Opinion ID: 461000
Heading Depth: 2
Heading Rank: 1

Heading: The Underlying Tax Dispute

Text: 2 Aruba Bonaire Curacao Trust Company, Limited (ABC) is the non-resident alien trustee of the four trusts that are the subject of this action. Pursuant to its duty to manage the trusts' assets prudently, ABC invested in several land development projects in California. Unfortunately, these investments soured and ultimately produced a lawsuit in which ABC was the defendant. ABC counterclaimed, however, and won a judgment of $1,108,804.70 from the original plaintiff in the action. ABC agreed that the plaintiff could pay this sum in six monthly installments. 3 Before the plaintiff had paid the third installment, however, the Commissioner of Internal Revenue (Commissioner) entered the picture. The Commissioner issued deficiency assessments against ABC, alleging that the trusts owed taxes for several years during which they were doing business in the United States. These assessments amounted to $129,549.56. The Commissioner therefore demanded that the plaintiff in the California litigation pay all sums still owing on the judgment directly to the Internal Revenue Service. Realizing that competing parties had claims to the funds, the plaintiff paid the remaining portion of the judgment into the United States District Court for the Central District of California. That court is currently holding the funds, pending resolution of the tax dispute.