The taxpayer in the Historic Boardwalk Hall (HBH) v. Commissioner case recently filed a petition for rehearing and rehearing en banc of the U.S. 3rd Circuit Court of Appeals’ August 27 panel opinion. In that decision, the court found that the project’s historic tax credit (HTC) equity investor, Pitney Bowes Inc., was not a bona fide partner in HBH because it lacked a meaningful stake in the project’s success or failure. Consequently, the court denied the investor’s 99.9% allocation of the historic tax credits, and treated the substance of transfer as a sale of the tax credits.

The petition asks the Appellate Court to reconsider its decision. It argues that the court’s decision wrongfully treats the HTC allocation to the investor as a repayment of capital by the partnership and that the decision erroneously treats HTCs as property to be transferred or sold. In addition, the taxpayer argues that there were in fact risks involved including the potential that Pitney Bowes would not recover capital contributions from the partnership and that the court erred when concluding that there was no risk.

UPDATE: The Third Circuit Court of Appeals denied the taxpayer’s petition for rehearing in Historic Boardwalk Hall case. None of the judges who concurred in the decision asked for rehearing and a majority of the circuit judges did not vote for rehearing.

NH&RA will explore the latest issues concerning the Historic Boardwalk Hall case and implications for future historic tax credit and other tax credit transactions during the Policy Update panel at our upcoming 2012 Fall Developers Forum October 29-30 in Boston MA. Click here to learn more about the topics to be covered.

Click here to read the rehearing petition.
Click here to view the Third Circuit Court’s response to the rehearing petition.