The State - News from Aug. 7, 1989

Trial attorney Melvin Belli did not defraud the government but must pay back taxes on a San Francisco building he gave to his children, the U.S. Tax Court ruled in Washington. Belli, 82, took the Internal Revenue Service to court last summer after it said he owed $3.3 million in back taxes and fraud penalties on the building. The government contended that the lawyer, known as the King of Torts (civil lawsuits), failed to report the 1978 gift of the Belli Building to his children, Caesar, 33, and Melia, 17. Belli argued that he sold it to the children in 1981 and was therefore exempt from paying gift taxes on it. Judge Julian Jacobs ruled that the transfer was subject to gift taxes but he did not side with the IRS claim that Belli had lied about the gift to evade taxes. “The building is associated with his name and reputation, and transferring his interest in the building was so traumatic to Mr. Belli that he suppressed it from his consciousness,” Jacobs wrote.