Free Motion for Leave to File - District Court of Federal Claims - federal

AUG-22-2006 10: 43 FROM: IRS COUNSEL

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TO: 912025149440

P. 2/17

Case 1:01-cv-00344-LB
t

Document 113-5

Filed 08/28/2006

Page 1 of 16 .- "'--~"'..~.~~-.~..
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COACHELLA FRUI T GROWERS. ET AL.. Frederick H. Behrens. Tax Matters Partner,

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Docket Nos.

Petitioners,
v.
COMMISSIONER OF INTERNAL REE,
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12531-90 12534-90

12533 ;: ,§Ö-" ~-.'::'.'=-='. .t

12536 - 90

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12538-90 12540-90 15827-90 15035-91 15037-91 15039-91 15042-91 15044-91
15046 - 91

12535-90 12537-90 12539-90 15826-90
15032 - 91

15036-91 15038-91
1504'0- 91

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15049-91
15052 - 91 15054 - 91

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15056-91 15059-91 7889-92 7893-92 7900-92
'7904-92

15043-91 15045-91 15048-91 15051-91 15053-91 15055-91 15057-91 15060-91
7B91-92

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7908-92 7915 - 92 7914-92 7920-92 7917-92 7923 - 92 7922-92 7930-92 7924-92 7934-92 7933-92 7937-92 7936-92 7940-92 7939-92 7946-92 7943-92 1863 - 01 1862-01 1865-01 1864-01 1867-01 1866-01 IB69-01 1868-01 1871-01 1870-01 1873 - 01 1872-01 1875-01 1874-01 1877 - 01 1876-01 Judge Halpern

7895-92 7903-92 7906-92 7912-92

MOTION FOR ENTRY OF DECISIONS PURSUAN TO RULE 248 (b)
RESPONDEN MOVES, pursuant to Rule 248 (b) of the Tax Court 's

Rules of Practice and Procedure, that the Decisions submitted
herewi th be entered in the above-docketed cases 60 days after the

date on which this Motion is granted. GRANTED
- IN SUPpORT THEREOF. the respondent shows unto the courJuri~ 2001 /
following :

u. s. TAX eo

EXHIBIT "/
~ D
D

(SIgned) James S. H,lr

3

~

AUG-22-2006 10: 43 FROM: IRS COUNSEL

6195576581

TO: 912025149440

P.Y17

Case 1:01-cv-00344-LB

Document 113-5

Filed 08/28/2006

Page 2 of 16

1. In the notices of Final Partnership Administrative
Adjustments ("FPAAs") which were timely issued to the tax matters
partners of the partnerships involved in those above -docketed
proceedings listed in Attachment A ("the FPAA Cases

'i ); respondent

proposed adjustments to certain partnership items of each

partnership.
2. In the FPAA Cases, respondent determined that certain of
the transactions entered into by each of the partnerships were
factual or economic shams and respondent disallowed the
deductions claimed for expenses relating to these transactions.

3. Timely petitions were filed by partners other than the
tax matters partner in each of the FPAA Cases; seeking a final

determination of the disputed partnership items which were
disallowed in the FPAAs.

4. In July 1999, the tax matters partners for each of the
partnerships was permitted to intervene in the FPAA Cases.

5. By Order dated October 4, 1999, the remaining original
petitioning partners and participating partners in the FPAA Cases were dismissed as participating partners baaed upon their failure
to prosecute.

6. As of October 4, 1999, no partners other than the
intervening tax matters partners are participating partners,

within the meaning of Rule 247 (b) of the Tax Court i s Rules of
Practice and Procedure, in the above-docketed partnership

proceedings líated in Attachmnt A.
7. The time within which to file notice of election to
participate ín the above-docketed proceedings under Rule 245 (b)

2

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TO: 912025149440

Case 1:01-cv-00344-LB
'.

Document 113-5

Filed 08/28/2006

P. 4/17 Page 3 of 16

has expired and as of the date or this motion, no partner has
moved for leave to intervene.

