SunCal CEO’s bankruptcy estate sues the IRS for “overstated” tax bill

The bankruptcy estate of SunCal CEO Bruce Elieff is suing the Internal Revenue Service, claiming the federal agency “overstated” a tax bill totaling $84 million, according to a complaint filed in a Santa Ana court last week. 

Elieff filed for Chapter 11 bankruptcy in 2019. At the same time, he declared bankruptcies on five companies, including property and development LLCS and one that owned luxury homes in Corona del Mar, a seaside neighborhood of Newport Beach. The portfolio included 177 Shorecliff Road, an 11,000-square-foot estate that sold for $20.6 million in May last year.  

Elieff’s bankruptcy cases have since been consolidated under Chapter 7 and handed over to a court-appointed trustee. In its complaint, the estate accuses the IRS of filing “incorrectly computed” claims that did not properly account for declared losses and tax penalties. 

The complaint stipulates that the IRS disallowed tax deductions by Elieff for advertising, insurance, and capital losses by the real estate entities. The estate at one point included stakes in 22 development projects, according to the Orange County Register, in partnerships with homebuilding giant Lennar.

The IRS declined to comment on the lawsuit, citing a policy that prohibits public statements on pending litigation. 

In November 2019, the IRS filed a $103.5 million claim against the estate. More than a year later, the IRS submitted an amended claim for $84 million. The amended figure is split between $37.1 million in secured claims relating to Elieff’s tax assessments from 2002 to 2004 and $46.9 million in unsecured claims from tax years 2005 to 2007.  

The case adds to Elieff’s history of legal proceedings. He was previously sued by Todd Kurtin, a former business partner, who claims he was owed a payout after leaving SunCal. In 2017, a judge ordered Elieff to pay a $20 million settlement. In 2014, Elieff filed a fraud lawsuit against an ex-girlfriend, claiming that $850,000 in funds he gave to her were loans, not gifts.   

SunCal, which describes itself as “one of the nation’s largest real estate development companies,” was worth $4 billion before the collapse of its largest lender, Lehman Brothers, in 2008, according to the New York Post. The firm owns several large residential developments in California, according to its website. Its portfolio includes the Fairways, a 3,300-home project that wraps around the Morongo Golf Club in the Riverside County city of Beaumont and Oak Knoll, a 183-acre residential project in the Oakland Hills.  

The estate seeks a court order that would set Elieff’s tax bill at “reduced amounts.”