TFT Galveston Portfolio, Ltd. v. Comm'r, 144 T.C. No. 7

• Decision Date: 26 February 2015
• Docket Number: Docket No. 1082-12,Docket No. 30001-11,Docket No. 682-12,Docket No. 1533-12.,Docket No. 1180-12,144 T.C. No. 7,Docket No. 1175-12,Docket No. 29995-11
• Parties: TFT GALVESTON PORTFOLIO, LTD., AS SUCCESSOR IN INTEREST FOR TFT #2, LTD., ET AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: U.S. Tax Court

TFT GALVESTON PORTFOLIO, LTD., AS SUCCESSOR
IN INTEREST FOR TFT #2, LTD., ET AL.,¹ Petitioners
v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

144 T.C. No. 7
Docket No. 29995-11
Docket No. 30001-11
Docket No. 682-12
Docket No. 1082-12
Docket No. 1175-12
Docket No. 1180-12
Docket No. 1533-12.

UNITED STATES TAX COURT

February 26, 2015

P received a Notice of Determination Concerning Worker Classification and corresponding employment tax liabilities on its own behalf and other such notices as successor in interest to various

Page 2

partnerships. The parties dispute whether P was a successor in interest under Texas law, and R asserts this Court should establish a Federal standard of successor in interest as Federal common law. In addition, the status of P's workers for the period involving P is itself at issue.

Held: On the facts before us, P was not a successor in interest under Texas law.

Held, further, we do not adopt a Federal common law standard of successor in interest.

Held, further, P's workers were employees.

Gary I. Currier, for petitioners.

Jeremy H. Fetter and Jason D. Laseter, for respondent.

GOEKE, Judge: These consolidated cases² are before us on petitions for redetermination of employment status filed pursuant to section 7436.³ In separate

Page 3

Notices of Determination Concerning Worker Classification (notices) respondent determined that for purposes of Federal employment taxes, the individuals listed in Table 1 attached to the notices should be legally classified as petitioners' employees and thus determined deficiencies in, additions to, and penalties with respect to petitioner's Federal employment taxes as follows:⁴

TFT Galveston Portfolio, Ltd., docket No. 1082-12
Additions to tax
Period ended	Type of tax	Amount	Sec. 6651(a)(1)	Sec. 6651(a)(2)	Penalty sec. 6656
12/31/2004	FICA, ITW	$36,362	$8,182	$9,091	$690
12/31/2004	FUTA	5,414	1,218	1,354	541

TFT Galveston Portfolio, Ltd., As Successor in Interest to TFT #1, Ltd., docket No. 30001-11
Additions to tax
Period ended	Type of tax	Amount	Sec. 6651(a)(1)	Sec. 6651(a)(2)	Penalty sec. 6656
3/31/2000	FICA, ITW	$8,817	$1,984	$2,204	$156
6/30/2000	FICA, ITW	7,300	1,642	1,825	129
9/30/2000	FICA, ITW	7,988	1,797	1,997	141
12/31/2000	FICA, ITW	7,926	1,783	1,981	140

Page 4

12/31/2000	FUTA	2,759	621	690	276
3/31/2001	FICA, ITW	7,730	1,739	1,932	137
6/30/2001	FICA, ITW	8,287	1,865	2,072	146
9/30/2001	FICA, ITW	8,465	1,905	2,116	151
12/31/2001	FICA, ITW	7,977	1,795	1,994	143
12/31/2001	FUTA	2,349	528	587	235
3/31/2002	FICA, ITW	7,524	1,693	1,881	136
6/30/2002	FICA, ITW	7,340	1,652	1,835	133
9/30/2002	FICA, ITW	7,437	1,673	1,859	135
12/31/2002	FICA, ITW	7,615	1,713	1,904	138
12/31/2002	FUTA	2,568	578	642	257
3/31/2003	FICA, ITW	6,882	1,548	1,721	131
6/30/2003	FICA, ITW	7,121	1,602	1,780	135
9/30/2003	FICA, ITW	7,554	1,700	1,888	143
12/31/2003	FICA, ITW	7,511	1,690	1,878	143
12/31/2003	FUTA	1,865	420	466	187
3/31/2004	FICA, ITW	7,598	1,710	1,899	144
6/30/2004	FICA, ITW	7,838	1,763	1,959	149
9/30/2004	FICA, ITW	8,837	1,988	2,209	168
12/31/2004	FICA, ITW	2,837	638	709	54
12/31/2004	FUTA	1,810	407	452	181