8. The respondent and the tax matters partner for each of

the partnerships whose partnership i terns are in dispute in the
FPAA Cases have reached contingent agreements with respect to all
of the disputed partnership items at issue in the FPAA Cases.

The portion of the contingent agreement that relates to the

partnership items at issue in these proceedings is reflected in
the Decisions. submitted herewith.

9. All partners in each partnership whose partnership items
are to be determined in the FPAA Cases and who meet the interest
requirements of I.R.C. § 6226

(d) are deemed to be parties to

those partnership proceedings pursuant to the provisions of

I.R.C. § 6226(c) and Rule 247(a) of the Tax Court's Rules of
Practice and Procedure and upon entry of the Decision and that

Decision becoming final. will be bound by the determination of

the partnership items set forth therein, and will be assessed any
additional tax resulting from the

adjustments contained in the

Decision documents pursuant to the provisions of I.R.C. §§ 6225,

6230 (a) and 6231 (a) (6) 'within the time period provided by I,R.C.
§ 6229 (d) .
10. In timely filed Administrative Adjustment Requests

("AAs 'i) under I. R. C. § 6227 (e) (2), the tax matters partners for

the partnerships whose partnership i terns are at issue in chose
above-docketed proceedings listed Attachment B ("the AA Cases")
advanced a protective claim that certain amounts of income that

was reported by the partnerships in subsequent years be reduced
or eliminated in the event the Court should determine that the
3

AUG-22-2006 10: 43 FROM: IRS COUNSEL

6195576581

TO: 912025149440

Case 1:01-cv-00344-LB

Document 113-5

Filed 08/28/2006

P. 5/17 Page 4 of 16

partnerships' transactions were factual or economic shams, which
claims were not allowed by respondent.

11. Within the time prescribed by l.R.C. § 6228(a), the tax
matters partners for tne partnerships whose partnership items a~e

in dispute in the AA Cases, timely petitioned this Court to

review the AAR claims and to determined whether the partnerships t
income should be reduced or eliminated.

12. As of October 4, 1999. no partners other than the tax

matters partners are participating partners, within the meaning

of Rule 247 (b) of the Tax çourt i s Rules of Practice and
Procedure, in those above~docketed partnership proceedings listed
in Atta~hment B.

13. The time within which to file notice of election to
participate in the above-docketed proceedings under Rule 245 (b)

has expired for all cases except those at docket numbers 1B62 -01

through 1877-01. As of the date of this motion, no partner has
moved ror leave to intervene.

14. The respondent and the tax matters partner for each of
the Partnerships whose ~artnership items are in dispute in the

AA Cases have entered into contingent agreements with respect. to
all of the pa~tnership items at issue in the AA Cases, which
agreement is reflected in the Decisions submitted herewith.

15. All partners of the partnerships listed in Attachment B
who meet the interest requirements of I.R.C. § 6226 (d) are

treated as part ies to those actions pursuant to I. R. C .
§ 6228 (a) (4) (A) and Rule 247 (a) of the Tax Court i s Rules of

Practice and Procedure and upon entry of the decision will be

4

AUG-22-2006 10: 43 FROM: IRS COUNSEL

6195576581

TO: 912025149440

Case 1:01-cv-00344-LB

Document 113-5

Filed 08/28/2006

P. 6/17 Page 5 of 16

bound by the determination of the partnership items set forth

therein.
16. During the administrative partnership proceedings which
resulted in the issuance of

FPAAs to the tax matters partners of

the partnerships listed in Attachment Ai respondent also made
preliminary determinations as to certain affected items,

including the liabilìty of the limited partners for additions to

tax pursuant to I.R.C. §§ 6653 and 6661, and for the assessment
of interest on the deficiencies in the partners i income tax at

the increased rate prescribed by former I.R.C. § 6621 (e); ~hich

determinations the tax matters partner and other partners are
expected to dispute.

