Castle Harbour Decision: Legitimacy of Partnerships With Tax Benefits

Structuring the Entity to Withstand IRS Scrutiny and Maximize Tax Advantages

Recording of a 90-minute premium CLE/CPE webinar with Q&A

Conducted on Thursday, January 14, 2010

Recorded event now available

or call 1-800-926-7926

This CLE course will analyze the recent ruling in the Castle Harbour case, its impact on determining the legitimacy of partnership structures with tax benefits, and best practices for structuring partnerships to withstand IRS scrutiny.


The recent district court ruling in TIFD III-E Inc. v. United States (the Castle Harbour case) was a victory for the taxpayer in an IRS challenge of a partnership structure. The IRS claimed the partnership was merely a tax shelter with no legitimate business purpose.

On remand after the Second Circuit reversed its original ruling, the district court held in Oct. 2009 that the partnership between the company and two foreign banks qualified as a family partnership under section 704(e)(1).

Amid aggressive efforts by the IRS to crackdown on tax shelters, Castle Harbor has broad implications for other partnership structures whose members may not qualify for partner status under the traditional Culberston rule.

Listen as our panel of tax attorneys discusses the Castle Harbour case, its impact on partnership structures with tax benefits, and structuring transactions to withstand IRS attack.



  1. Analysis of court’s ruling
    1. Family partnership status under section 704(e)
    2. Partnership status test under Culbertson
  2. Impact of ruling on future IRS challenges to legitimacy of partnerships
  3. Structuring partnerships to withstand IRS attack


The panel will review these and other key questions:

  • How will the Castle Harbour ruling impact the way courts view the legitimacy of partnership structures with tax benefits?
  • Will this decision impact future IRS challenges of partnership structures with tax benefits?
  • What proactive steps should counsel take on behalf of current and prospective clients in light of the Castle Harbour ruling?


Lawrence M. Hill
Lawrence M. Hill

Dewey & LeBoeuf

He is lead litigation counsel to a major international bank in civil litigation and government investigations involving...  |  Read More

Todd Y. McArthur
Todd Y. McArthur

Dewey & LeBoeuf

He represents multinational corporations and private investors in a wide range of transactions, including transactions...  |  Read More

Abraham N. M. Shashy
Abraham N. M. Shashy

Dewey & LeBoeuf

His practice includes transactional tax planning for, and tax controversy representation of, multinational corporations...  |  Read More

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