Court Opinion

ID: 4366076
Source: CourtListenerOpinion
Date Created: 2019-02-08 17:00:41.037117+00
Date Added: 2024-06-11T14:48:42.541830
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

 BASR PARTNERSHIP, WILLIAM F. PETTINATI,
       SR., TAX MATTERS PARTNER,
              Plaintiffs-Appellees

                           v.

                  UNITED STATES,
                 Defendant-Appellant
                ______________________

                      2017-1925
                ______________________

    Appeal from the United States Court of Federal Claims
in No. 1:10-cv-00244-SGB, Judge Susan G. Braden.
                 ______________________

               Decided: February 8, 2019
                ______________________

    THOMAS A. CULLINAN, Eversheds Sutherland (US)
LLP, Atlanta, GA, argued for plaintiffs-appellees. Repre-
sented by REBECCA M. STORK.

    MICHAEL J. HAUNGS, Tax Division, United States De-
partment of Justice, Washington, DC, argued for defend-
ant-appellant.    Also represented by JACOB EARL
CHRISTENSEN, DAVID A. HUBBERT, GILBERT STEVEN
ROTHENBERG.
2                         BASR PARTNERSHIP   v. UNITED STATES

   CARLTON M. SMITH, New York, NY, for amici curiae
Harvard Federal Tax Clinic, Philip C. Cook Low-Income
Tax Clinic of Georgia State University.
                 ______________________

     Before PROST, Chief Judge, WALLACH and CHEN,
                    Circuit Judges.
     Opinion for the court filed by Chief Judge PROST.
    Dissenting opinion filed by Circuit Judge WALLACH.
PROST, Chief Judge.
     This appeal concerns an order from the U.S. Court of
Federal Claims awarding $314,710.69 to BASR Partner-
ship (“BASR”) under 26 U.S.C. § 7430 (“I.R.C. § 7430”) for
its reasonable litigation costs incurred in connection with
a tax determination from a Tax Equity and Fiscal Respon-
sibility Act of 1982 (“TEFRA”) proceeding. The United
States (“Government”) appeals the order. We have juris-
diction pursuant to 28 U.S.C. § 1295(a)(3). We affirm.
                              I
     The Pettinati family owned a commercial printing com-
pany, Page Printing, from 1982 until they sold it in 1999.
Before completing the sale, the Pettinatis hired the now-
defunct law firm of Jenkens & Gilchrist to advise them on
an investment strategy that potentially had tax benefits
arising from the sale of their business. See BASR P’ship v.
United States, 795 F.3d 1338, 1340 (Fed. Cir. 2015); J.A.
133, 987. As part of the “tax planning strategy by attorney
Erwin Mayer of Jenkens & Gilcrest [sic], P.C.,” J.A. 1071,
the Pettinatis formed BASR, a general partnership, J.A.
1071, 2392–402. BASR assumed certain U.S. Treasury
Note obligations, which increased its cost basis. J.A. 54.
Further, each of the BASR partners—William Pettinati,
Sr., his wife, Virginia Pettinati, and the gift trusts belong-
ing to their two sons, William Pettinati, Jr. and Andrew
Pettinati—contributed all their shares in Page Printing to
BASR PARTNERSHIP   v. UNITED STATES                          3

BASR in June 1999. J.A. 55, 82. Two months later, BASR
sold 100% of its stock in Page Printing to Nationwide
Graphics, Inc. for $6,898,245. J.A. 55. When offset against
its overstated cost basis, however, BASR realized a gain of
only $263,934. Id. On their 1999 individual returns, the
Pettinati partners reported their shares of this under-
stated gain passed through to them from BASR. J.A. 1231,
1266, 1280. In other words, “by creating the BASR Part-
nership, the Pettinatis greatly reduced the tax liability
arising from the sale of their printing business.” BASR
P’ship, 795 F.3d at 1340.
     The Internal Revenue Service (“IRS”) did not confront
the Pettinatis regarding the overstated basis until a decade
later. In January 2010, the IRS issued to BASR’s tax mat-
ters partner, William Pettinati, Sr., a final partnership ad-
ministrative adjustment (“FPAA”), which disallowed the
tax benefits generated from BASR’s 1999 tax filing. J.A.
61–72. In April 2010, Mr. Pettinati filed a petition and
summary judgment motion in the U.S. Court of Federal
Claims (“trial court”) challenging the FPAA as untimely
under I.R.C. § 6501(a), which provides a three-year statute
of limitations. J.A. 45–60. At that time, BASR had “zero
assets,” J.A. 1956, and had filed its last partnership return
in 1999, J.A. 317.
    While BASR’s filings were pending before the trial
court, the BASR partners offered the Government $1.00 to
settle all of the adjustments that the Government made in
the FPAA. J.A. 1953–54. 1 The Government declined the
offer. Government’s Br. 56–57.

    1    Although BASR argues that it submitted the qual-
ified offer in conjunction with its partners, Appellee’s
Br. 11, I.R.C. § 7430(g)(1)(A) specifies that a qualified offer
“is made by the taxpayer.” Because partnerships do not
pay income taxes, see I.R.C. § 701, we do not regard BASR
4                        BASR PARTNERSHIP   v. UNITED STATES

    In September 2013, the trial court granted summary
judgment for BASR, holding that the FPAA was untimely
issued. BASR P’ship v. United States, 113 Fed. Cl. 181, 194
(2013). This court affirmed. BASR P’ship, 795 F.3d at
1350.
     In March 2016, BASR, by and through Mr. Pettinati,
Sr., moved the trial court for litigation costs under I.R.C.
§ 7430(c)(4)(E). J.A. 1934–41. The trial court granted
BASR’s motion in part and awarded BASR $314,710.69 in
litigation costs. BASR P’ship v. United States, 130 Fed. Cl.
286, 313–14 (2017). 2
                             II
    This appeal concerns the interplay between two statu-
tory schemes—I.R.C. § 7430, which is a fee-shifting stat-
ute, and TEFRA, 26 U.S.C. § 6221 et seq.
    I.R.C. § 7430(a) provides that a “prevailing party” may
be awarded reasonable litigation costs incurred in connec-
tion with a court proceeding brought against the United
States in connection with “the determination, collection, or
refund of any tax, interest, or penalty under this title.”

as an offeror, see Oral Arg. at 32:16–32:20, http://oralargu-
ments.cafc.uscourts.gov/default.aspx?fl=2017-1925.mp3
(Q: “Is the partnership a taxpayer?” A: “No.”).
    2    In its briefing before this court, BASR moved to
strike portions of the Government’s opening brief that
BASR claims are disputed. Appellee’s Br. 12. The Govern-
ment responds that “there is no requirement that the fac-
tual statements in an appellate brief must be based on
specific findings of fact determined after a trial.” Govern-
ment’s Reply Br. 31–32. When reviewing the briefs, we re-
main cognizant that a party may present the facts in the
light most favorable to that party. BASR had the oppor-
tunity in its response brief to dispute the Government’s fac-
tual account. The motion is denied.
BASR PARTNERSHIP   v. UNITED STATES                            5