17. In the interest of all partners who are deemed to be
parties to those proceedings. the tax matters partner for each
partnership has entered into a settlement agreement with
respondent i contingent upon Decisions being entered by the Uni ted

States Tax Court and becoming f inali pursuant to Tax Court Rule
248 (b). in each of the above-docketed partnership proceedings.

The the terms of this contingent agreement are shown in
Attachment C.

18. The tax matters partner for each partnership agrees to
the proposed Decisions in these cases, but does not certify that
no party obj ects to the granting of Respondent i s Motion For Entry

of Decision.

19. If any partner of the partnership files motion for
leave to participate and is permitted by the Court to file an

objection to this motion for entry of decision pursuant to Tax
Court Rule 248 (b) (4), and such objection is not withdrawn or

5

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Case 1:01-cv-00344-LB

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Filed 08/28/2006

Page 6 of 16

otherwise resolved within 90 days of the date on which this
motion is filed, the tax matters partners and respondent
stipulate that this motion for entry of decisions 'wiii be

withdrawn by respondent.

20. Once the Decisions submitted herewith are entered by the
Court and become final,

respondent will assess any deficiency in

income tax due from each partner by way of computational
adjustment, under I.R.C. § 6231 (a) (6) based upon the adjustment

contained in the Decisions, wi thin the time period provided by
I.R.C. § 6229(d); and based upon the determination made in the
Decisions i respondent will assess interest which has accrued

thereon under former l.R.C. § 6621(c), within the time period
provided by I.R.C. § 6229(d).

21. The agreements reflected in the Rule 248 (b) Motion for
Entry of Decision, including Attachments; and the Decisions are
not to be construed as "settlement agreements" under I.R.C.

section 6231 (b) (1) (e). The statement of the agreements,
including Attachment C, does not act to convert partnership items

to nonpartnership items, but rather, sets forth how the Decisions

will be entered by the Tax Court which will be binding on the
non-participating partners who are parties to these proceedings'.

22. The Motion for Entry of Decision in the cases at Docket
No. 12531-90 et. al., and the Motion fo~ Entry of Decision in the
consolidated group of cases at Docket No. 12530-90 are con~ingent

upon each of these Motions being granted. Should either one of
Respondent's Motions for Entry of Decision be denied then
Respondent requests that other other Motion for Entry of Decision
also be denied or withdrawn.
6

AUG-22-2006 10: 43 FROM: IRS COUNSEL

6195576581

TO: 912025149440

Case 1:01-cv-00344-LB
"

Document 113-5

Filed 08/28/2006

P.W17 Page 7 of 16

WHEREFORE, it is prayed that this motion be granted.

RICHA W. SKILLMA
Acting Chief Counsel Internal Revenue Service

Date: ~
OF COUNSEL:

BY:

ALI CE M. HAUTTE

~ln.~~

At torney, LMSB Area 4 Tax Court No. HA0363 1244 Speer Blvd., Suite 500 Denver, Colorado 80204 (303) 844-3258

JAMES CLAK
ASSOCIATE AREA COUNSEL Communication, Technology & Media, Area 5

MAGARET K. HEBERT
Ass~stant Area Counsel (Strategic Litigation) Internal Revenue Service 701 B Street, Suite 901 San Diego, CA 92101 (619) 557-6014

7

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Case 1:01-cv-00344-LB

Document 113-5

Filed 08/28/2006

Page 8 of 16

Attchment A: FP AA Cases

Ag-Capital Fund-1983
Agri-Cal Venture Assoc.

Agrì-Venture-ll
Agri-Cal Venture Assoc. Agri-Venture 1985

Agri~ V eoture Associate

Agri-Venture Fund Canyon Desert Vineyards
Coachella-85 Partners

Coacbella Fruit Growers Columbia Basin Growers Crop AssocIates-1986 Desert Flame Growers Desert Highl:ind Vineyards
Dixie Delano Growers

Dixie Ventures-198S Dixie Veotures-1986 EI Rancho Vineyard Emperor Seedless 1985 Houston Farm Assoc.-II
Indio Date Associates

iv A-1984 IVA-1985
Lifemark Farming Assoc.

