A developer has lost his €288,897 income tax battle with Revenue that centred around the treatment of a $11.2m loss in a US business venture.
This follows the Tax Appeals Commissioner (TAC), Andrew Feighery finding that the developer was not able to write-off his portion of the $11.2m losses arising from an investment in a residential development against his own income tax bill for the years, 2016, 2017, 2018 and 2019.
The developer claimed a trade loss in the years 2016 to 2019 and set the amount of this loss against his other taxable income in those years.
Revenue issued its €288,897 income tax assessment in 2021 and the developer appealed the ruling to the TAC.
However, Mr Feighery found that the developer did not personally undertake trading activities and as such, did not incur a trading loss and the assessment stands.
Mr Feighery found that the transaction undertaken by the developer was not in the nature of a trade but rather that of an investment.
He made this finding after concluding that as the potential return of the $11m investment was linked to profits that were long term in nature.
The developer became aware that the $11m was irrecoverable in 2014 but he "would have been in trouble with the bank" had he written it off at that stage.
The developer had a 42% share in the $11m investment and told the TAC hearing that he is a quantity surveyor by profession but that he spends most of his business life developing and investing in property.
He said that his main business entity is a company that is involved in the buying and selling of land and it develops houses, apartments and industrial units.
The developer stated that his understanding of the transaction was that it was intended to be a "quick deal" " and the anticipated profit on the transaction was approximately €900,000.
At hearing, the developer was represented by his accountant, his tax advisor and counsel while Revenue was represented by senior and junior counsel, its solicitor and two members of staff.
In addition, Commissioner Feighery heard sworn testimony from the developer and his expert witness, in addition to legal submissions from the parties.
Reporting by Gordon Deegan
