Gulfstream Aerospace G-IV Gulfstream IV
Gulfstream Aerospace G-IV Gulfstream IV ()

California plaintiffs firm Engstrom, Lipscomb & Lack owes more than $1 million in federal corporate taxes and penalties relating to business expenses from two personal aircraft, according to a federal appeals court’s ruling this week.

The U.S. Court of Appeals for the Ninth Circuit on Wednesday upheld a finding by a U.S. Tax Court judge that Los Angeles-based Engstrom owed $1.12 million after claiming unsubstantiated travel expense deductions relating to 119 flights taken from 2008 to 2010.

Engstrom founding partner Walter Lack and Thomas Girardi, of Los Angeles plaintiffs firm Girardi Keese, made payments to a corporation they set up called G&L Aviation in order to split the cost of a Gulfstream IV and a Beechcraft King Air 350 turboprop. Lack and Girardi have partnered on several cases including the litigation portrayed in the 2000 film “Erin Brockovich.”

“The Tax Court’s determination that Engstrom’s evidence was adequate to substantiate some, but not all, of Engstrom’s payments to G&L Aviation is not error, clear or otherwise,” the panel wrote in an unpublished memorandum opinion.

Lack and the firm’s attorney, Kevin Bagley, a solo practitioner in San Diego, did not respond to a request for comment. Nicole Navas, a spokeswoman for the U.S. Department of Justice, whose appellate section of the Tax Division handled the case, declined to comment.

The panel found that Engstrom produced “no written record” of an agreement to pay G&L Aviation for 24-hour standby use of the aircraft, leaving the court to consider contrary evidence that the planes were at times flown for personal use or that some of the payments went toward a luxury suite at the Staples Center in Los Angeles.

“Engstrom’s evidence did not clearly show that all of the flights in question had a business purpose,” the panel wrote. The panel also found “more than enough evidence” that the firm claimed deductions on payments that Lack made personally.

Copyright The Recorder. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Contact Amanda Bronstad at abronstad@alm.com. On Twitter: @abronstadnlj.

California plaintiffs firm Engstrom, Lipscomb & Lack owes more than $1 million in federal corporate taxes and penalties relating to business expenses from two personal aircraft, according to a federal appeals court’s ruling this week.

The U.S. Court of Appeals for the Ninth Circuit on Wednesday upheld a finding by a U.S. Tax Court judge that Los Angeles-based Engstrom owed $1.12 million after claiming unsubstantiated travel expense deductions relating to 119 flights taken from 2008 to 2010.

Engstrom founding partner Walter Lack and Thomas Girardi, of Los Angeles plaintiffs firm Girardi Keese , made payments to a corporation they set up called G&L Aviation in order to split the cost of a Gulfstream IV and a Beechcraft King Air 350 turboprop. Lack and Girardi have partnered on several cases including the litigation portrayed in the 2000 film “Erin Brockovich.”

“The Tax Court’s determination that Engstrom’s evidence was adequate to substantiate some, but not all, of Engstrom’s payments to G&L Aviation is not error, clear or otherwise,” the panel wrote in an unpublished memorandum opinion.

Lack and the firm’s attorney, Kevin Bagley, a solo practitioner in San Diego, did not respond to a request for comment. Nicole Navas, a spokeswoman for the U.S. Department of Justice, whose appellate section of the Tax Division handled the case, declined to comment.

The panel found that Engstrom produced “no written record” of an agreement to pay G&L Aviation for 24-hour standby use of the aircraft, leaving the court to consider contrary evidence that the planes were at times flown for personal use or that some of the payments went toward a luxury suite at the Staples Center in Los Angeles.

“Engstrom’s evidence did not clearly show that all of the flights in question had a business purpose,” the panel wrote. The panel also found “more than enough evidence” that the firm claimed deductions on payments that Lack made personally.

Copyright The Recorder. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Contact Amanda Bronstad at abronstad@alm.com. On Twitter: @abronstadnlj.