Generally, a party must “substantially prevail” with re-
spect to the amount in controversy or the issues presented,
as provided by I.R.C. § 7430(c)(4)(A). 3 But special rules ap-
ply when a taxpayer makes the Government a monetary
offer to settle the tax dispute and the Government rejects
the offer. In such cases, if the taxpayer’s liability under the
court’s judgment turns out to be less than or equal to the
offer that the taxpayer made to the Government to settle
the tax dispute, the taxpayer will be treated as a “prevail-
ing party” if it is also “[a] party to [the] court proceeding.” 4

    3    We do not consider BASR’s alternative argument
that it is a prevailing party under I.R.C. § 7430(c)(4)(A), be-
cause BASR pursued a different route to an award before
the trial court, specifically, I.R.C. § 7430(c)(4)(E). J.A.
1940–41 (BASR’s memorandum in support of its motion for
litigation costs under I.R.C. § 7430(c)(4)(E)); Oral Arg. at
36:33–37:10. The trial court, therefore, did not address the
issue. We view the argument as forfeited.
     4   I.R.C. § 7430(c)(4)(E) (“qualified offer rule”) recites:
    A party to a court proceeding . . . shall be treated
    as the prevailing party if the liability of the tax-
    payer pursuant to the judgment in the proceeding
    (determined without regard to interest) is equal to
    or less than the liability of the taxpayer which
    would have been so determined if the United States
    had accepted a qualified offer of the party under
    subsection (g).
       (ii) Exceptions.—This subparagraph shall not
    apply to.—
            (I) any judgment issued pursuant to a set-
    tlement; or
            (II) any proceeding in which the amount of
    tax liability is not in issue . . . .
I.R.C. § 7430(c)(4)(E).
6                         BASR PARTNERSHIP   v. UNITED STATES

There are two exceptions, however, to this so-called quali-
fied offer rule. The qualified offer rule does not apply
(1) when the court’s judgment issues pursuant to a settle-
ment or (2) when the amount of tax liability is not “in issue”
during the court proceeding. See I.R.C. § 7430(c)(4)(E)(ii).
     TEFRA, enacted in 1982, enables the IRS to correct er-
rors on a partnership’s tax return in a single, unified pro-
ceeding. 5 United States v. Woods, 571 U.S. 31, 38–39
(2013). Under TEFRA, the IRS first initiates proceedings
at the partnership level to adjust partnership items. Id. at
39. Once the tax treatment of the partnership items at the
partnership level becomes final, administratively or judi-
cially, the IRS next initiates a partner-level proceeding to
make any resulting computational adjustments in the tax
liability of the individual partners. See id. The IRS di-
rectly assesses most computational adjustments against
the partners, “bypassing deficiency proceedings and per-
mitting the partners to challenge the assessments only in
post-payment refund actions.” Id. 6

    5   Although partnerships do not pay federal income
tax, I.R.C. § 701, they must still report their tax items
(“partnership items”) on an annual information return,
I.R.C. § 6031(a).
    6   The Bipartisan Budget Act of 2015, Pub. L. No.
114-74, § 1101, 129 Stat. 584, 625, repealed TEFRA and
reformed the partnership auditing process such that the
tax attributable to any audit adjustments made by the IRS
to the partnership items will be assessed and collected from
the partnership at the partnership level, rather than from
the partners in the partner-level proceedings. This change
does not apply to this case because the Act is effective only
for partnership taxable years beginning after December
2017. See Bipartisan Budget Act of 2015 § 1101, 129 Stat.
at 638.
BASR PARTNERSHIP   v. UNITED STATES                         7

                             III
    With this legal framework in mind, we turn to the Gov-
ernment’s arguments. The Government advances five in-
dependent challenges to the trial court’s order. The first is
that (1) BASR does not qualify for litigation costs under
I.R.C. § 7430(a) because it is not a “party” and therefore
cannot be a “prevailing party.” Government’s Br. 17–18.
Next, it argues that, even if BASR were considered to be a
“party,” it still could not receive litigation costs under
I.R.C. § 7430(a) because (2) it did not pay or incur any such
costs, and (3) the amount of tax liability was not “in issue”
during the TEFRA partnership-level court proceeding.
Government’s Br. 24, 45. Lastly, the Government argues
that even if BASR were statutorily eligible to receive an
award for litigation costs under I.R.C. § 7430(a), the trial
court erred by (4) failing to apply the real-party-in-interest
doctrine and by (5) abusing its discretion in granting the
award. Government’s Br. 51, 56.
                    A. Prevailing Party
    To qualify as a “prevailing party” under I.R.C.
§ 7430(a), the taxpayer must necessarily be a “party” to a
§ 7430(a) court proceeding—here, the TEFRA partnership-
level judicial proceeding. See I.R.C. § 7430(c)(4)(E); 26
U.S.C. § 6226 (2009) (“I.R.C. § 6226”). The Government ar-
gues that BASR could not have been a party to the proceed-
ing because it is the partnership entity, and as a legal
matter, only the individual partners can be parties to a
TEFRA proceeding. Government’s Br. 40. The trial court
disagreed and determined that BASR was indeed a party
to the TEFRA proceeding. Although the trial court relied
largely on an inapplicable treasury regulation to reach its
conclusion, 7 the trial court’s error was harmless because,

    7    Treasury Regulation § 301.7430-5(g) applies only
to costs incurred and services performed in cases in which
8                        BASR PARTNERSHIP   v. UNITED STATES

in our view, other reasons support a finding that BASR was
a party.
    Whether I.R.C. § 6226 prohibits a partnership from be-
ing a party to a TEFRA partnership-level court proceeding
is a legal question requiring statutory interpretation. We
review the trial court’s statutory interpretation de novo.
Salman Ranch Ltd. v. United States, 573 F.3d 1362, 1370
(Fed. Cir. 2009). We focus our inquiry on the statutory lan-
guage. Electrolux Holdings, Inc. v. United States, 491 F.3d
1327, 1330 (Fed. Cir. 2007) (explaining that “[s]tatutory in-
terpretation begins with the language of the statute” and
“the plain meaning of the statute [is derived] from its text
and structure”).
     I.R.C § 6226 concerns judicial review of FPAAs under
the TEFRA scheme. It provides, in relevant part, that “(1)
each person who was a partner in [the] partnership at any
time during [the partnership taxable] year shall be treated
as a party to [the] action,” and “(2) the court having juris-
diction of [the] action shall allow each such person to par-
ticipate in the action.” I.R.C. § 6226(c). Despite the
Government’s argument to the contrary, I.R.C. § 6226(c)
does not provide that “partners, rather than the partner-
ship itself, are the parties in a TEFRA partnership pro-
ceeding.” Government’s Br. 44–45. While it is true that
I.R.C. § 6226(c) provides that a partner “shall be treated as
a party” to the TEFRA judicial proceeding, that provision
alone does not disqualify the partnership entity from also
being a party to the proceeding.
    The Government, however, avers that allowing a part-
nership to be a party would conflict with U.S. Tax Court
precedent and the Rules of the Court of Federal Claims

the petition was filed on or after March 1, 2016. 81 Fed.
Reg. 10,479, 10,489 (Mar. 1, 2016); Treas. Reg. § 301.7430-
6. The petition in this case was filed in 2010.
BASR PARTNERSHIP   v. UNITED STATES                         9

