeal was followed by the taxpayer’s brief, which was filed on December 15.

And last week, law firm Miller and Chevalier filed an amicus brief in the Historic Boardwalk Hall case.

The amicus brief submitted last week was filed on behalf the National Trust for Historic Preservation and other historic preservation organizations. The amicus brief was shaped through consultation between and Chevalier and other law firms active with the Historic Tax Credit Coalition, including Bryan Cave, Squire Sanders, Kutak Rock and Holland and Knight.

The historic rehabilitation tax credit (HRTC) community is watching the outcome of this appeal closely, as it could have significant repercussions for historic preservation. As Historic Tax Credit Coalition Founder John Leith-Tetrault writes in the December 2011 issue of the Novogradac Journal of Tax Credits, the pending appeals court decision may well answer the question that the IRS continues to pose in a number of circumstances: whether traditional historic tax credit (HTC) structures that rely on managing member guaranties, fixed priority returns and standard put and call exit strategies to attract limited partner capital can meet the requirements for characterization as a federal tax partnership.

Indeed, in its amicus brief, the National Trust for Historic Preservation writes:

The Tax Court’s recent decision upholds the validity of the well-established method of facilitating investment in historic rehabilitation projects by forming partnerships among investors and property owners to undertake rehabilitation activities and thereby earn HRTCs for the partners. Reversing the Tax Court’s decision, as the Government requests, would undermine the authorities supporting investment in historic rehabilitation projects through partnerships, threatening the financing of future historic preservation projects.

If you have questions about the case or its implications for the historic tax credit community, please contact Tom Boccia, CPA, or Charlie Rhuda, CPA.