In a case of first impression, the Tax Court ruled for the IRS in denying foreign tax credits to the Bank of New York (BNY) in an elaborate $1.5 billion financing transaction, resulting in income tax deficiencies over $200 million for the years at issue. The transaction, marketed by KPMG and Barclays to BNY, was… Continue Reading
Tag Archives: economic substance
First Circuit Applies 40% Valuation Penalty On Son of BOSS Transaction
Posted in Economic Substance, General, Partnership/LLC, Tax SheltersIn Fidelity International, the First Circuit upheld a 40% valuation penalty on a so-called “Son of BOSS” transaction described in Notice 2000-44. These transactions involved contributing offsetting long and short options into a partnership and claiming that the net effect of the options resulted in a very high tax basis in the partnership for purposes of… Continue Reading
IRS Has Three New Wins On Tax Shelter Cases
Posted in Economic Substance, General, International, Litigation/Controversy, Partnership/LLCThe Justice Department touted three significant wins on tax shelter cases involving importing foreign built-in tax losses, foreign tax credits, and generating tax losses from “underwater” commercial leases. In the first case, Southgate Master Fund LLC v. United States, the Fifth Circuit Court of Appeals, affirmed a lower court ruling that a purported “partnership” was… Continue Reading
New IRS Guidance to Field on Applying Economic Substance Doctrine
Posted in Economic Substance, Tax SheltersThe IRS issued guidance to its field offices to instruct examiners when appropriate to seek approval to raise the economic substance doctrine. The guidance also sets forth a series of inquiries the examiner must develop and analyze in order to seek approval for the ultimate application of the doctrine in the examination. Substantive guidance includes… Continue Reading
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