“Citgo Says IRS Misapplied All-Events Test in $195M Dispute”
Citgo Petroleum Corp.’s parent company is urging the Tax Court to find that the IRS misapplied the all-events test on when it recognized $195 million in income from partnership liability relief.
Brandon L. Bloom of Thompson & Knight LLP told Tax Notes that PDV’s argument raises a question whether the company can factually support that it was a partner in MSLP from 2009 to 2017. “Unfortunately for PDV, other than contesting the validity of the call option exercise, there
was little it could do to prove it was still a partner in the partnership during the interim years,” he said.
To some extent, PDV was at the mercy of its partner ConocoPhillips, which filed the 2009 partnership return reporting that MSLP had terminated and that PDV was no longer a partner. “This case is a good example of how important it could be to be in control of the tax reporting process,” Bloom said.