Good Fortune Shipping SA v. Commissioner of Internal Revenue Service
United States Court of Appeals for the District of Columbia Circuit
897 F.3d 256 (2018)
- Written by Heather Whittemore, JD
Facts
Good Fortune Shipping SA (Good Fortune) (plaintiff) was a shipping company incorporated in the Marshall Islands. On its 2007 tax return, Good Fortune attempted to claim an exemption under § 883 of the Internal Revenue Code. Section 883 allowed a foreign company to exempt some income derived from the United States from taxation so long as a significant proportion of the company’s stock was owned by residents of countries with reciprocal tax-exemption policies for companies incorporated in the United States. The Internal Revenue Service (IRS) (defendant) disallowed the exemption because Good Fortune’s stock was made up entirely of bearer shares. In 2003 the IRS had enacted a rule that excluded bearer shares as proof of a foreign company’s stock ownership under § 883, despite acknowledging that bearer shares were a valid form of ownership. This rule changed the IRS’s policy regarding bearer shares, which were previously allowed to prove corporate ownership under § 883. The IRS explained the new rule by pointing to the difficulty of proving the true ownership of bearer shares. Good Fortune challenged the IRS rule excluding bearer shares as proof of corporate ownership for being an unreasonable interpretation of § 883. To support its argument, Good Fortune pointed to other sections of the Internal Revenue Code that allowed bearer shares as proof of ownership of a company. Good Fortune also highlighted other forms of ownership that were difficult to prove but were allowed under § 883. The United States Tax Court held in favor of the IRS. Good Fortune appealed.
Rule of Law
Issue
Holding and Reasoning (Griffith, J.)
What to do next…
Here's why 832,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 46,500 briefs, keyed to 994 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.
