Court Opinion

ID: 4175390
Source: CourtListenerOpinion
Date Created: 2017-06-07 20:04:04.15343+00
Date Added: 2024-06-11T14:39:20.350998
License: Public Domain

FILED
                             NOT FOR PUBLICATION
                                                                            JUN 7 2017
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                             FOR THE NINTH CIRCUIT

SIXTY-THREE STRATEGIC                            No.   15-15525
INVESTMENT FUNDS and PRESIDO
GROWTH LLC,                                      D.C. No. 3:05-cv-01123-RS

              Petitioners,
                                                 MEMORANDUM*
 and

J. PAUL REDDAM and CLARENCE
VENTURES, LLC,

              Intervenors-Appellants,

 v.

UNITED STATES OF AMERICA,

              Respondent-Appellee.

                    Appeal from the United States District Court
                       for the Northern District of California
                     Richard Seeborg, District Judge, Presiding

                       Argued and Submitted May 18, 2017
                            San Francisco, California

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: THOMAS, Chief Judge, WARDLAW, Circuit Judge, and
BENCIVENGO,** District Judge.

      J. Paul Reddam and his single-member LLC, Clarence Ventures

(collectively “Reddam”), appeal the district court’s grant of summary judgment to

the government. We have jurisdiction pursuant to 26 U.S.C. § 6226(g) and 28

U.S.C. § 1291, and we affirm. Because the parties are familiar with the facts of

this case, we do not repeat them here.

      Reddam and Clarence Ventures, LLC are intervenors in the underlying suit

brought by Presidio Growth, LLC (“Presidio”) on behalf of strategic investment

funds (also LLCs) that were being investigated by the IRS for their participation in

a tax shelter known as “Bond Linked Issue Premium Structure,” or “BLIPS.”

Reddam participated in BLIPS by forming Clarence Ventures LLC, which invested

in the Foraker Strategic Investment Fund (“Foraker”). Both Reddam and Clarence

Ventures are “partners” in Foraker, 26 U.S.C. § 6231(a)(2), and Presidio was

Foraker’s tax matters partner.

      Foraker filed its 1999 partnership tax return on April 13, 2000, so absent an

extension of the statute of limitations, the IRS had until April 15, 2003, to issue a

final partnership administrative adjustment (“FPAA”). 26 U.S.C. §§ 6223(a),

      **
             The Honorable Cathy Ann Bencivengo, United States District Judge
for the Southern District of California, sitting by designation.
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6229(a)(1). Reddam personally signed multiple consents, collectively extending

the limitations period to June 30, 2008. 26 U.S.C. § 6229(b)(1). The IRS issued

an FPAA to Presidio for Foraker on December 21, 2004, after the initial limitations

period expired but within the extension granted by the consents.

      Reddam argues, inter alia, that he relied on the advice of Carl Hasting, the

man who originally sold the BLIPS investment strategy to him, when he decided to

sign an extension of the limitations period, and that because Hasting came under

investigation by the IRS for his BLIPS involvement, Hasting had a conflict of

interest that invalidated the consent Reddam signed. The district court granted

summary judgment to the government on the validity of the extensions, and

Reddam appealed.

      Reddam relies on Transpac Drilling Venture 1982-12 v. Comm’r, 147 F.3d
221 (2d Cir. 1998), for the proposition that an advisor’s conflict of interest

invalidates a taxpayer’s own consent to extend a limitations period. However,

Transpac is easily distinguishable because it does not address a situation in which

a taxpayer signed a consent himself. Twenty-two Strategic Investment Funds, et.

al. v. Comm’r, __ F.3d__ (9th Cir. 2017).

      The evidence in the record demonstrates that Hasting was not advising

Reddam when his power of attorney signed the first consent, but that Hasting was

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advising Reddam when Reddam personally signed the second consent; that Hasting

informed Reddam of a possible conflict of interest and Reddam understood and

waived the same; and that Reddam personally signed five more extensions after

terminating his relationship with Hasting. Although on summary judgment “all

justifiable inferences are to be drawn in [ ] favor” of the non-movant, Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 255 (1986), the facts here do not support the

inference that Hasting’s potential conflict infected every extension of the

limitations period Reddam personally signed. For this reason, the district court did

not err in concluding that the consents Reddam signed to extend the limitations

period for issuing an FPAA were not invalidated by Carl Hasting’s alleged conflict

of interest.

       Because Reddam validly consented to extend the limitations period, the

district court properly entered summary judgment. We need not, and do not, reach

any other issue urged by the parties.

       AFFIRMED.

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