Facts

Gene Yamagata, Rex Maughan and Ruth Maughan filed a complaint against United States, seeking tax refund.

PLAINTIFFS' CONTENTIONS:
Rex and Ruth Maughan, husband and wife, and Gene Yamagata were both 50 percent stockholders of Forever Living Products Japan. Each treated Forever Living Products as a corporation when they initially filed their tax returns for tax years 1991 through 1996. They filed this lawsuit against the U.S., claiming that the agreements they entered into during the early 1990s transformed Forever Living Products into a partnership, making their original filings as a corporation an error. Consequently, they alleged that they were entitled to a significant adjustment in taxes. Plaintiffs filed a motion for summary judgment.

DEFENDANT'S CONTENTIONS:
The government filed a cross-motion for summary judgment, arguing that Forever Living Products was correctly taxed as a corporation.

Damages

Yamagata sought $9,753,274 in tax refund plus costs, fees, and interest. The Maughans sought $36,738,362 in tax refund plus costs and interest.

Result

U.S. Court of Federal Claims Judge Nancy B. Firestone concluded that Forever Living Products exhibited at least three of the attributes of a corporation during the relevant time periods. As such, Forever Living Products closely resembled a corporation, and was properly taxed as a corporation. The court granted the government's motion for summary judgment, and denied plaintiffs' cross-motion for summary judgment.