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IRS Seeks $100 Million from Former HP Chairman Ray Lane
Author: Scarinci Hollenbeck, LLC
Date: June 24, 2013
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Ray Lane, former chairman of Hewlett-Packard Co., and the Internal Revenue Service remain at odds over a reported $100 million tax bill which Lane plans to dispute.
The businessman said he will appeal a ruling by the U.S. Tax Court which claims he owes roughly $100 million in taxes as a result of his participation in what the IRS calls an illegal tax shelter. The case stems back to the dot-com era when certain corporate tax shelters reined supreme. However, many of these havens are no longer recognized under U.S. tax law, and Lane may now face the ramifications of using a POPS shelter to generate “improperly” claimed losses of $251 million to offset income.
Lane argued that the IRS was wrong to say his partnership, Vanadium Partners Fund LLC, lacked “legitimate business purpose.” He explained that the partnership invested in several start-up companies that later went under, which allowed the group to legitimately claim losses. He also said that he has always been fully willing to cooperate with the IRS to reach a settlement, but that this process has been held up as a result of disagreements with remaining partners.
“It’s from the year 2000. It was never a dispute by me; it was disputed by the partnership,” Lane said in an interview with MarketWatch. “Part of that partnership has been disputing this for a long time.”
Since 2000, the partnership invested in five companies, and also purchased stock options and warrants. However, the IRS argues that the investments in the companies “were payments of fees to promoters of listed and/or abusive tax avoidance transactions,” according to Bloomberg. The agency noted that because Lane and other investors failed to establish the value of stock options or warrants in an “amount greater than zero,” the losses were not allowable under U.S. tax law, the news source added.
- Practices: Tax and Trusts & Estates
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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