Court Upholds Restricted Property Trust in IRS Dispute

Mann Construction and RPT, LLC secured a legal win against the IRS in a case involving the Restricted Property Trust (RPT) tax structure. The U.S. District Court in Michigan awarded attorney fees, marking this as a critical decision affirming the RPT's validity in tax planning.

Initially, the IRS had labeled the RPT as an "abusive tax shelter," citing Notice 2007-83. However, Mann Construction argued this notice was not legally binding. The Sixth Circuit Court of Appeals supported this claim, ruling the notice lacked procedural foundation.

Following their initial victory, Mann Construction pursued litigation costs. The court ruled that fees paid on their behalf were recoverable, awarding $220,482.50 in attorney fees. This ruling reinforces taxpayer protections against unjustified IRS penalties.

The case sets a precedent that may influence future disputes involving RPTs, emphasizing the need for the IRS to follow established legal procedures.