Opinion ID: 64710
Heading Depth: 3
Heading Rank: 1

Heading: Was the 2000 transaction a taxable event under then-existing Mexican tax law?

Text: After conducting a hearing on this issue under Rule 44.1 of the Federal Rules of Civil Procedure, the district court concluded that the Carnrite-Gale transaction in 2000 was a taxable event under Article 190 [5] of the Mexican tax code applicable at the time of the transaction. Carnrite maintains that the court's interpretation of Mexican law is incorrect. According to Carnrite, the exchange of a nonresident limited-liability company's shares did not generate tax liability under the version of Article 190 in effect at the time of the 2000 transaction if the value of the shares derived from an indirect interest in Mexican real property, as through a fideicomiso. The provision was amended in 2004 to create tax liability in such situations. We do not resolve this issue. As we will discuss, even if the transaction in 2000 was a taxable event, the Gales have not shown that Carnrite's failure to pay such taxes resulted in a liability for Villa Rayos. As such, the Gales' breach of contract claim fails under either interpretation of the Mexican tax law.