721.8 kB - Poledna | Boss | Kurer

United StatesThe United States Tax Court heard a motion forsummary judgment from a taxpayer who was a residentof the US Virgin Islands and held an interestin a domestic partnership. The taxpayer filed his taxreturns with the Virgin Islands Revenue; howeverthe IRS argued years later that the partnership wasnot valid, that the taxpayer had failed to properlyidentify all sources of income, and that the returnsshould have been filed with the IRS.Because the taxpayer correctly filed his tax returnswith the Virgin Islands Revenue, despite the matterof income from the partnership being left unresolved,the Court granted his motion for a summaryjudgment against the tax adjustments, by reasonthat the notice was issued by the IRS more thanthree years after the properly filed tax returns andwas therefore invalid.The judgment was delivered on May 22, 2013.The IRS made adjustments to negate the tax benefitsthe taxpayer received from the Virgin Islands onaccount of the partnership; the taxpayer objectedand brought the motion before the Tax Court.The Court acknowledged that the success of thetaxpayer's motion depended on whether he properlyfiled the required returns with the Virgin IslandsRevenue, and that it was required under lawto assume that income from the partnership wasnot suitably recorded in the submitted returns.The IRS attempted to rely on case law and its ownnotices to argue that the taxpayer was considered aUS resident living abroad and was required to file atax return with them, but the Court disagreed entirelywith their interpretation of the law. It statedthat the taxpayer had no reason to consider himselfliving abroad, that the necessary returns filed withthe Virgin Islands Revenue mirrored the returns requiredby the IRS, and that their notices were publishedafter the taxpayer filed his returns and didnot have retroactive effect.http://www.ustaxcourt.gov/InOpHistoric/AppletonDivJacobs.TC.WPD.pdfTax Court: Arthur I. Appleton Jr. et al. v. Commissioner(140 T.C. No. 14)ASIA PACIFICIndiaThe Delhi High Court heard an appeal by the Revenueagainst the tax treatment of services providedby an India-based subsidiary of Digital Microwave(Mauritius) Ltd, which is itself a wholly-ownedsubsidiary of a US-based manufacturing company,Digital Microwave Corporation USA.The subsidiary was paid to supply warranty coverageon equipment sold by the US company to Indiancustomers, but it also independently provided installationand maintenance services for said equipment.The subsidiary calculated the arm's lengthprice of its international transactions with the UScompany, but the Transfer Pricing Officer insisted90