(“RCFC”). 8 Government’s Br. 40, 44. As the trial court
acknowledged, the Tax Court has, at least on one occasion,
interpreted I.R.C. § 6226(c) as standing for the proposition
that “the partners, rather than the partnership entity, are
the parties in a TEFRA proceeding.” BASR P’ship, 130
Fed. Cl. at 302 (quoting Foothill Ranch Co. P’ship v.
Comm’r, 110 T.C. 94, 99 (1998)). Our view, however, is that
the Tax Court’s interpretation improperly converts an in-
clusive statutory provision into an exclusive one. Moreo-
ver, we note that the Tax Court has also said that “the
partners and the tax matters partner, rather than the part-
nership entity itself, are the essential parties in a partner-
ship audit and litigation procedure,” leaving open the
possibility that a partnership could be a non-essential
party. See Chef’s Choice Produce, Ltd. v. Comm’r, 95 T.C.
388, 395 (1990) (emphasis added).
    Regardless, we are not bound by Court of Federal
Claims Rules or Tax Court decisions. In fact, this court
previously explained that “[t]he tax matters part-
ner . . . represents the partnership in partnership-level ju-
dicial     proceedings,    but   the    individual    limited
partners . . . are also deemed to be parties to the proceed-
ing.” Conway v. United States, 326 F.3d 1268, 1271 (Fed.
Cir. 2003) (internal citation omitted). Other courts, more-
over, have also acknowledged that the partnership partici-
pates in partnership-level TEFRA proceedings through its
tax matters partner. See, e.g., White & Case v. United
States, 22 Cl. Ct. 734, 736–37 (1991) (referring to the part-
nership, rather than the partner, as the plaintiff in a court
proceeding concerning a petition for readjustment of part-
nership items pursuant to I.R.C. § 6226(a)). Because

    8    RCFC Appendix F, Rule 6(a) (“[T]he partner who
filed the complaint, the tax matters partner, and each per-
son who satisfies the requirements of Code Sections 6226(c)
and (d) . . . shall be treated as parties to the action.”).
10                        BASR PARTNERSHIP   v. UNITED STATES

nothing in I.R.C. § 6226 or I.R.C. § 7430 prohibits a part-
nership from being a party to a partnership-level TEFRA
judicial proceeding, we reject the Government’s argument
that BASR, due to its partnership status, cannot legally be
a party to the proceeding.
    To the contrary, as BASR argues, the statutes at issue
suggest that a partnership can receive litigation costs in a
TEFRA judicial proceeding. Specifically, under I.R.C.
§ 7430(c)(4)(A)(ii), a “prevailing party” must “meet[] the re-
quirements of section 2412(d)(2)(B) of such title 28.” That
section states, in relevant part:
     “party” means (i) an individual whose net worth did
     not exceed $2,000,000 at the time the civil action
     was filed, or (ii) any owner of an unincorporated
     business, or any partnership, corporation, associa-
     tion, unit of local government, or organization, the
     net worth of which did not exceed $7,000,000 at the
     time the civil action was filed, and which had not
     more than 500 employees at the time the civil ac-
     tion was filed.
28 U.S.C. § 2412(d)(2)(B) (2012) (emphasis added). The
fact that the Internal Revenue Code’s cost-shifting statute
incorporates a provision that sets specific requirements for
partnerships suggests that Congress intended for partner-
ships to be eligible for costs under § 7430.
    Indeed, the Government does not dispute that a court
can award costs in a partnership-level proceeding. The
Government’s position is simply that the qualified offer
rule can never result in a costs award in partnership-level
cases. But I.R.C. § 7430 does not draw this distinction. Ra-
ther, the statute applies in any proceeding “in connection
with the determination, collection, or refund of any tax.”
I.R.C. § 7430(a). Thus, we conclude that BASR can legally
be a “party.”
BASR PARTNERSHIP   v. UNITED STATES                           11

                         B. “In Issue”
    The Government next argues that the trial court erred
in determining that tax liability was “in issue” in the
TEFRA partnership-level court proceeding. Specifically,
the Government asserts that the qualified offer rule does
not apply to TEFRA partnership-level proceedings at all
because each partner’s tax liability amount is not “in issue”
in such proceedings. See I.R.C. § 7430(c)(4)(E)(ii)(II) (ex-
cluding from the qualified offer rule cases in which the
amount of tax liability is not “in issue” during the court
proceeding); Government’s Br. 28.
    The trial court found that the amount of tax liability
was “in issue” because “[t]he partnership-level FPAA re-
view proceeding conclusively determines the tax treatment
of all partnership items, determining each individual part-
ner’s tax liability.” BASR P’ship, 130 Fed. Cl. at 303–04.
Although the Government does not appear to dispute that
the tax treatment of partnership items affects each part-
ner’s individual tax liability, it contends that “[u]nder the
plain terms of the qualified-offer rule, . . . that real, but in-
direct, link between the judgment and the tax liability is
insufficient to support a fee award.” Government’s Br. 31.
According to the Government, the amount of tax liability
must be determined in the proceeding for it to be “in issue”
in that proceeding. See Government’s Reply Br. 7–10.
BASR disagrees and argues that the amount of tax liability
need be only indirectly “in issue” to avoid the qualified offer
rule’s exclusionary provision. See Appellee’s Br. 36.
     To resolve the parties’ dispute, we turn to the language
of the statute to ascertain whether the amount of tax lia-
bility must be determined in order for it to be “in issue” for
purposes of the qualified offer rule. As previously dis-
cussed, we review the trial court’s statutory interpretations
de novo. Salman Ranch, 573 F.3d at 1370. We agree with
the trial court that the statute does not require such a de-
termination.
12                        BASR PARTNERSHIP   v. UNITED STATES

    I.R.C. § 7430 does not define the phrase “in issue,” and
we are unaware of any special technical meaning under the
tax laws. Thus, it is appropriate to construe the phrase
according to its plain meaning. FDIC v. Meyer, 510 U.S.
471, 476 (1994). Black’s Law Dictionary defines the term
“issue” as “a . . . dispute between two or more parties.”
Black’s Law Dictionary 907 (9th ed. 2009). It follows,
therefore, that the plain meaning of “in issue” is simply “in
dispute.” Additionally, at least some courts have used the
terms “in issue” and “at issue” interchangeably in certain
contexts. See, e.g., Safeco Ins. Co. of Am. v. Vecsey, 259
F.R.D. 23, 30 n.5 (D. Conn. 2009) (“The Connecticut Su-
preme Court has used the terms ‘in issue’ and ‘at issue’ in-
terchangeably when discussing the implied-waiver-of-
privilege doctrine . . . .”). The term “at issue” is defined in
Black’s Law Dictionary as “taking opposite sides; under
dispute; in question.” Black’s Law Dictionary 144 (9th ed.
2009). In light of these consistent definitions, we view the
plain and ordinary meaning of “in issue” as broader than
the Government asserts and conclude that the phrase re-
quires neither a calculation nor determination of tax liabil-
ity amount. The Government has not pointed to anything
in the statutory scheme that would warrant a narrower in-
terpretation.
     “TEFRA created a method for uniformly adjusting
items of partnership income, loss, deduction, or credit that
affect each partner.” Locke v. Comm’r, 1996 Tax Ct. Memo
LEXIS 558, at *5–6. “A partner’s tax liability attributable
to partnership items is determined at the partnership
level, separate from the proceedings for determining defi-
ciencies attributable to nonpartnership items.” Id. (empha-
sis added). As the Tax Court has said, the proposition that
in a partnership-level proceeding the court “make[s] deter-
minations with respect to the items of income, gain, loss, or
credit of the partnership, rather than the individual part-
ners, . . . is to exalt form over substance.” See 1983 W. Re-
serve Oil & Gas Co. v. Comm’r, 95 T.C. 51, 57 (1990).
BASR PARTNERSHIP   v. UNITED STATES                         13

