Stobie Creek: Too Good to Be True‘

2 Pages Posted: 8 Aug 2008 Last revised: 12 Sep 2015

See all articles by Karen C. Burke

Karen C. Burke

University of Florida Levin College of Law

Grayson M.P. McCouch

University of Florida Levin College of Law

Date Written: August 8, 2008

Abstract

Is a tax shelter that purports to eliminate more than $200 million of gain, with an investment of $2 million and no realistic possibility of profit, "too good to be true"‘ According to the Court of Federal Claims, which filed its decision in Stobie Creek Investments, LLC v. United States on July 31, the answer is yes. In a lengthy opinion, Judge Christine Miller found that a contingent-liability shelter lacked economic substance and affirmed hefty partnership-level penalties. In a setback for the government, however, the court declared the retroactive section 752 regulations invalid. The decision highlights three issues of special interest for practitioners: economic substance, retroactive regulations, and penalties.

Keywords: tax shelter, economic substance, Stobie Creek, penalties, partnership, retroactivity, liabilities, contingent

JEL Classification: K34

Suggested Citation

Burke, Karen C. and McCouch, Grayson M.P., Stobie Creek: Too Good to Be True‘ (August 8, 2008). San Diego Legal Studies Paper No. 08-062, Available at SSRN: https://ssrn.com/abstract=1211923 or http://dx.doi.org/10.2139/ssrn.1211923

Karen C. Burke (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

Grayson M.P. McCouch

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

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