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TAX TRENDS

Analysis of and reflections on

recent cases and rulings.

Author: 2008, and Shant was responsible for
James A. Beavers, CPA, CGMA, Procedure & Administration paying the expenses of the property.
J.D., LL.M. The house was previously owned
Trusts held to be nominees by Shant’s mother, but in 2012 she
of delinquent taxpayer transferred the property to Pachava for

The IRS can assert tax liens against $1. In 2018, Nina Hovnanian, Shant’s
properties held by two trusts to satisfy sister, was the sole trustee of Pachava.
the tax debts of a taxpayer because the Legal title to the Village Mall prop-
trusts were nominees of the taxpayer. erty was held by the VSHPHH Trust.
The property was a two-story office
Two trusts held to Background complex, partially rented out to tenants
be nominees of In the early 2000s, taxpayer Shant and partially used rent-free by Shant.
Hovnanian engaged in certain tax shel-
Shant’s parents previously owned the
individual taxpayer; ter transactions structured and marketed property but transferred it to Shant
decades-old tax by tax lawyer Lance O. Valdez. The IRS in 2015 for $1. Nina was also the sole
determined that the shelters were illegal
trustee of VSHPHH in 2018.
liabilities previously and denied Shant the losses he claimed In 2018 the IRS filed a notice of
affirmed in Tax Court associated with the shelters. The Tax tax lien against the properties, which
proceedings cannot Court upheld the IRS’s determination, listed both Pachava and VSHPHH as
and its decision was affirmed by both the
Shant’s nominees with respect to the
be relitigated in a Second and Third Circuits. By 2018, the properties. Later that year, the IRS
refund suit in IRS claimed that Shant owed federal tax filed an action in district court seeking
an order that it had valid federal tax
liabilities in excess of $16 million related
district court. to his participation in the shelters. liens against the Navesink property
As part of its efforts to collect the and the Village Mall property and
taxes Shant owed, the IRS sought to that it could foreclose the liens against
attach federal tax liens and foreclose on the properties.
two pieces of real property it attributed In district court, the IRS moved
to him: 520 Navesink River Road, Mid- for summary judgment, arguing that
dletown Township, N.J. (Navesink prop- based on the facts of this case, under
erty), and 1 Dag Hammarskjold Blvd., the six-factor test from Patras, 544
Freehold, N.J. (Village Mall property). F. App’x 137 (3d Cir. 2013), both
At this time, legal title to the Pachava and VSHPHH were Shant’s PHOTO BY ARCHEOPHOTO/ISTOCK
Navesink property was owned by the nominees and that the tax liens as-
Pachava Asset Trust. Shant (as well as sessed against him consequently
his ex-wife and children until 2015) attached to the Navesink and Village
lived at the property after it was built in Mall properties.

62 March 2023 The Tax Adviser