Tax Notes Quotes Leila Carney on Rawat v. Commissioner

A foreign partner’s gain from the sale of her U.S. partnership interest attributable to inventory is foreign-source income . . . the D.C. Circuit held.

In its July 23 opinion in Rawat v. Commissioner, the D.C. Circuit rejected the IRS’s position. . . . “The short of it is that section 751(a) does not of its own force render Rawat’s inventory gain taxable because it does not change the fact that she sold a partnership interest, not inventory,” the opinion states. “Once we reach that conclusion, the parties agree that the inventory gain from the sale is foreign-source income as to which Rawat owes no U.S. taxes.”

. . .

Rawat’s attorneys, Christopher S. Rizek of Holland & Knight LLP and Leila D. Carney of Caplin & Drysdale, told Tax Notes they were pleased that the D.C. Circuit supported their client’s position and issued such a favorable opinion.

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