           C. Paid or Incurred Litigation Costs
    Prevailing parties may be awarded reasonable litiga-
tion costs “incurred” in connection with a court proceeding
brought against the United States with respect to “the de-
termination, collection, or refund of any tax, interest or
penalty” under Title 26. I.R.C. § 7430(a). The Government
argues that “BASR is . . . ineligible for an award under
I.R.C. § 7430 because it did not ‘pay or incur’ any litigation
costs.” Government’s Br. 45.
    Both parties agree that in order to “incur” costs, one
must be obligated to pay them. See Pickholtz v. Rainbow
Techs., Inc., 284 F.3d 1365, 1375 (Fed. Cir. 2002); Govern-
ment’s Br. 46; Appellee’s Br. 40. The trial court determined
that “BASR ‘incurred’ litigation costs for purposes of I.R.C.
§ 7430, because it ha[d] an obligation to pay the attorney
and paralegal fees and other costs charged by Sutherland
Asbill [& Brennan LLP].” BASR P’ship, 130 Fed. Cl. at
306. The Government argues that the trial court erred be-
cause BASR had no such “legal obligation” to pay Suther-
land, Asbill & Brennan LLP anything. See Government’s
Br. 51.
    The Government avers that the obligation to pay Suth-
erland belonged to only the Pettinatis because the
“[e]ngagement letters were addressed to, and counter-
signed by, (1) William Pettinati, Sr., and Virginia Pettinati;
and (2) William Pettinati, Jr., and his wife.” Government’s
Br. 46. Additionally, “Sutherland’s invoices were all ad-
dressed to Virginia and William Pettinati, Sr., not to
BASR.” Government’s Br. 47. “And the Pettinatis paid
those invoices out of their own funds: Virginia and William
Pettinati, Sr., paid two-thirds of the fees . . . [and] William
Pettinati, Jr., paid the remaining one third.” Id.
    The trial court acknowledged these arguments and
found them unpersuasive because “under the terms of the
Partnership Agreement, BASR is obligated to repay its
Partners for litigation costs incurred on its behalf.” BASR
14                        BASR PARTNERSHIP   v. UNITED STATES

P’ship, 130 Fed. Cl. at 306. The court cited Section 2.5 of
the Partnership Agreement, which provides that the Man-
aging Partner—i.e., William Pettinati, Sr.—is entitled to
“reimbursement for reasonable out-of-pocket expenses in-
curred by him on behalf of the Partnership or in pursuance
of his duties as Managing Partner.” Id.; J.A. 2394 (Part-
nership Agreement). The trial court also cited Section
9.2(a) of the Partnership Agreement:
     Each Partner shall, to the extent permitted by law,
     be indemnified and held harmless by the Partner-
     ship from and against any and all losses, claims,
     damages, liabilities, joint and several, expenses
     (including reasonable legal fees and ex-
     penses), . . . and all other amounts arising from any
     and all claims, costs, demands, actions, suits or
     proceedings, civil, criminal, administrative or in-
     vestigative, in which the Partner may be involved.
J.A. 2399 (emphasis added). The trial court noted that alt-
hough Section 9.2(c) limits indemnification “to the extent
of any Partnership assets,” see BASR P’ship, 130 Fed. Cl.
at 307, BASR’s inability to reimburse the partners for liti-
gation costs advanced on its behalf does not absolve BASR
of its obligation to reimburse its partners, see id.
    The trial court also relied on Texas partnership law.
The court found that “Texas law governs the obligations
that BASR owes to its partners” because “Section 9.11 of
the Partnership Agreement states that ‘th[is] Agreement
shall be governed by and construed in accordance with the
laws of the State of Texas, including the [Texas Uniform
Partnership] Act.’” Id. at 306 (quoting J.A. 2400 (Partner-
ship Agreement)). Under Texas law, “[t]o the extent that
the partnership agreement does not otherwise provide,
[Chapter 152] and the other partnership provisions [of the
Texas Business Organizations Code (TBOC)] govern the re-
lationship . . . between the partners and the partnership.”
Tex. Bus. Org. Code Ann. § 152.002(a).
BASR PARTNERSHIP   v. UNITED STATES                        15

    Thus, the trial court found that “even if the Partner-
ship Agreement did not expressly provide that the partners
were entitled to reimbursement, the TBOC obligates BASR
to repay its partners for litigation costs incurred on its be-
half.”    BASR P’ship, 130 Fed. Cl. at 307 (citing
TBOC §§ 152.703(a), 11.052, and 11.055, which together
provide that a person winding up a partnership’s business
may continue to prosecute or defend a civil court action or
proceeding by or against the partnership in the name of
and for and on behalf of the partnership).
    The Government acknowledges BASR’s Partnership
Agreement and the TBOC, Government’s Br. 50, but ar-
gues that (1) the partners did not advance the litigation
costs on BASR’s behalf but rather incurred those costs to
pay for their own legal representation as separate parties
to the litigation, and (2) any obligation that BASR may
have had to reimburse the Pettinatis is purely theoretical
because BASR has not reimbursed its partners and its
partners have not requested such reimbursement, id. at
49–50.
    “A partnership agreement is a contract, and is inter-
preted according to the principles of contract law.” Holmes
v. Keets, 153 F.2d 132, 134 (D.C. Cir. 1946); Park Cities
Corp. v. Byrd, 534 S.W.2d 668, 672 (Tex. 1976) (“[W]e shall
construe and interpret [the partnership] agreement pursu-
ant to the applicable law of contracts.”). Because contract
interpretation is a question of law, we review the trial
court’s legal conclusions de novo. Barron Bancshares, Inc.
v. United States, 366 F.3d 1360, 1368 (Fed. Cir. 2004). If
the provisions of a contract are clear and unambiguous, as
they are here, we construe them according to their plain
meaning. Id. at 1375–76.
    We disagree with the Government. As to the Govern-
ment’s first argument, TEFRA partnership-level court pro-
ceedings under I.R.C. § 6226 are only “nominally brought
in the name of a partner.” H.R. Rep. No. 105-148, at 638
16                         BASR PARTNERSHIP    v. UNITED STATES

