Opinion
Case No. 00-7065-CIV-FERGUSON
April 11, 2001
FINAL JUDGMENT ON THE PLEADINGS
The Plaintiff, Paul K. Gundotra, brought this action to obtain a "[d]etermination of whether the value of the interest of the United States in the property located at 4580 and 4600 Livingston Road in Indian Head, Maryland is less than the value determined by the Internal Revenue Service." This cause is before the Court on the Defendant's Motion for Judgment on the Pleadings [D.E. 14].
Plf.'s Compt. ¶ 1.
On March 11. 1996 the United States Tax Court found that the PKG Foundation Corporation ("PKG") owed income taxes. plus interest and penalties, for the year 1990. A valid Notice of Federal Tax Lien was filed for the delinquent taxes on June 14, 1996 in the official records of Charles County, Maryland where the property was located. On April 10, 2000 PKG and the Commissioner of the Internal Revenue executed a Closing Agreement pursuant to Section 7121 of the Internal Revenue Code. In this document, which was signed by both parties, the District Director of the Internal Revenue determined that the value of the United States' interest in the subject property is $78,469.79. Plaintiff paid the delinquent taxes and a Certificate of Discharge was issued on April 26, 2000.
Pl.'s Compl. Ex. 1.
Pl's Compl. Ex. 2.
Plaintiff now seeks a refund for the amount paid. $78,469.79, and claims that although he transferred the subject property to PKG in fee simple on August 28, 1991. PKG "had no beneficial interest in the property. [s]o even though the corporation may have had the title in its name. it had no real owner ship [sic] of any value." The deed reads as follows:
Pl's Compl. ¶ 2-3.
Pl's Compl. Ex. 3.
IN GIVING the above mentioned property as a irrevocable Gift . . . The first party(ies) stipulates that any income or use of such property apart from the capital gains after sale of such property shall be for the benefit of only the following individual(s) and or organization(s). . .
Plaintiffs argument lacks merit as he did not dispute that the property in question was owned by PKG at the time the paflies executed the Closing Agreement. Further, it is clear that PKG held a beneficial interest in the property as the language of the deed gives PKG the right to self the property and retain whatever capital gains it realized from the sale when it states "income or use of such property apart from the capital gains after sale of such property shall be for the benefit of' the beneficiaries. See Plante v. Comm'r., 168 F.3d 1279 (11th Cir. 1999) (shareholders are not entitled to a bad debt tax deduction for losses for money they advanced to a corporation but had forgiven when they sold their interests pursuant to a stock purchase agreement because they were bound by the language of the agreement which characterized their advances as capital contributions not loans).
As in Plante, the Plaintiff is bound by the language of the conveying instrument which creates PKG's fee simple ownership of the underlying property. Further, once a federal tax lien has attached, the lien follows the property into the hands of third parties. See United States v. Bess, 357 U.S. 51, 57 (1958). In another case the United States Supreme Court rejected similar argument by a corporation that taxes incurred on the sale of real property should be attributed to a sole shareholder rather than to the corporation. See Moline Prop., Inc. v. Comm'r., 319 U.S. 436 (1943) (holding "[t]he choice of the advantages of incorporation . . . require[s] the acceptance of the tax disadvantages."). Plaintiff must now accept the tax disadvantages of conveying the subject property in fee simple to PKG.
Judgment on the pleadings is appropriate when no issues of material fact are raised in the pleadings and the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P. 12(c); Ortega v. Christian, 85 F.3d 1521, 1524 (11th Cir. 1996). In this case there are no disputed material facts in the pleadings arid it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him to relief. See Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99 (1957). It is hereby
Walco Investments. Inc. v. Thenen, 881 F. Supp. 1576, 1580 (S.D. Fla. 1995)("[t]he standard of review for judgment on the pleadings is almost identical to the standard used to decide motions to dismiss"); The Miami Herald Publ. Co. v. Ferre. et al., 636 F. Supp. 970, 974 (S.D. Fla. 1985)("the Court notes that the standard of review employed for Rule 12(b)(6) motions is considered nearly identical to the standard set forth . . . for ruling on 12(c) motions").
ORDERED AND ADJUDGED that the Defendant's Motion for Judgment on the Pleadings [D.E. 14] is GRANTED. This Cause is hereby DISMISSED with prejudice. Any pending motions are rendered moot by this Final Judgment on the Pleadings. The case is closed.
DONE AND ORDERED in Chambers at Ft. Lauderdale, Florida, this 11th day of April, 2001.