Judge Buchwald said Tuesday that AMTAX hasn’t “sustained its burden of proving by a preponderance of the evidence that its claims depend on federal tax law rather than the parties’ interpretation of a sui generis contract.”
Specifically, Judge Buchwald said, AMTAX had argued that a federal issue is raised because its claims require the interpretation of Section 42(i)(7) and other related Internal Revenue Code provisions. For one, the partnership said its breach of fiduciary duty claim stems from the firm’s calculation of the purchase price in a manner that it said was “inconsistent” with federal tax law. On top of that, AMTAX said its professional negligence claim is related to the same calculation, according to the opinion.
However, the judge said it’s clear that the purchase price was in fact calculated based on language contained in the right of refusal agreement, not based on the law.
“Thus, AMTAX’s argument that its claims rest on the interpretation of Section 42(i)(7), rather than the ROR agreement, is too tenuous to support federal jurisdiction,” Judge Buchwald said.