TFT Galveston Portfolio, Ltd., As Successor in Interest to TFT #2, Ltd., docket No. 29995-11
Additions to Tax
Period ended	Type of tax	Amount	Sec. 6651(a)(1)	Sec. 6651(a)(2)	Penalty sec. 6656
3/31/2000	FICA, ITW	$17,667	$3,975	$4,417	$312

Page 5

6/30/2000	FICA, ITW	19,286	4,339	4,822	341
9/30/2000	FICA, ITW	18,009	4,052	4,502	318
12/31/2000	FICA, ITW	17,014	3,828	4,254	301
12/31/2000	FUTA	4,298	967	1,075	430
3/31/2001	FICA, ITW	17,372	3,909	4,343	307
6/30/2001	FICA, ITW	17,478	3,933	4,370	309
9/30/2001	FICA, ITW	17,459	3,928	4,365	312
12/31/2001	FICA, ITW	19,564	4,402	4,891	350
12/31/2001	FUTA	3,726	838	931	373
3/31/2002	FICA, ITW	18,301	4,118	4,575	331
6/30/2002	FICA, ITW	16,858	3,793	4,215	305
9/30/2002	FICA, ITW	20,032	4,507	5,008	362
12/31/2002	FICA, ITW	15,588	3,507	3,897	282
12/31/2002	FUTA	4,492	1,011	1,123	449
3/31/2003	FICA, ITW	9,346	2,103	2,337	177
12/31/2003	FUTA	1,438	324	359	144

TFT Galveston Portfolio, Ltd., As Successor in Interest to TFT # 3, Ltd., docket No. 1533-12
Additions to tax
Period ended	Type of tax	Amount	Sec. 6651(a)(1)	Sec. 6651(a)(2)	Penalty sec. 6656
3/31/2000	FICA, ITW	$20,126	$4,528	$5,032	$356
6/30/2000	FICA, ITW	22,320	5,022	5,580	394
9/30/2000	FICA, ITW	27,588	6,207	6,897	487
12/31/2000	FICA, ITW	26,026	5,856	6,507	460
12/31/2000	FUTA	8,045	1,810	2,011	805
3/31/2001	FICA, ITW	21,074	4,742	5,268	372

Page 6

6/30/2001	FICA, ITW	22,729	5,114	5,682	402
9/30/2001	FICA, ITW	21,677	4,877	5,419	387
12/31/2001	FICA, ITW	20,618	4,639	5,155	369
12/31/2001	FUTA	6,706	1,509	1,676	671
3/31/2002	FICA, ITW	17,384	3,911	4,346	314
6/30/2002	FICA, ITW	18,792	4,228	4,698	340
9/30/2002	FICA, ITW	19,124	4,303	4,781	346
12/31/2002	FICA, ITW	18,367	4,133	4,592	332
12/31/2002	FUTA	5,484	1,234	1,371	548
3/31/2003	FICA, ITW	14,287	3,215	3,572	271
6/30/2003	FICA, ITW	14,715	3,311	3,677	279
9/30/2003	FICA, ITW	14,957	3,365	3,739	284
12/31/2003	FICA, ITW	14,603	3,286	3,651	277
12/31/2003	FUTA	4,968	1,118	1,242	497
3/31/2004	FICA, ITW	11,271	2,536	2,818	214
6/30/2004	FICA, ITW	11,713	2,635	2,928	222
9/30/2004	FICA, ITW	20,189	4,543	5,047	383
12/31/2004	FICA, ITW	6,874	1,547	1,718	130
12/31/2004	FUTA	5,230	1,177	1,308	523

