Historic Boardwalk Case: Tax Court Rules Against IRS
By Caitlin Jones
1 min read
Tax Credit Advisor, February 2011: In a significant ruling hailed by practitioners, the U.S. Tax Court has ruled against the Internal Revenue Service in its challenge of the structure of a transaction involving the $99 million historic rehabilitation of the former convention center in Atlantic City, N.J. The IRS could appeal the decision. (Historic Boardwalk Hall, LLC, New Jersey Sports and Exposition Authority v. Commissioner of Internal Revenue Service, Docket No. 11273-07, Jan. 3, 2011.)
Washington, D.C. tax attorney Jerry Breed, a partner with Bryan Cave LLP, called the Court’s ruling “a very welcome decision that should provide substantial comfort and assurance to investors.” He noted, “If the case had come out the other way and the government had won you would have needed a restructuring of how these deals are structured….I think what you see is an affirmation of the way these deals are structured currently.”
The Court affirmed that there was economic benefit to the investor from the transaction in addition to the tax benefits, including a 3% preferred cash-on-cash return.
