In a reversal of the taxpayer-favorable lower court opinion, the Appeals Court for the federal Court of Claims concluded that Consolidated Edison’s Lease-In Lease-Out (LILO) transaction did not have economic substance and the purported lease was not a “true lease”. The IRS “listed” this particular transaction in Rev. Rul. 2002-69 and Congress further stopped these… Continue Reading
Category Archives: Debt vs. Equity
Subscribe to Debt vs. Equity RSS FeedThird Circuit Concludes Historic Rehab Credit Investors Were Not Partners
Posted in Debt vs. Equity, Economic Substance, Partnership/LLC, Real Estate, Tax CreditsThe IRS has won a significant victory in the world of tax credit partnerships. Federal tax credits are typically monetized through syndicated credit-investment partnerships where the investor is required to be treated as a partner for tax purposes in order to receive an allocation of the credit. In a reversal of the Tax Court, the… Continue Reading
Tax Court Respects Related-Party Loan
Posted in Debt vs. Equity, General, Litigation/Controversy, Partnership/LLCIn a significant taxpayer win, the Tax Court concluded in NA General Partnership v. Commissioner that related-party loans from a U.K. corporation to its controlled U.S. subsidiary were respected as debt, and the U.S. subsidiary was entitled to $932 million of interest deductions. The original loans were $4 billion in fixed-rate notes and $896 million in floating-rate… Continue Reading
Second Circuit Again Concludes Preferred Investor Was Not A Partner
Posted in Debt vs. Equity, Partnership/LLC, Tax SheltersIn the latest Castle Harbour decision, the Second Circuit Court of Appeals has again concluded that a preferred investor was not a partner for tax purposes, denying an allocation of taxable income to the tax-indifferent investor. In 2004, the District Court originally held that the investor was a partner and the second circuit reversed under… Continue Reading
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