Randall et al. v. Loftsgaarden et al. (478 U.S. 647)
U.S. Supreme Court · decided July 2, 1986 · Supreme Court Database (Spaeth)
- Citation
- 478 U.S. 647 · 106 S. Ct. 3143
- Decided
- July 2, 1986
- Term
- October Term 1985
- Vote
- 8–1
- Majority author
- Justice O'Connor
- Issue area
- Economic Activity
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice O’Connor delivered the opinion of the Court. The question presented is whether the recovery available to a defrauded tax shelter investor, entitled under § 12(2) of the Securities Act of 1933 or § 10(b) of the Securities Exchange Act of 1934 to rescind the fraudulent transaction or obtain rescissory damages, must be reduced by any tax benefits the investor has received from the tax shelter investment. w In 1973, petitioners purchased interests m Alotel Associates (Associates), a limited partnership organized by respondent B. J. Loftsgaarden to build and operate a motel in Rochester, Minnesota. Loftsgaarden was the president and sole shareholder of respondent Alotel, Inc. (Alotel), which, together with Loftsgaarden, was to be a general partner in the venture. Loftsgaarden marketed this $3.5 million project as a “tax shelter,” which would result in “ ‘significantly greater returns for persons in relatively high income tax brackets.’ ” Austin v. Loftsgaarden, 675 F. 2d 168, 173 (CA8 1982) (Austin I). As a partnership, Associates would not be taxed as an entity. Rather, its taxable income and losses would pass through to the limited partners, who would then be entitled to claim their individual shares of the partnership’s deductible losses to the extent of their adjusted basis in their partnership interests. 26 U. S. C. § 704(d). Especially attractive from the high-income…
Excerpt of a 52,160-character opinion. The full text and citation network load in the interactive viewer above.