Free Motion to Dismiss - Rule 12(b)(1) - District Court of Federal Claims - federal

Case 1:06-cv-00228-CFL

Exhibit 4, Page 1 of 17

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Document 11-7

Filed 11/16/2007

Page 1 of 17
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UNITED STATES TAX COURT
COACHELLA FRUIT GROWERS, ET AL., Frederick H. Behrens,
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Docket Nos.

Tax Matters Partner,

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Petitioners,
v.
COMMISSIONER OF INTERNAL REVENUE,

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Respondent.

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-12533= 90'-~-- -.----... 12531-90 12535-90 12534-90 12537-90 12536-90 12539-90 12538-90 15826-90 12540-90 15032-91 15827-90 15036-91 15035-91 15038-91 15037-91 15040-91 15039-91 15043 - 91 15042-91 15045-91 15044-91 15048-91 15046-91 15051-91 15049-91 15053-91 15052-91 15055-91 15054-91 15057-91 15056-91 15060-91 15059-91 7891-92 7889-92 7895-92 7893-92 7903-92 7900-92 7906-92 7904-92 7912-92 7908-92 7915-92 7914-92 7920-92 7917-92 7923-92 7922-92 n 7930-92 7924-92 N 7934-92 7933-92 7937-92 7936-92 7940-92 7939-92 7946-92 7943-92 9y?i. ' 1863-01 1862-01 1865-01 lb~J-&~ 1864-01 , . Ii\J r 1867-01 1866-01 1869-01 1868-01 1871-01 1870-01 1873-01 1872-01 1875-01 1874-01 1877-01 1876-01 Judge Halpern

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MOTION FOR ENTRY OF DECISIONS PURSUAN TO RULE 248 (b)
RESPONDENT MOVES, pursua~t to Rule 248 (b) of the Tax Court i s

Rules of Practice and Procedure, that the Decisions submitted
herewith be entered in the above-docketed cases 60 days after the
date on which this Motion is granted.
u. s. TAX COURT

. IN SUPPORT THEREOF, the respondent shows unto t e Court the

GRANTED
JUl 1 9 2001
om ..' .JU E

rollowing:

CERTIFIED TRUE COpy ,

:~~~~,'!U~ ;1 92001
DEPUTY CLERK i 1
i ·

(SIgned) James S. Halpern

. - ~.. .

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 2 of 17

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"), 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 based 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 listed in Attachment A.

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

Exhibit 4, Page 2 of 17

2

.

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Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 3 of 17

has expired and as of the date of 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 items 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") under I.R.C. § 6227(c) (2), the tax matters partners for
the partnerships whose partnership items are at issue in those

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

Exhibit 4, Page 3 of 17

3

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 4 of 17

partnerships i transactions were factual or economic shams, which

claims were not allowed by respondent.

11. Within the time prescribed by I.R.C. § 6228(a), the tax
matters partners for the partnerships whose partnership items are
in dispute in the AAR Cases, timely petitioned this Court to

review the AA claims and to determined whether the partnerships i
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 Court i s Rules of Practice and
Procedure, in those above-docketed partnership proceedings listed
in Attachment 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 1862-01
through 1877- 01. As of the date of this motion, no partner has
moved for leave to intervene.

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

AA Cases have entered into contingent agreements with respect to
all of the partnership 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 parties 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

Exhibit 4, Page 4 of 17

4

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 5 of 17

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 A, respondent also made
preliminary determinations as to certain affected items,

including the liability 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(c); which
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, contingent upon Decisions' being entered by the United

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

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

Exhibit 4, Page 5 of 17

5

.. ., ",
Case 1:06-cv-00228-CFL Document 11-7 Filed 11/16/2007 Page 6 of 17

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 will 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 computa~ional
adjustment, under I.R.C. § 6231(a) (6) based upon the adjustment

contained in the Decisions, within the time period provided by
I.R.C. § 6229(d); and based upon the determination made in the

Decisions, respondent will assess interest which has accrued
thereon under former I.R.C. § 6621 (c), within the time period

provided by I.R.C. § 6229(d).
21. The agreemellts 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) (C). 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 for Entry of Decision in the
consolidated group of cases at Docket No. 12530-90 are contingent

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.