(1997). To be sure, this court has previously interpreted
I.R.C. § 6226 as “permit[ting] the ‘tax matters part-
ner’ . . . to file a petition on behalf of the partnership to con-
test adjustments to partnership income made by the
Internal Revenue Service.” Transpac Drilling Venture,
1983-63 by Crestwood Hosps., Inc. v. United States, 16 F.3d
383, 385 (Fed. Cir. 1994). Consistent with that interpreta-
tion, Mr. Pettinati, Sr., as BASR’s Tax Matters Partner,
brought the partnership action on BASR’s behalf to chal-
lenge the adjustments the IRS made to BASR’s partnership
return.
     As to the Government’s second argument, we simply
fail to see its relevance. The fact that BASR has not yet
reimbursed its partners and that its partners have not yet
asked for the reimbursement is immaterial to the question
whether BASR is contractually obligated to reimburse or
indemnify its partners under the Partnership Agreement.
    We agree with the trial court that the Partnership
Agreement obligates BASR to indemnify and reimburse
the Pettinatis for reasonable legal fees and expenses aris-
ing from the TEFRA partnership-level court proceeding.
Section 9.2 obligates BASR to indemnify each partner for
reasonable legal fees and expenses arising from any and all
suits or proceedings in which the partner is involved. J.A.
2399. Section 2.5 obligates BASR to reimburse Mr. Petti-
nati, Sr., for his reasonable out-of-pocket expenses incurred
on behalf of the partnership or in pursuance of his duties
as Managing Partner. J.A. 2394. Under the Partnership
Agreement, it is the Managing Partner’s duty to serve as
the Tax Matters Partner. J.A. 2397. As such, Mr. Petti-
nati, Sr., had a duty to act on the partnership’s behalf, ir-
respective of his personal tax posture. See United States v.
Martinez (In re Martinez), 564 F.3d 719, 728–29 (5th Cir.
2009); see also Comput. Programs Lambda, Ltd. v. Comm’r,
89 T.C. 198, 205–06 (1987).
BASR PARTNERSHIP   v. UNITED STATES                          17

    Mr. Pettinati, Sr., filed a petition for readjustment of
BASR’s partnership items under I.R.C. § 6226(a) and hired
legal representation in connection with the consequent
partnership-level proceeding. We agree with the trial court
that Mr. Pettinati, Sr., acted on BASR’s behalf in his ca-
pacity as BASR’s Tax Matters Partner consistent with the
Partnership Agreement. See BASR P’ship, 130 Fed. Cl. at
290. BASR, therefore, is responsible for the litigation costs
associated with the partnership-level TEFRA proceeding.
                 D. Real-Party-in-Interest
    The Government avers that the trial court erred in
awarding costs to BASR because the Pettinatis, not BASR,
are the real-parties-in-interest in the TEFRA partnership-
level proceeding. Government’s Br. 54. The trial court,
however, determined that BASR is the real-party-in-inter-
est with respect to litigation costs because the Partnership
Agreement and Texas law obligate it to pay those costs. See
BASR P’ship, 130 Fed. Cl. at 308.
    “The phrase, ‘real party in interest,’ is a term of art uti-
lized . . . to refer to an actor with a substantive right whose
interests may be represented in litigation by another.”
United States ex rel. Eisenstein v. City of New York, 556
U.S. 928, 934–35 (2009). The relevance of the real-party-
in-interest doctrine to this case stems from 28 U.S.C.
§ 2412(d)(2)(B), which is partially incorporated into I.R.C.
§ 7430(c)(4)(E) and prohibits, inter alia, an individual
whose net worth exceeds $2 million and a partnership
whose net worth exceeds $7 million from obtaining an
award under I.R.C. § 7430.
     It is undisputed that Virginia and William Pettinati,
Sr., are ineligible to directly recover litigation costs under
I.R.C. § 7430 because their personal net worth exceeds
18                         BASR PARTNERSHIP    v. UNITED STATES

$2 million. Oral Arg. at 24:10–24:16. 9 Also undisputed is
the fact that BASR’s net worth does not exceed $7 million.
Government’s Br. 50; J.A. 1956 (affidavit of William Petti-
nati, Sr., certifying that BASR had “zero assets” at the time
the complaint was filed). Thus, in order for Mr. and Mrs.
Pettinati, Sr., to recover their out-of-pocket litigation costs,
they must do so indirectly through reimbursement from
BASR.
     Relying on Unification Church v. Immigration & Nat-
uralization Service, 762 F.2d 1077, 1082 (D.C. Cir. 1985)
(holding that “the court shall consider only the qualifica-
tion[s] . . . of those parties that will be themselves liable for
fees if court-awarded fees are denied”), the Government ar-
gues that “the Pettinatis would be the only beneficiaries of
any award in this case.” Government’s Br. 54. According
to the Government, the Pettinatis would be liable for the
litigation costs if an award is denied. See id.; see also J.A.
2067–72 (law firm engagement letters); J.A. 2399 (section
of the Partnership Agreement providing that “indemnifica-
tion . . . shall be to the extent of any Partnership As-
sets”). And the Pettinatis ultimately would recover their
litigation costs—either as a consequence of the Partnership
Agreement or due to the inherent, pass-through nature of
partnerships—if an award is granted. See Government’s
Br. 54. As a consequence, argues the Government, the Pet-
tinatis are the real-parties-in-interest. Id. The dissent
agrees. Dissenting Op. at 2, 6. We do not.
    In Unification Church, the D.C. Circuit applied the
real-party-in-interest doctrine “to carry out the congres-
sional intent” with regard to § 2412(d). 762 F.2d at 1082.
The court found that the real-party-in-interest was the

     9  The Government disputed before the trial court
whether William Pettinati, Jr.’s gift trust satisfies the net-
worth requirements, but the trial court made no findings
on that issue. See BASR P’ship, 130 Fed. Cl. at 308.
BASR PARTNERSHIP   v. UNITED STATES                         19

Church, not the employees who applied for attorney’s fees,
because the Church had agreed to pay for the employees’
attorney’s fees. See id.; see also Love v. Reilly, 924 F.2d
1492, 1494 (9th Cir. 1991).
     Notably, at least one of our sister circuits has rejected
the D.C. Circuit’s application of the real-party-in-interest
doctrine to determine eligibility for fees and costs under
§ 2412(d). See, e.g., Nail v. Martinez, 391 F.3d 678, 683
(5th Cir. 2004) (stating that the D.C. Circuit’s “resort to the
legislative history for the inclusion of a non-statutory re-
quirement for EAJA eligibility was unnecessary” because
“Congress has precisely defined the term ‘party’” and
“[t]here is no ambiguity in the statutory language that
would warrant looking beyond the plain language of the
statute”).
    Other circuits, however, have simply reasoned, without
endorsing the application of the real-party-in-interest doc-
trine when performing a § 2412(d) analysis, that the doc-
trine does not bar recovery in a particular case. See, e.g.,
Love, 924 F.2d at 1494 (the Ninth Circuit concluding that
the real-party-in-interest doctrine did not bar the associa-
tion from collecting attorney’s fees because the associa-
tion’s members were not the real-parties-in-interest, as
there was no agreement making them liable for the attor-
ney’s fees); Estate of Palumbo v. United States, 675 F.3d
234, 241–44 (3d Cir. 2012) (the Third Circuit concluding
that the real-party-in-interest doctrine did not support a
determination that the Charitable Trust was the real-
party-in-interest because the trust “had no . . . arrange-
ment that made it liable or responsible for the [legal] fees”).
That is the course that we take here.
    Even assuming the real-party-in-interest doctrine can
bar recovery of fees in some cases, we agree with the trial
court’s determination that “the ‘real-party-in-interest’ doc-
trine is not a bar to recovery” in this case. BASR P’ship,
130 Fed. Cl. at 308. As explained above, BASR is liable
20                        BASR PARTNERSHIP   v. UNITED STATES