Oasis Date Associates Pecan Diversifed Growers Pump Station. III Assoc.
Rancho Calif. Partners Rancho Calif. Partners-lJ Rancho Madera Partners
Ri'cbgrove Grape Assoc.

Texas Farm Venturers
Travertine Flame Assoc.

US Farm Partncrs-84 US Farm Partners-85 US Farm Partners-86
USB Flame Growers

15045-91 1868-01 i 5048-91 12530-90 15035-91 15047-91 15034-91 15054-91 15057.91 12531-90 i 5055-91 12532-90 15052-91 15056-91 15053-91 15050-91 12533-90 15049-91 15039-91 15041-91 15042..91 15051-91 15827-90 15036-91 15037-91 15038-91 15040-91 12534-90 12535-90 12536-90 15044-91 15058-91 15059-91 15032..91 15046-91 12538-90
15060:"91 i 5043-91

1984 1995, 1996 1984, 1985 1986 1985 1984, 1985 1985
1.985

1985 1986 1985 1986

1984,1985
1985

1984,1985
1985 1986 1985 1985 1985 1985 1985 1986 1984, 1985

1984,1985 1984,1985
1984, 1985 1986 1986 1986 1984, 1985 1984, 1985 1984, i 985 1984,1985 1985 1986 1984, 1985 1985 1986 1986 1986

USB-1985 Associates

USß.86 Associates
Vista AG-Realty Partners

Western A ricultural Vent.

12537-90 12539-90 12540-90

R

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Case 1:01-cv-00344-LB
"

Document 113-5

Filed 08/28/2006

Page 9 of 16

Attachment B: AA Cases

Ag-Capitai FUDd~i983
Agri-Cal Venture Assoc.

7943-92
1868-01 7940-92
7915-92 & 1877-01

1986
1995, 1996

Agri.Venture-ll
Agri-Venture 1985

1986

1985,1995
1986

Agri-Venture Associates Agri-Venture Fund Canyon Desert Vineyards Coachella Fruit Growers
CoacbcUa-85 Partners

7920-92
7985-92 & 1866-01

1986,1995
1986

790492
1876-01
7891-92 & 1862-01

1995,1996
1986, 1995 1986 1986 . 1986 1986 1986, 1995,. 1996 1986 1986 1986, 1995 1986,.1995 1995 1986 1986 1986 1986

7930-92 Columbia Basin Growers 7917-92 Desert Flame Growers Desert Highland Vineyards 7912-92
Dixie Delano Growers

7914-92
7893-92 & 1865-01

Dixie Ventures-1985 EI Rancho Vineyard Emperor Seedless 1985 Houston Farm Assoc. n
Indio Date Associates

7900-92 7980.92 15826-90,1875-01
7924-92 & 1873-01

Lifeniark Farmiug Assoc. iv A-1984
Oasis Date Associates

1872..1 793~92
7939-92 7937-92 7889-92
1867-01

Pecan Diversified Growen Pump Station III Assoc.
Rancbo Calif! Partners II
Richgrove Grape Assoc.

1995,1996
1986 1986 1986 1986 1986, 1995 1995, 1996 1995 1995, 1996 1995, 1996

Texas Farm Venturers
Travertine Flame Assoc.