Exhibit 4, Page 6 of 17

6

Case 1:06-cv-00228-CFL

Document .. 11-7

Filed 11/16/2007

Page 7 of 17

WHEREFORE, it is prayed that this motion be granted.

RICHAD W. SKILLMA
Acting Chief Counsel Internal Revenue Service

Date, ~
OF COUNSEL:

BY:

ALI CE M. HABUTTE

w~im.4~

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

Assistant Area Counsel (Strategic Litigation)
Internal Revenue Service 701 B Street, Suite 901 San Diego, CA 92101 (619) 557-6014

MAGARET K. HEBERT

(

Exhibit 4,7 Page 7 of 17

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 8 of 17

Attachment A: FP AA Cases

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

Agri- Venture-II
Agri-Cal Venture Assoc. Agri-Venture 1985

Agri- Venture Associates

Agri-Venture Fund Canyon Desert Vineyards
Coachella-85 Partners

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Coachella Fruit Growers Columbia Basin Growers Crop Associates-1986 Desert Flame Growers Desert Highland Vineyards
Dixie Delano Growers

Dixie Ventures-1985
Dixie Ventures-1986

EI Rancho Vineyard Emperor Seedless 1985
Houston Farm Assoc.-II
Indio Date Associates

iV A-1984 iV A-1985
Lifemark Farming Assoc.
Oasis Date Associates

Pecan Diversifed Growers Pump Station III Assoc.
(

Rancho Calif. Partners

Rancho Calif. Partners-II
Rancho Madera Parters
Richgrove Grape Assoc.

Texas Farm Venturers
Travertine Flame Assoc.

US Farm Parters-84

US Farm Partners-85 US Farm Partners-86 USB Flame Growers USB-1985 Associates USB-86 Associates Vista AG-Realty Partners

Western A ricultural Vent.

15045-91 1868-01 15048-91 12530-90 15035-91 15047-91 15034-91 15054-91 15057-91 12531-90 15055-91 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 15043-91 12537-90 12539-90 12540-90

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

Exhibit 4, Page 8 of 17
8

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 9 of 17

Attachment B: AAR Cases

"h~nJl~li c - , . c, . _~._~_,~__~,'''__L~~__~~..~'' , c '."."" . ' .., ~ ~-~~":~D ''7"',.~'----~-r:w~~~"----:,~-~''~ _, ~..~.~,~~_""_~~,_,."_~,,~~_
Ag-Capital Fund-1983
Agri-Cal Venture Assoc.

w. i.lfi4l&~ ",' 'h r- i
7943-92 1868-01 7940-92
7915-92 & 1877-01

Agri- Venture-II
Agri-Venture 1985

Agri- Venture Associates Agri- Venture Fund Canyon Desert Vineyards

7920-92
7985-92 & 1866-01

Coachella Fruit Growers
Coachella-85 Partners

7904-92 1876-01
7891-92 & 1862-01

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. II
Indio Date Associates

7900-92 7980-92
15826-90, 1875-01
7924-92 & 1873-01

1986 1995, 1996 1986 1985, 1995 1986 1986, 1995 1986 1995, 1996 1986, 1995 1986 1986 1986 1986 1986, 1995, 1996 1986 1986

1986,1995 1986,1995
1995 1986 1986 1986 1986

Lifemark Farming Assoc.

IV A-1984
Oasis Date Associates

Pecan Diversified Growers Pump Station III Assoc. Rancho Calif. Partners II
Richgrove Grape Assoc.

Texas Farm Venturers
Travertine Flame Assoc.