under the Partnership Agreement and the TBOC for the
litigation costs arising from the TEFRA partnership-level
court proceeding. So, if we were to deny an award here,
BASR would be liable for the costs that the partners ad-
vanced on its behalf—even though BASR, presumably,
would be unable to reimburse its partners. If we were to
grant an award, however, the Government would be liable
for those costs. In light of the foregoing, and the fact that
the plain language of I.R.C. § 7430 and 28 U.S.C. § 2412
does not explicitly prohibit an insolvent party from obtain-
ing an award, we conclude that BASR would be the benefi-
ciary of the award. Accordingly, the real-party-in-interest
doctrine, as applied in Unification Church, does not pre-
vent BASR from obtaining an award under I.R.C. § 7430.
                  E. Abuse of Discretion
    Finally, the Government argues that the trial court
abused its discretion by awarding litigation costs under the
qualified offer rule because the partners’ $1.00 offer to the
Government “was not made in a good-faith attempt to pro-
duce a settlement,” and was submitted solely to shift fees
to the Government in the event BASR and the BASR part-
ners prevailed. Government’s Br. 56–57. BASR responds
that the $1.00 offer was a good-faith attempt to settle a
case that BASR believed the Government could not win.
Appellee’s Br. 53. We disagree with the Government.
    This court has not previously addressed the standard
of review to apply to a district court’s decision to grant an
I.R.C. § 7430 award, but several of our sister circuits have
reviewed such rulings for an abuse of discretion. See, e.g.,
Moulton v. United States, 429 F.3d 352, 355 (1st Cir. 2005)
(finding that a district court’s award or denial of attorneys’
fees under I.R.C. § 7430 should be reviewed for abuse of
discretion); Kaffenberger v. United States, 314 F.3d 944,
960 (8th Cir. 2003) (same); United States v. Yochum (In re
Yochum), 89 F.3d 661, 670 (9th Cir. 1996) (same); Michael
A. Cramer, MAI, SRPA, Inc. v. United States, 47 F.3d 379,
BASR PARTNERSHIP   v. UNITED STATES                        21

382 (10th Cir. 1995) (same); Rasbury v. IRS (In re Ras-
bury), 24 F.3d 159, 166 (11th Cir. 1994) (same). We follow
suit here and review the trial court’s decision to award
BASR litigation costs under I.R.C. § 7430 for an abuse of
discretion.
     To constitute an abuse of discretion, the trial court’s
decision must be clearly unreasonable, arbitrary or fanci-
ful, or based on clearly erroneous findings of fact or errone-
ous conclusions of law. Hohenberg Bros. Co. v. United
States, 301 F.3d 1299, 1303 (Fed. Cir. 2002). In exercising
its discretion to grant BASR’s request for reasonable litiga-
tion costs, the trial court rejected the Government’s argu-
ment that the $1.00 settlement offer was not made in good
faith. The trial court recognized that I.R.C. § 7430 “does
not require any minimum amount or define the parameters
of a ‘reasonable’ offer, nor does it require that an offer be
for a certain percentage of the taxpayer’s purported liabil-
ity.” BASR P’ship, 130 Fed. Cl. at 305. The trial court also
noted that the Government did not identify any amount
that BASR could have offered that would have been rea-
sonable. Id.
    No evidence or argument currently before us persuades
us that the trial court’s determination was clearly unrea-
sonable, arbitrary, fanciful, based on clearly erroneous
findings of fact, or based on erroneous conclusions of law.
We therefore conclude that the trial court did not abuse its
discretion.
                             IV
   We have considered the Government’s remaining argu-
ments and find them unavailing. 10 Accordingly, the order

    10 We acknowledge the discussion during oral argu-
ment on the issue of whether BASR cannot avail itself of
the qualified offer rule because it is a partnership and not
a taxpayer, as required by I.R.C. § 7430(g). Oral Arg. at
22                        BASR PARTNERSHIP     v. UNITED STATES

of the U.S. Court of Federal Claims is affirmed.
                        AFFIRMED
                           COSTS
     The parties shall bear their own costs.

32:08–34:42. However, because that issue was not raised
or briefed on appeal here or before the trial court, we do not
consider it.
  United States Court of Appeals
      for the Federal Circuit
                  ______________________

  BASR PARTNERSHIP, WILLIAM F. PETTINATI,
        SR., TAX MATTERS PARTNER,
               Plaintiffs-Appellees

                              v.

                    UNITED STATES,
                   Defendant-Appellant
                  ______________________

                        2017-1925
                  ______________________

    Appeal from the United States Court of Federal Claims
in No. 1:10-cv-00244-SGB, Judge Susan G. Braden.
                 ______________________

WALLACH, Circuit Judge, dissenting.
    The majority properly recognizes that the real party in
interest doctrine has been applied to bar recovery of litiga-
tion costs and attorney fees in tax proceedings under Inter-
nal Revenue Code (“I.R.C.”) § 7430 (2012) and 28 U.S.C.
§ 2412 (2012), but errs in “agree[ing] with the [U.S. Court
of Federal Claims’] determination that ‘the . . . doctrine is
not a bar to recovery’ in this case.” Maj. Op. 20 (quoting
BASR P’ship v. United States, 130 Fed. Cl. 286, 308 (2017)).
In arriving at its conclusion, the majority relies on prece-
dent that is not only inapposite to its reasoning, but that
explicitly contradicts it. If, as here, there exists an express
agreement making other parties or non-parties liable for a
party’s litigation costs and attorney fees and providing that
2                         BASR PARTNERSHIP   v. UNITED STATES

they will receive any court award of costs and fees, then
those parties and non-parties are the real parties in inter-
est who must demonstrate eligibility for such an award.
The Court of Federal Claims, therefore, erred in determin-
ing Appellee BASR Partnership (“BASR”) is the real party
in interest, see BASR, 130 Fed. Cl. at 308, and awarding
BASR litigation costs and attorney fees, see id. at 313–14.
The proper course is to vacate the Court of Federal Claims’
real party in interest determination and remand the case
for findings regarding whether the actual real parties in
interest, i.e., William F. Pettinati, Sr., Virginia Pettinati,
and William F. Pettinati, Jr. (collectively, “the Pettinatis”),
who are partners in BASR and liable for the litigation costs
and attorney fees arising from this case, satisfy the statu-
tory eligibility requirements for the award of litigation
costs and attorney fees under § 7430 and § 2412. Accord-
ingly, I respectfully dissent.
                         DISCUSSION
    The Pettinatis, not BASR, are the real parties in inter-
est with regard to litigation costs and attorney fees in this
case because they are liable for the financial obligations
that resulted from the U.S. Internal Revenue Service’s un-
timely issuance of a notice of final partnership administra-
tive adjustment to Appellee Mr. Pettinati, Sr., the tax
matters partner of BASR, and because they will receive the
costs and fees awarded by the Court of Federal Claims.
The Pettinatis, rather than BASR, must, therefore, fulfill
the criteria under § 7430 and § 2412 for the award of liti-
gation costs and attorney fees. In order to recover these
costs and fees “[i]n any administrative or court preceding
which is brought by or against the United States in connec-
tion with the determination, collection, or refund of any
tax, interest, or penalty under” the Internal Revenue Code,
a party must be a “prevailing party.” I.R.C. § 7430(a). To
be a prevailing party, a party must, inter alia, “meet[] the
requirements of [28 U.S.C. §] 2412(d)(2)(B).”             Id.
§ 7430(c)(4)(A)(ii). Section 2412(d)(2)(B) allows recovery by
BASR PARTNERSHIP   v. UNITED STATES                          3