US Farm Partners-84
US Farm Parters-85

7934-92 7906-92 7923-92 7922-92
794(i92 & 1863-01

t87()01 Western Agricultural Assoc. 1869-01

US Farm Partners-86 USB-85 Associates USB-86 Associates Vista Ag-Realty Partners

1874-01 7903-92 1871-01

1995,1996

o

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Case 1:01-cv-00344-LB

Document 113-5

Filed 08/28/2006

Page 10 of 16

ATTACHMNT C
In the interests of all parties to the proceeding,

respondent and the tax matters partner for each partnerships

listed in Attachments A and B ("the Partnerships"), have entered
into agreements as to al i partnership items here in dispute and

all affected items determined by respondent but not yet before

the Court; which agreements are contingent upon the express or
implied consent. of all partners who are deemed to be parties to
this proceeding under l.R.C. §§ 6226(c), 622B(a) (4)

(A) and Tax

Court Rule 247 (a), to the entry of Decision by the United States
Tax Court pursuant to Tax Court Rule 248 (b), in each of the

above-docketed cases.
i. The tax matters partner for the Partnerships agrees to
the Decision submitted herewith, but does not certify that all
parties do not object to the granting of Respondent i 5 Motion For

Entry of Decision.

2. The terms of the express agreement between the
respondent and the tax matters partners, Frederick Behrens and
Robert Wright, and of the implied agreement between respondent
and all partners are as follows:

a. The terms ot the agreements, as set forth below, will
only take effect if Decisions are entered by the United
States Tax Court in all of the above-docketed cases
pursuant to Tax Court Rule 248 (b) and such Decisions
become final.

b. The agreements reflected in the Rule 248 (b) Motion for
Entry of Decision and the Decisions are not to be

10

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Case 1:01-cv-00344-LB

Document 113-5

Filed 08/28/2006

Page 11 of 16

construed as "settlement agreements" under l.R.C.

section 6231 (b) (1) (C). This statement of the agreement
does not act to convert partnership items to

nonpartnership items, but rather it sets forth how the

Decision will be entered by the Tax Court which will be
binding on the non-participating partners who are
parties to these proceedings.

c. The income, expenses, and credits of the Partnerships
for the first year in which a deduction for Farming

Expenses was claimed on Schedule F and disallowed by
respondent in the FPAA (II the Adjustment Year"), will be

adjusted by the reduced amounts shown in the Decisions.

If Decisions are entered in each of the above-docketed
cases, it is contemplated that all parties will be

directly bound by the final determination of the Ta~

Court. Any resulting assessments of additional tax
wiii be made within the time period provided by I.R.C.

§ 6229 (d) .
d. If Decisions are not entered in each of the abovedocketed cases the contingent agreements between the

respondent and the tax matters partners will not take

effect.
e. In consideration of the reduced adjustments to
partnership income, expense and credits set forth in
therein, the .parties agree that the income, expense and

credits reported by the Partnership for years ending
after the Adjustment Year up through December 31, 1997,

11

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Case 1:01-cv-00344-LB

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Filed 08/28/2006

Page 12 of 16

will not be adjusted by respondent or by any partner.

All Administrative Adjustment Requests relating to
adjustments to the income, expense or credit of the

Partnerships which are presently pending before any
court will be dismissed ~ith .prejudice prior eo ehe

entry of Decisions by the United States Tax Court in
this proceeding.

f. Effective upon entry of the Decisions and in
consideration of the reduced adjustments set forth
therein, the parties expressly waive any right of appeal from the orders, opinions, or other rulings

entered in this proceeding or in the related

proceedings.
g. Effective upon entry the of Decisions and such
Decisions becoming final, and in consideration of the
reduced adjustments set forth therein, the parties expressly waive all claims against the respondent, his

employees, and representatives, which arise from or are

based upon the conduct of the investigation and
examination of the AMCOR, its principals and employees.
,

the Partnership, or any AMCOR affiliate.

h. Effective upon entry of the Decisions and such
Decisions becoming final, and in consideration of the
reduced adjustments set forth therein, the parties

expressly waive all claims against respondent this

employees, and representatives arising from or based

12

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Case 1:01-cv-00344-LB

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upon the conduct of

the litigation in t.his proceeding

and in the related proceedings.

ì. Effective upon the entry of the Decisions submitted
herewith and such Decisions becoming final, and in

consideration of the reduced adjustments set forth
therein, the partners expressly consent to the

assessment of interest on the deficiencies in income
tax, if any

i which are attributable to the adjustments

to the partnership items of Partnership at the increased rate specified in former I.R.C. § 6621(c).

