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March 2016

Tax Partner Carol Schaner Scores Major Victory Against the California Franchise Tax Board

Orange County partner Carol Schaner successfully represented a prominent Southern California couple in a Franchise Tax Board (FTB) audit of their 2007 and 2008 tax returns.  Following a lengthy audit, Schaner convinced the FTB to withdraw $10 million of proposed tax adjustments resulting from a deduction disallowance.  The audit involved a deduction claimed by the couple for the contribution of a building, land and art, with an aggregate value of $10 million, to a newly-established museum of contemporary art.

The contribution was the initial gift of a planned contribution of approximately $100 million of art to the new museum.  The FTB proposed to entirely disallow the couples' $10 million deduction.

Ms. Schaner represented the couple in connection with the audit and argued before the FTB representatives during July of 2015.  Based on the record developed by Schaner, and her written and oral arguments, the FTB withdrew the proposed tax adjustments and issued a Notice of Action - Withdrawal of Adjustments.

Carol P. Schaner



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