“an individual whose net worth did not exceed $2,000,000
at the time the civil action was filed” or “any owner of an
unincorporated business, or any partnership, corporation,
association, unit of local government, or organization, the
net worth of which did not exceed $7,000,000 . . . and which
had not more than 500 employees at the time the civil ac-
tion was filed.”
     In addition, we have invoked the real party in interest
doctrine 1 with regard to § 2412, and stated that, “[i]f the
party seeking legal fees is obligated to pay them to a third
party which is not the professional providing the legal ser-
vice, an award under [§ 2412] has been deemed inappropri-
ate.” Phillips v. Gen. Servs. Admin., 924 F.2d 1577, 1583
n.5 (Fed. Cir. 1991). Pursuant to the real party in interest
doctrine, we must examine the parties or non-parties to
whom any award of costs and fees actually accrues to de-
termine whether they are statutorily eligible for such an
award. See Wall Indus., Inc. v. United States, No. 89-1236,
1989 WL 81684, at *1 (Fed. Cir. July 26, 1989) (per curiam)
(affirming the Court of Federal Claims’ conclusion that a
party “was not the prevailing party” because it “did not in-
cur th[e legal] fees or have any responsibility to do so and
derived no benefit from the judgment,” and determining
that the “real prevailing party in interest [that] paid the
fees” and “received the proceeds from the judgment”
“must . . . satisfy [the] various eligibility requirements of

    1   “The phrase, ‘real party in interest,’ is a term of art
utilized in federal law to refer to an actor with a substan-
tive right whose interests may be represented in litigation
by another.” United States ex rel. Eisenstein v. City of N.Y.,
556 U.S. 928, 934–35 (2009); see Unification Church v. Im-
migration & Naturalization Serv., 762 F.2d 1077, 1081
(D.C. Cir. 1985) (“The [real party in interest] doctrine is of-
ten relevant to which entities may properly press a claim
or an appeal.”).
4                          BASR PARTNERSHIP    v. UNITED STATES

[§ 2412] to recover”). This approach is consistent with sev-
eral of our sister circuits, including the Third, Eighth,
Ninth, and D.C. Circuits. See Estate of Palumbo v. United
States, 675 F.3d 234, 242 (3d Cir. 2012) (determining that
“a legal arrangement that ma[kes a party] responsible for
[legal] fees” makes it the real party in interest in attorney
fees proceedings under § 7430 and § 2412); Nat’l Ass’n of
Mfrs. v. Dep’t of Labor, 159 F.3d 597, 603 (D.C. Cir. 1998)
(“[T]he ‘real party in interest’ doctrine applies [under
§ 2412] when an ineligible party pays the fees for an eligi-
ble party” or when “an ineligible non-party (such as an as-
sociation member) . . . pays the fees of a party (such as an
association),” and “bar[s] fee awards from which only inel-
igible parties [and non-parties] would benefit” (emphases
and footnote omitted)); Love v. Reilly, 924 F.2d 1492, 1494
(9th Cir. 1991) (providing that individual members of an
association “would be the real party in interest in the
[§ 2412] fee litigation . . . if they were liable for the [associ-
ation’s] attorney[] fees”); SEC v. Comserv Corp., 908 F.2d
1407, 1416 (8th Cir. 1990) (determining that “a . . . party
meeting the financial qualifications” of § 2412 was never-
theless ineligible to receive an award of attorney fees be-
cause its attorney fees were “fully paid by a noneligible
organization” and it was, therefore, not the real party in
interest).
    Application of the real party in interest doctrine to the
limitations of § 2412 is appropriate in light of Congress’s
intent in enacting this statute. Pertinently, Congress
found that “certain individuals, partnerships, corporations,
and labor and other organizations may be deterred from
seeking review of, or defending against, unreasonable gov-
ernmental action because of the expense involved in secur-
ing the vindication of their rights in civil actions and in
administrative proceedings.” Equal Access to Justice Act,
Pub. L. No. 96–481, § 202(a), 94 Stat. 2321, 2325 (1980).
Accordingly, when § 2412 was enacted, its stated purpose
was “to diminish the deterrent effect of seeking review of,
BASR PARTNERSHIP   v. UNITED STATES                         5

or defending against, governmental action by providing in
specified situations an award of attorney fees, expert wit-
ness fees, and other costs against the United States.” Id.
§ 202(c)(1) (emphasis added). As the D.C. Circuit has rec-
ognized, “a congressional intention to limit the scope of
[§ 2412] to individuals or to small entities that find partic-
ularly burdensome the ever-rising costs of litigation” is ev-
ident, but “not to subsidize . . . the purchase of legal
services by large entities easily able to afford legal ser-
vices.” Unification Church, 762 F.2d at 1082; see Wall In-
dus., 1989 WL 81684, at *1 (“[T]he possibility of an
ineligible party using a nominally eligible party as a front
to obtain fees otherwise unavailable is contrary to [§ 2412]
and its legislative history and purpose and cannot be coun-
tenanced.”); see also Foley Constr. Co. v. U.S. Army Corps
of Eng’rs, 716 F.2d 1202, 1203 (8th Cir. 1983) (“The purpose
of [§ 2412] is to diminish the deterrent effect of the expense
involved in seeking review of, or defending against, unrea-
sonable government action.” (citation omitted)).
    There is no dispute that the Pettinatis are legally obli-
gated to pay the litigation costs and attorney fees arising
from this case. See J.A. 2067–69 (providing the Fees and
Costs Agreement between, inter alia, Mr. Pettinati, Jr. and
counsel for BASR and Mr. Pettinati, Sr.), 2070–72 (provid-
ing the same with regard to Mr. Pettinati, Sr. and Ms. Pet-
tinati), 2073–282 (providing the invoices for legal services
provided by counsel for BASR and Mr. Pettinati, Sr. billed
to Mr. Pettinati, Sr. and Ms. Pettinati). Indeed, the record
demonstrates that the Pettinatis actually paid the litiga-
tion costs and attorney fees. J.A. 2283–91 (providing the
Billing and Payment Report from counsel for BASR and
Mr. Pettinati, Sr. indicating amounts charged and pay-
ments made by Mr. Pettinati, Sr. and Mr. Pettinati, Jr.),
2327–57 (providing the credit card statements indicating
payments made by Mr. Pettinati, Sr. and Mr. Pettinati, Jr.
to counsel for BASR and Mr. Pettinati, Sr.). In addition,
BASR’s partnership agreement obligates BASR to
6                         BASR PARTNERSHIP    v. UNITED STATES