TFT Galveston Portfolio, Ltd., Successor in Interest to TFT # 4, Ltd., docket No. 682-12
Additions to tax
Period ended	Type of tax	Amount	Sec. 6651(a)(1)	Sec. 6651(a)(2)	Penalty sec. 6656
3/31/2000	FICA, ITW	$14,136	$3,181	$3,534	$250
6/30/2000	FICA, ITW	19,532	4,395	4,883	345
9/30/2000	FICA, ITW	14,889	3,350	3,722	263

Page 7

12/31/2000	FICA, ITW	14,755	3,320	3,689	261
12/31/2000	FUTA	4,400	990	1,100	440
3/31/2001	FICA, ITW	11,724	2,368	2,931	207
6/30/2001	FICA, ITW	13,868	3,120	3,467	245
9/30/2001	FICA, ITW	11,202	2,520	2,800	200
12/31/2001	FICA, ITW	10,913	2,455	2,728	195
12/31/2001	FUTA	3,752	844	938	375
3/31/2002	FICA, ITW	10,185	2,292	2,546	184
6/30/2002	FICA, ITW	10,675	2,402	2,669	193
9/30/2002	FICA, ITW	8,655	1,947	2,164	157
12/31/2002	FICA, ITW	9,981	2,246	2,495	181
12/31/2002	FUTA	3,395	764	849	340
3/31/2003	FICA, ITW	5,437	1,223	1,359	103
12/31/2003	FUTA	837	188	209	84

TFT Galveston Portfolio, Ltd., As Successor in Interest to TFT Chateau Lafitte-WJT., Ltd., docket No. 1175-12
Additions to tax
Period ended	Type of tax	Amount	Sec. 6651(a)(1)	Sec. 6651(a)(2)	Penalty sec. 6656
3/31/2003	FICA, ITW	$4,662	$1,049	$1,165	$88
6/30/2003	FICA, ITW	15,803	3,556	3,951	300
9/30/2003	FICA, ITW	16,266	3,660	4,067	309
12/31/2003	FICA, ITW	14,196	3,194	3,549	269
12/31/2003	FUTA	3,727	839	932	373
3/31/2004	FICA, ITW	12,906	2,904	3,227	245
6/30/2004	FICA, ITW	14,503	3,263	3,626	275

Page 8

9/30/2004	FICA, ITW	13,267	2,985	3,317	252
12/31/2004	FICA, ITW	4,402	991	1,101	84
12/31/2004	FUTA	2,754	620	689	275

TFT Galveston Portfolio, Ltd., As Successor in Interest to TFT Somerset-WJT., Ltd., docket No. 1180-12
Additions to tax
Period ended	Type of tax	Amount	Sec. 6651(a)(1)	Sec. 6651(a)(2)	Penalty sec. 6656
3/31/2003	FICA, ITW	$2,475	$557	$619	$47
6/30/2003	FICA, ITW	8,721	1,962	2,180	166
9/30/2003	FICA, ITW	8,997	2,024	2,249	171
12/31/2003	FICA, ITW	8,007	1,802	2,002	152
12/31/2003	FUTA	3,034	683	758	303
3/31/2004	FICA, ITW	8,124	1,828	2,031	154
6/30/2004	FICA, ITW	8,149	1,833	2,037	155
9/30/2004	FICA, ITW	9,047	2,036	2,262	172
12/31/2004	FICA, ITW	3,303	743	826	63
12/31/2004	FUTA	3,077	692	769	308

Page 9

After concessions,⁵ the issues for decision are: (1) whether the workers listed in the notice of determination for TFT Galveston Portfolio, Ltd.'s ("TFT Galveston Portfolio") fourth quarter of the taxable year 2004...