Court Misapplied Tax Doctrine in $7.4 Million Refund Dispute

A partnership’s challenge over a denied a $7.4 million tax refund or claim was vacated and remanded because a lower court applied an incorrect legal standard when examining the transaction generating the loss, the Federal Circuit held Thursday.

The US Court of Appeals for the Federal Circuit held that the federal claims court conflated two legal doctrines when it “applied a hybrid legal standard” and denied GSS Holdings Inc. the ability to carry back some net operating losses generated in 2011 back to its 2009 tax year.

The US Court of Federal Claims court had utilized a hybrid of the ...