indemnify the Pettinatis, as partners in BASR, for these
financial obligations and outlays. See J.A. 2392 (identify-
ing, in the Partnership Agreement, the Pettinatis as part-
ners), 2399 (stating, in the Partnership Agreement, that
“[e]ach Partner shall, to the extent permitted by law, be in-
demnified and held harmless by [BASR] from and against
any and all . . . expenses (including reasonable legal fees
and expenses) . . . arising from any and all . . . suits or pro-
ceedings . . . in which the Partner may be involved” (em-
phases added)).       Thus, pursuant to the Partnership
Agreement and the Pettinatis’ agreements to pay the fees
and costs of counsel for BASR and Mr. Pettinati, Sr., the
Pettinatis, not BASR, stand to benefit from the Court of
Federal Claims’ award of litigation costs and attorney fees,
and are, therefore, the real parties in interest. See Phillips,
924 F.2d at 1583 n.5 (stating that, “[i]f the party seeking
legal fees is obligated to pay them to a third party which is
not the professional providing the legal service, an award
under [§ 2412] has been deemed inappropriate”); Unifica-
tion Church, 762 F.2d at 1082 (“[T]he beneficiary of any
award of fees . . . can fairly be characterized as the real
party in interest.”).
    The situation here mirrors that in Unification Church
upon which the majority relies in resolving the real party
in interest issue. See Maj. Op. 20 (basing its resolution of
this issue on “the real-party-in-interest doctrine[] as ap-
plied in Unification Church”). There, three individuals and
a church sought attorney fees from the Government. Uni-
fication Church, 762 F.2d at 1079. However, per an ar-
rangement with their shared counsel, the church was
solely liable for attorney fees. Id. at 1082. Thus, “[w]hat-
ever the outcome of [the D.C. Circuit’s] consideration of
fees,” the individuals would “not pay the fees.” Id. If fees
were not awarded, the church would pay, and if they were,
the Government would pay. Id. The church was, therefore,
determined to be “the beneficiary of any award of fees, not
the individual appellants, and . . . the [c]hurch [was]
BASR PARTNERSHIP   v. UNITED STATES                         7

characterized as the real party in interest.” Id. “[I]f the
[c]hurch would not itself qualify [for a fee award], then to
allow the presence of the individual plaintiffs to result in a
fee award would allow the [c]hurch to receive free legal ser-
vices courtesy of a statute that intended to exclude the
[c]hurch from its scope.” Id. at 1083. Similarly, had the
Court of Federal Claims not awarded costs and fees here,
the Pettinatis would have paid. See J.A. 2067–72. The
Court of Federal Claims, however, awarded costs and fees,
so Appellant the United States (“Government”) must pay.
See BASR P’ship, 130 Fed. Cl. at 313. Under Unification
Church, the Pettinatis are the real parties in interest, not
BASR. See 762 F.2d at 1082–83.
     As a result of its errant conclusion that BASR is the
real party in interest, the Court of Federal Claims limited
its consideration of net worth under § 7430(c)(4)(A)(ii) and
§ 2412(d)(2)(B) to BASR, rather than the Pettinatis. See
BASR P’ship, 130 Fed. Cl. at 308 (“[T]he court need not
consider the net worth of BASR’s individual part-
ners . . . .”). If the Pettinatis each individually have a net
worth exceeding $2 million, then they are not eligible for
an award of litigation costs and attorney fees, see I.R.C.
§ 7430(c)(4)(A)(ii); 28 U.S.C. § 2412(d)(2)(B), and they may
be improperly receiving free legal services courtesy of a
statute intended to exclude them from its scope, see Nat’l
Ass’n of Mfrs., 159 F.3d at 603 (“[I]f an association were no
more than a ‘front’ or a ‘sham’ through which ineligible en-
tities pursued litigation and recovered fees, it would be ap-
propriate to pierce the associational veil and look to the
real parties in interest.”).
    The majority disregards this possibility and fails to cor-
rectly apply the real party in interest doctrine by stating
that the Ninth Circuit, in Love, has “reasoned, without en-
dorsing the application of the real-party-in-interest doc-
trine when performing a § 2412(d) analysis, that the
doctrine does not bar recovery in a particular case.” Maj.
Op. 19. Love, however, is not only unsupportive of the
8                          BASR PARTNERSHIP    v. UNITED STATES

majority’s assessment, but expressly contradicts it. In
Love, an association sought attorney fees against the Gov-
ernment and was eligible for such an award under § 2412.
924 F.2d at 1493. The Government there argued that the
real parties in interest were the association’s members
since they would benefit from any award of fees, and sought
to “requir[e] the association to prove that each of its mem-
bers [was] individually eligible for fees.” Id. at 1494. The
Ninth Circuit disagreed and stated, in relevant part, that
“[t]he members . . . would be the real part[ies] in inter-
est . . . only if they were liable for the [association]’s attor-
ney[] fees,” and that “[n]othing in the record points to such
an agreement.” Id. (emphases added); see Estate of Pa-
lumbo, 675 F.3d at 242 (determining that the presence of
“a legal arrangement that ma[kes a party] responsible
for . . . fees” is key to an individual or entity being the real
party in interest). 2 Here, the Pettinatis are liable for

    2   Although, the majority also cites Estate of Palumbo
to support its proposition that our sibling circuits have not
endorsed the real party in interest doctrine in holding “that
the [real party in interest] doctrine does not bar recovery
in a particular case,” Maj. Op. 19, I disagree. In Estate of
Palumbo, the Third Circuit comprehensively assessed
whether the real party in interest doctrine obligated it to
look to the qualifications of a non-party in determining
whether, under § 2412, the award of attorney fees was
proper, and determined that the doctrine did not by distin-
guishing cases in which the doctrine was interpreted to im-
pose such an obligation. See 675 F.3d at 242 (concluding
that “judicial interpretations of the real-party-in-interest
doctrine pertaining to [§ 2412] do not militate in favor of”
looking to a non-party’s qualifications). Contrary to the
majority’s assertion, Estate of Palumbo is an example of
one of our sibling circuits applying the real party in inter-
est doctrine in the context of a § 2412 analysis, and
BASR PARTNERSHIP   v. UNITED STATES                         9

BASR’s litigation costs and attorney fees due to their
agreements to pay the fees and costs of counsel for BASR
and Mr. Pettinati, Sr. See J.A. 2067–72. Thus, based on
its statements in Love, the Ninth Circuit would determine
persons like the Pettinatis to be the real parties in interest
who must satisfy the requirements of § 7430 and § 2412 to
be eligible for the award of costs and fees. 3
                        CONCLUSION
    In failing to apply the real party in interest doctrine to
this case, the majority relies on precedent that actually
contradicts its conclusion that the doctrine “does not pre-
vent BASR from obtaining an award under . . . § 7430.”
Maj. Op. 20. Rather, the record and precedent make clear
that the Pettinatis, not BASR, are the real parties in inter-
est. Accordingly, the Court of Federal Claims’ determina-
tion that BASR is the real party in interest should be
vacated and the case remanded for findings with regard to
the Pettinatis’ fulfillment of the statutory requirements

determining that the doctrine did not require appraisal of
the qualifications of a non-party for the award of attorney
fees.
    3   The majority also relies on “the fact that the plain
language of . . . § 7430 and . . . § 2412 does not explicitly
prohibit an insolvent party from obtaining an award” to
reach its conclusion. Maj. Op. 20. This, however, is irrele-
vant to deciding the real party in interest issue, which
solely involves discerning to whom any costs and fees
award accrues, regardless of solvency. See, e.g., Nat’l Ass’n
of Mfrs., 159 F.3d at 603 (providing that the real party in
interest doctrine applies when ineligible parties or non-
parties pay the fees for an eligible party, and “bar[s] fee
awards from which only ineligible parties [and non-parties]
would benefit”).
10                       BASR PARTNERSHIP   v. UNITED STATES

under § 7430 and § 2412 for the award of litigation costs
and attorney fees. For these reasons, I respectfully dissent.