Dodgers Owner Petitions Tax Court to Review FPAA

1. Petitioner, The McCourt Company, Inc., is a corporation with a legal residence in Delaware.

2. At the time of the filing of the petition, The McCourt Broderick Limited Partnership (now known as McCourt Broderick LLC) ("TMBLP") had a principal place of business of 888 7th Avenue, Floor 43, New York, New York 10106.

3. Petitioner is the tax matters partner of TMBLP.

4. TMBLP's United States Return of Partnership Income (Form 1065) for taxable year 2008 was filed with the office of the Internal Revenue Service located at Ogden, Utah.

5. The notice of final partnership administrative adjustment ("FPAA") was mailed to petitioner on November 4, 2013 and was issued by the office of the Internal Revenue Service located at 15 New Sudbury Street, Boston, Massachusetts 02203-0208. A complete copy of the FPAA, as redacted pursuant to Rule 27 of the Tax Court Rules of Practice and Procedure, is attached as Exhibit A.

6. The partnership adjustments as set forth in the FPAA, all of which are in dispute, relate to taxable year 2008 and total $60,138,543.

7. The partnership adjustments as set forth in the FPAA are based on the following errors:

a. Respondent erred when he disallowed TMBLP's repairs and maintenance expense deduction in the amount of $5,168,074.

b. Respondent erred when he disallowed TMBLP's interest expense deduction in the amount of $32,258,923.

c. Respondent erred when he disallowed TMBLP's amortization expense deduction related to media rights in the amount of $1,901,209.

d. Respondent erred when he disallowed TMBLP's amortization expense deduction related to non-player contracts in the amount of $76,145.

e. Respondent erred when he disallowed TMBLP's amortization expense deduction related to Los Angeles Dodgers ("Dodgers") player contracts in the amount of $210,697.

f. Respondent erred when he disallowed TMBLP's meals and entertainment expense deduction in the amount of $1,229,753.

g. Respondent erred when he disallowed TMBLP's travel expense deduction in the amount of $6,325,677.

h. Respondent erred when he disallowed TMBLP's insurance expense deduction in the amount of $5,523,848.

i. Respondent erred when he disallowed TMBLP's promotion expense deduction in the amount of $1,995,177.

j. Respondent erred when he disallowed TMBLP's other deductions related to baseball operations in the amount of $1,769,036.

k. Respondent erred when he disallowed TMBLP's employee benefit program expense deduction in the amount of $4,062,892.

8. The facts upon which petitioner relies in support of its petition are as follows:

a. During 2008, TMBLP's primary business activity was the ownership and operation, through various wholly-owned subsidiaries, of the Dodgers Major League Baseball franchise.

b. Also during 2008, TMBLP engaged in other business activities through various wholly-owned subsidiaries, including the ownership and operation of the Los Angeles Marathon ("Marathon").

c. TMBLP is able to substantiate the deductions disallowed by respondent in the FPAA.

d. The expense deductions claimed on TMBLP's 2008 partnership return were ordinary and necessary to TMBLP's trade or business.

e. During 2008, TMBLP paid or incurred $5,168,074 in repairs and maintenance expenses related to Dodger Stadium.

f. TMBLP's repair and maintenance expenses related to Dodger Stadium in 2008 were properly classified as such and were not permanent improvements or betterments.

g. During 2008, TMBLP properly claimed a deduction for interest on indebtedness related to its business operations in the amount of $32,258,923.

h. During 2008, TMBLP incurred an amortization expense deduction in the amount of $33,844,137.

i. On its 2008 partnership return, TMBLP properly claimed an amortization deduction related to Dodgers player contracts, non-player contracts related to Dodgers operations, and Dodgers media rights, as all such intangibles were used in the course of TMBLP's business for only a limited period, the length of which was estimated with reasonable accuracy.

j. During 2008, TMBLP properly claimed $1,339,897 in ordinary and necessary meals and entertainment expense deductions, after the application of the 50% limit found in I.R.C. § 274(n).

k. During 2008, TMBLP properly claimed $12,785,105 in ordinary and necessary travel expense deductions from the operation of the Dodgers.

l. During 2008, TMBLP properly claimed $5,661,883 in ordinary and necessary insurance expense deductions from the operation of the Dodgers.

m. During 2008, TMBLP properly claimed $6,997,171 in ordinary and necessary promotion expense deductions from the operation of the Dodgers.

n. During 2008, TMBLP properly claimed $1,769,036 in ordinary and necessary other business expense deductions related to the operation of the Dodgers.

o. During 2008, TMBLP properly claimed $4,062,892 in ordinary and necessary employee benefit program expense deductions.

WHEREFORE, petitioner prays that the court (i) readjust the partnership items as set forth above and (ii) grant such other further relief to which TMBLP is entitled.

Date: January 14, 2014