IRS Answers Individual’s Assertions in 5-Hour Energy Case

INDU RAWAT
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

UNITED STATES TAX COURT

ANSWER

RESPONDENT, in answer to the petition filed in the above-entitled case, admits and denies as follows:

1. First sentence, denies for lack of information of knowledge Petitioner's residential status or current address. Second sentence, admits.

2. Admits.

3. First and second sentence, inclusive, admits. Third sentence, admits Petitioner invokes the Court's overpayment jurisdiction under IRC section 651(b) with respect to $2,942,000.27 in tax, interest, penalties and additions to tax paid on June 1, 2016 for the 2008 tax year. Further admits Petitioner paid $2,942,000.27 in tax, interest, penalties and additions to tax paid on June 1, 2016 for the 2008 tax year.

4. (a) through (i), inclusive, denies Commissioner erred.

5. Answers Petitioner's allegations as follows:

(a) Denies for lack of information or knowledge.

(b) Denies for lack of information or knowledge.

(c) Denies for lack of information or knowledge.

(d) Denies for lack of information or knowledge.

(e) Admits Innovation Ventures, LLC (IV, LLC) filed Form 1065, U.S. Return of Partnership Income, during the 2008 and 2009 tax year.

(f) Admits.

(g) Denies for lack of information or knowledge.

(h) Denies for lack of information or knowledge.

(i) Denies for lack of information or knowledge.

(j) Denies for lack of information or knowledge whether Petitioner filed Form 1040 NR, U.S. Nonresident Alien Income Tax Returns for years 2000 through 2003 and paid tax on her allocated share of IV LLC's items of income, loss, deduction and credit. Admits for the 2004 through 2007 tax years, Petitioner filed Form 1040 NR, U.S. Nonresident Alien Income Tax Returns. Denies for lack of information or knowledge whether Petitioner reported and paid tax on her allocated share or Innovation Ventures' items of income, loss, deduction and credit for the 2004 through 2007 tax years.

(k) Denies for lack of information or knowledge.

(l) Admits "Membership Interest Purchase Agreement" purports to show a sale on January 4, 2008 between IV, LLC, Innovations Ventures Acquisitions Co., LLC and Indu Rawat for 295,000 Class A Memberships in IV, LLC for $438,075,000.00.

(m) Denies for lack of information or knowledge if the $438,075,000 aggregate purchase price was paid by delivery to Petitioner of a promissory note. Admits "Promissory Note", dated January 4, 2028 in the amount of $438,075,000, was signed by Petitioner and Manoj Bhargava on behalf of Innovation Ventures Acquisition Co., LLC. Alleges "Promissory Note" in question is attached hereto as Exhibit A.

(n) Neither admits nor denies as "Promissory Note", attached as Exhibit A, speaks for itself.

(o) Denies for lack of information or knowledge.

(p) Denies for lack of information or knowledge.

(q) Denies for lack of information or knowledge.

(r) Denies.

(s) Denies.

(t) Admits.

(u) Admits the parties entered into a Form 870-LT, Agreement for Partnership Items and Partnership Level Determinations as to Penalties, Additions to Tax, and Additional Amounts and Agreement for Affected Items (Form 870-LT), which agreement is attached as Exhibit B. Neither denies nor admits remainder of paragraph as Form 870-LT speaks for itself.

(v) Neither admits nor denies. Alleges Form 870-LT, attached as Exhibit B, speaks for itself.

(w) Neither admits nor denies. Alleges Form 870-LT, attached as Exhibit B, speaks for itself.

(x) Neither admits nor denies. Alleges Form 870-LT, attached as Exhibit B, speaks for itself.

(y) Neither admits nor denies as statement is a legal conclusion, not a statement of fact.

(z) Neither admits nor denies. Alleges Form 870-LT, attached as Exhibit B, speaks for itself.

(aa) Neither admits nor denies as statement is a legal conclusion, not a statement of fact.

(bb) Neither admits nor denies. Alleges Form 870-LT, attached as Exhibit B, speaks for itself.

(cc) Admits respondent issued a "Notice of Computations Adjustment" to Petitioner on February 10, 2012, a copy of which is attached as exhibit C.

(dd) Admits respondent assessed $2,258,984 against Petitioner on March 19, 2012, denies remainder for lack of information or knowledge.

(ee) Denies for lack of information or knowledge.

(ff) Denies for lack of information or knowledge.

(gg) Denies for lack of information or knowledge.

(hh) Admits.

(ii) Denies for lack of information or knowledge.

(jj) Denies for lack of information or knowledge.

(kk) Denies for lack of information or knowledge.

6. Denies generally each and every allegation of the petition not herein specifically admitted, qualified or denied.

WHEREFORE, it is prayed that the relief sought in the petition be denied and that respondents determination, as set forth in the notices of deficiency, be in all respects approved.

WILLIAM J. WILKINS
Chief Counsel
Internal Revenue Service

Date: NOV 04 2016

By: S. KATY LIN
Senior Attorney
(Large Business & International)
Tax Court Bar No. LS0403
500 Woodward Avenue
One Detroit Center
Suite 1300
Detroit, MI 48226
Telephone: (313) 628-3116

OF COUNSEL:
THOMAS J. KANE
Division Counsel
(Large Business & International)
WILLIAM G. MERKLE
Area Counsel
(Retailers, Food, Transportation & Health Care)
ERIC R. SKINNER
Associate Area Counsel
(Large Business & International)