Tax Court Denies Eaton Corp.’s Request for Interlocutory Appeal
Eaton Corp. et al. v. Commissioner
- Case NameEaton Corp. et al. v. Commissioner
- CourtUnited States Tax Court
- DocketNo. 28040-14
- JudgeKerrigan, Kathleen
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- Tax Analysts Document Number2019-40926
- Tax Analysts Electronic Citation2019 TNTI 209-172019 TNTF 209-24
Eaton Corp. et al. v. Commissioner
EATON CORPORATION AND SUBSIDIARIES,
Petitioner(s),
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent
UNITED STATES TAX COURT
ORDER
In an Opinion previously issued in this case, Eaton Corp. & Subs. v. Commissioner, 152 T.C. 43 (2019), we held that the earnings and profits (E&P) of the upper tier controlled foreign corporation (CFC) partners of Eaton Worldwide LLC (EW LLC), a domestic partnership, must be increased as a result of the partnership's section 951(a) income inclusions.1 As a result of our holding, petitioner's income is redetermined to reflect income inclusion under sections 951(a)(1) and 956 in amounts previously stipulated by the parties.
On June 6, 2019, petitioner filed a motion to certify for interlocutory appeal the Court's March 12, 2019 Order granting respondent's motion for partial summary judgment and denying petitioner's motion for partial summary judgment. Petitioner asserts in its motion that it satisfies the requirements of section 7482(a)(2)(A) and Rule 193. On July 8, 2019, respondent filed a response to petitioner's motion. Petitioner filed a reply to respondent's response on July 19, 2019.
Section 7482(a)(2)(A) provides that a U.S. Court of Appeals, upon a timely request by a party to litigation in this Court, may permit an immediate appeal of an interlocutory order of this Court when it contains a statement that a controlling question of law is involved with respect to which there is a substantial ground for difference of opinion and that an immediate appeal from that order may materially advance the ultimate termination of the litigation. See Rule 193(a); Kovens v. Commissioner, 91 T.C. 74, 77 (1988). Each of these three grounds must be met before we certify an interlocutory order for immediate appeal. See Kovens v. Commissioner, 91 T.C. at 77.
The proper application of section 7482(a)(2) requires balancing of the policies favoring interlocutory appeals — i.e, avoidance of wasted trial and harm to litigants — against the policies underlying the so-called final judgment rule; that is, avoidance of piecemeal litigation and dilatory and harassing appeals. Id. at 78. The certification of an interlocutory order for appeal is an exceptional measure that we use sparingly. See Gray v. Commissioner, 140 T.C. 163, 166 (2013); Gen. Signal Corp. & Subs. v. Commissioner, 104 T.C. 248 (1995), aff'd on other grounds, 142 F.3d 546 (2d Cir. 1998); Kovens v. Commissioner, 91 T.C. at 78 (citing 1958 U.S.C.C.A.N. 5255, 5259, 5260-5261).
The parties agree that resolution of whether the E&P of the upper tier CFC partners of EW LLC, a domestic partnership, must be increased as a result of the partnership's section 951(a) income inclusions is a novel issue and that our Opinion addressing this is the only legal precedent addressing the controlling questions of law for which petitioner seeks interlocutory appeal. However, the parties differ on whether there is a substantial ground for difference of opinion. For there to be a substantial ground for difference of opinion there needs to be a serious and unsettled legal issue. Kovens v. Commissioner, 91 T.C. at 80. We do not need to decide whether there is a substantial ground for difference of opinion because an immediate appeal would not materially advance the ultimate termination of the litigation.
Petitioner contends that reversal on appeal would terminate litigation regarding the treatment of loans under sections 951 and 956.2 However, an appeal will not resolve all the remaining issues. The outcome of an appeal will not terminate the litigation. We have denied certification of interlocutory appeal previously in a case for which a successful interlocutory appeal would have resulted in the case being dismissed for lack of jurisdiction. Id. at 80-81. This case does not present exceptional circumstances which merit certifying an interlocutory appeal.
Accordingly, we decline to certify for interlocutory appeal this Court's Order dated March 12, 2019. For premises considered, it is
ORDERED that petitioner's motion to certify for interlocutory appeal is denied.
(Signed) Kathleen Kerrigan
Judge
Dated: Washington, D.C.
October 24, 2019
FOOTNOTES
1All section reference are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.
2On May 10, 2019, the Court granted respondent's motion for leave to file first amendment to answer. The first amendment to answer addresses the loans issue which regards an adjustment to petitioner's income under sections 951 and 956.
END FOOTNOTES
- Case NameEaton Corp. et al. v. Commissioner
- CourtUnited States Tax Court
- DocketNo. 28040-14
- JudgeKerrigan, Kathleen
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- Tax Analysts Document Number2019-40926
- Tax Analysts Electronic Citation2019 TNTI 209-172019 TNTF 209-24