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McA Inc. And Universal City Studios, Inc. v. American Broadcasting Companies, Inc., and United States of America
Citations: 715 F.2d 475; 53 A.F.T.R.2d (RIA) 371; 1983 U.S. App. LEXIS 24193Docket: 83-5694
Court: Court of Appeals for the Ninth Circuit; September 7, 1983; Federal Appellate Court
MCA, Inc. and Universal City Studios, Inc. (appellants) appealed a district court decision that dismissed their suit seeking a declaratory judgment regarding entitlement to investment tax credits for films produced between 1971 and 1974. ABC and the United States (appellees) contended that the declaratory judgment was not permissible under 28 U.S.C. § 2201, which generally prohibits such actions concerning federal taxes. During the relevant tax years, MCA produced 31 films exhibited by ABC. Both entities claimed investment tax credits, but the IRS granted these credits to MCA while disallowing ABC's claims. After paying the resulting taxes, ABC filed for a refund in the Court of Claims, asserting it was entitled to the credits. In response, MCA sought a declaratory judgment to confirm its entitlement to the credits. The court examined whether Section 804(c)(2)(D) of the Tax Reform Act of 1976 allows for a declaratory judgment contrary to the prohibition in 28 U.S.C. § 2201. The court concluded that Section 804 does not lift the general prohibition against declaratory judgments; it is meant to facilitate the government's ability to involve all claimants in disputes over tax credits when the government initiates action. As such, MCA's request for a declaratory judgment was denied, and the district court's dismissal was affirmed.