(

US Farm Partners-84 US Farm Partners-85 US Farm Partners-86 USB-85 Associates USB-86 Associates Vista Ag-Realty Partners

1872-01 7936-92 7939-92 7937-92 7889-92 1867-01 7934-92 7906-92 7923-92 7922-92
7946-92 & 1863-01

1995,1996
1986 1986 1986 1986

1986,1995
1995, 1996 1995

1874-01 7903-92 1871-01 1870-01 Western Agricultural Assoc. 1869-01

1995,1996
1995, 1996 1995, 1996

Exhibit 4, Page 9 of 17
9

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 10 of 17

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 (/I the Partnerships /I), have entered
into agreements as to all 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 I.R.C. §§ 6226 (c), 6228 (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.
1. The tax matters partner for the Partnerships agrees to
the Decision submitted herewith, but does not certify that all
parties do not obj ect to the granting of Respondent i s 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 of 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

Exhibit 4, Page 10 of 17

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 11 of 17

construed as "settlement agreements" under I.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 ("the Adjustment Year"), will be

\.

adj usted 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 Tax

Court. Any resulting assessments of additional tax
will be made within the time period provided by I.R.C.
§ 6229(d).
(

d.

If Decisions are not entered in each of the above-

docketed 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
credi ts reported by the Partnership for years ending

after the Adjustment Year up through December 31, 1997,

11

Exhibit 4, Page 11 of 17

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 12 of 17

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 with prejudice prior to the

entry of Decisions by the United States Tax Court in

thi s 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, his

employees, and representatives arising from or based

12

Exhibit 4, Page 12 of 17

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 13 of 17

upon the conduct of the litigation in this proceeding'
and in the related proceedings.

i.

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, 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 i 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 adj ustment 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

Exhibit 4, Page 13 of 17

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 14 of 17

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

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

contingent.

l.
t

Effective upon entry of the Decisions and such
Decisions becoming final, and in consideration of the
foregoing, respondent waives any claims against 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
implied consent of all parties. Absent a timely obj ection to the
(

entry of the decisions submitted herewith, the parties to the

proceedings shall be presumed to have consented to all of the terms of the agreement described above and shall be estopped from

challenging the adjustments 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 this proceeding files a timely obj ection

to Respondent i s Motion For Entry of Decision and sucn obj ection
14

Exhibit 4, Page 14 of 17

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 15 of 17

18 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 i s Motion For Entry of

Decision will be withdrawn 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 deficiency in income tax due

(
from each partner by way of computational adj ustment based upon

the decision within the time period provided by I.R.C. § 6229(d);

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.

8. The express agreement between respondent and the tax
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 the absence of any

timely obj ection to the motion for entry of decision, are without

prej udice to the partners i 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,

623 0 (a) (3), 623 0 (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

Exhibit 4, Page 15 of 17

Case 1:06-cv-00228-CFL

Document 11-7 ..

Filed 11/16/2007

Page 16 of 17

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 622 9 (f) .

(

(

16

Exhibit 4, Page 16 of 17

Case 1:06-cv-00228-CFL

Document 11-7

Filed 11/16/2007

Page 17 of 17

CERTIFICATE OF SERVICE
This is to certify that a copy of the foregoing RESPONDENT iS

MOTION FOR ENTRY OF DECISION was filed with the United States Tax Court by mailing the same in postage paid wrapper on

1 3 APR ZOOl and that a copy was sent via Federal Express to
Steven R. Mather, counsel for Tax Matters Partners/Petitioners,

Kajan, Mather & Barish, 9777 Wilshire Blvd., Suite 805, Beverly

Hills, CA 90210 on this same date.

(

AL CE M. HABUTTE

At torney, LMSB Area 4 Tax Court No. HAO 363 1244 Speer Blvd., Suite 500 Denver, CO 80030 (303) 844-3258

~1'.~
1 ~s APR 2001

Date:

(
. ".._.

Exhibit 4, Page 17 of 17