Honda Center Manager Misses $51 Million Bad-Debt Tax Deduction

The business partnership charged with managing the Honda Center in Anaheim, Calif., improperly claimed a $51.5 million bad-debt deduction, the US Tax Court ruled Monday.

Anaheim Arena Management LLC repeatedly paid advances in the form of various loans to make up for shortfalls in the Honda Center’s funding, and in 2015, it concluded that those advances would never be repaid under the terms of its operating agreement with the city. The IRS disallowed the group’s subsequent treatment of those loans as bad debt, denying the group an accompanying tax break.

Judge Richard T. Morrison backed the agency, concluding that AAM’s ...