Kleinman Capitol Expressway, L.P., along with its partners, has launched a legal battle against a prominent California accounting firm, accusing it of professional negligence and breach of contract. The complaint was filed by Kleinman Capitol Expressway, L.P., Elliot Kleinman, Paul Kleinman, and Larry Hernandez in the Superior Court of California, County of Santa Clara on January 16, 2025. The lawsuit targets SingerLewak LLP and Jon Widdowson.
The plaintiffs allege that SingerLewak LLP and its tax partner Jon Widdowson failed to perform their professional duties while preparing the partnership's 2017 tax returns. According to the complaint, this failure resulted in significant financial consequences for the plaintiffs. The case centers around a critical tax decision known as the "754 election," which allows for an adjustment in the tax basis of partnership property following certain events such as death or transfer of interest. In this instance, following Simon Kleinman's death in September 2017, his partnership interests were transferred to Elliot Kleinman, Paul Kleinman, and Larry Hernandez.
The plaintiffs assert that they engaged SingerLewak LLP to handle their tax preparation needs for the year 2017. Despite being aware of Simon's passing and the subsequent transfer of interests, SingerLewak allegedly neglected to make the necessary 754 election on behalf of Kleinman Capitol Expressway. This oversight purportedly led to an increased tax liability amounting to approximately $1.1 million when a portion of their San Jose property was sold in August 2022.
In September 2023, seeking relief from this financial burden, Kleinman Capitol Expressway approached the IRS for an extension to retroactively make the election through a private letter ruling process. Although successful in securing this extension and avoiding additional taxes through amended returns, the plaintiffs incurred over $150,000 in costs related to expert legal counsel and additional CPA services required for this complex process.
The lawsuit accuses SingerLewak LLP and Jon Widdowson of professional negligence by failing to adhere to standard care practices expected within their field. Furthermore, it claims breach of contract due to their omission regarding the crucial tax election during their engagement with the plaintiffs. As part of their legal action against these defendants—referred collectively alongside unnamed Doe defendants—the plaintiffs seek damages exceeding $150k along with prejudgment interest fees associated with litigation costs reasonable attorney’s fees among other potential compensations deemed appropriate by court judgment.
Representing them is attorney Don A. Lesser from The Lesser Law Group based out San Francisco; however no specific judge has been assigned yet as per available documentation under Case No:22CV456666