Cayman Islands partnership YA Global Investments LP told a federal appeals court that it shouldn’t have to pay $96.8 million in tax and penalties based on the IRS’s erroneous determination that it was a business, not an investment vehicle.
YA Global “was in many ways a typical hedge fund,” it said in its opening brief to the US Court of Appeals for the Third Circuit. It traded in penny stocks under a strategy developed by Yorkville Advisors LLC, but it didn’t amount to an active business for tax purposes, it said.
The US Tax Court’s two decisions against the company ...