Such assessment will be made within the time period

prescribed by I .R. C. § 6229 (d) .
j. Effective upon entry of the Decisions submitted
herewith and such Decisions becoming final, and in
consideration of the parties' consent to the assessment

of interest at the rate prescribed by former I. R. C .
§ 6621 (c). respondent expressly waives all claims

against the limited partners for any additions to tax

that might be due under I.R.C. §§ 6653 and 6661 to the
extent such claims for additions to tax are based upon
the adjustment to partnership items. set forth in the

Decisions.
k. Effective upon entry of the Decisions, and such
Decisions becoming final, the general partners of
Partnerships, Frederick Behrens and Robert Wright,

consent to the assessment of an addition to tax

pursuant to I.R.C. § 6661, at the rate of 10% of any

13

AUG - 22 - 2006 10: 44 FROM: IRS COUNSEL

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additional tax deficiency which results from the
adj ustments to partnership i teff contained in the

Decisions. The time period for making any assessments
under I.R.C. § 6661 is set forth at I.R.C. § 6229(£),
beginning from the date the separate Closing Agreement
signed by the tax matters partners become non-

contingent.
1. Effective upon entry of the Decisions and such
Decisions becoming final, and in consideration of the
foregoing, respondent waives any claims ~gainst the

general partners for the assessment of additions to tax
which might be due under

the provisions of I.R.C.

§ 6653 to the extent they are based upon the
adjustments to partnership items of Partnership set
forth in the Decisions.

4. Pursuant to Tax Court Rule 248 (b), the entry of the

Decisions in these proceedings is contingent upon the express or
impl ied consent of all part ies. Absent a timely obj ection to the

entry or the decisions submitted herewith, the parties to the

proceedings shall be presumed to have consented to ali of the terms of the agreement described above and shall be estopped from
challenging the adjuBtments to the .partnership items determined

in the decision and from challenging the assessment of interest

accruing on any deficiencies in income tax attributable thereto

at the increased rate prescribed by former I.R.C. § 6621 (c) .
5. If any party to thís proceeding files a timely objection

to Respondent l s Motion For Entry of Decision and such obj ect ion
14

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Page 15 of 16

is not withdrawn or otherwise resolved within 90 days of the date
that this motion is filed, the tax matters partners and
respondent stipulate that Respondent's Motion For Entry of
Decision will be wi thdrawn by respondent.

6. All partners of the partnership who meet the interest
requirements of I.R.C. § 6226(d) are treated as parties to this

action pursuant to I.R.C. § 6226(c) and Rule 247(a) of the Tax

Court i s Rules of Practice and Procedure.
7. Once the Decisions submitted herewith are entered by the
Court, respondent will assess any def iciency in income tax due

from each partner by way of computational adjustment based upon
the decision within the time period provided by I.R.C. § 6229(d) i

respondent will assess interest which has accrued thereon

pursuant to the provisions of former I.R.C. § 6621(c) within the
time period provided by I.R.C. § 6229(d); and, respondent will
assess any additions to tax, as stated above in paragraph 3.

B. The express agreement between respondent and the tdX
matters partners, Frederick Behrens and Robert A. Wright, and the
implied agreements between respondent all other parties to this

proceeding, which agreements are evidenced by ~he absence of any
timely objection to the motion for entry of decision, are without

prejudice to the partners' individual rights to seek
administrative or judicial relief that they may be entitled to,

including but not limited to any rights under I.R.C. §§ 6015.
6230 (a) (3), 6230 (c), and 7122.

9. If Respondent. s Motion for Entry of Decision is granted,

and any individual partner, who is a party to these proceedings,

15

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Document 113-5

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takes an action inconsistent with the terms of this agreement,

respondent reserves the right to issue an affected item notice of
deficiency with respect to additions to tax to that individual
within the time period provided by I. R.C. §§ 6229 (d)

and 6229 (f) .

i6