Reports | Robert Willens

1007 Results

Like Kind Exchange Not Abrogated by "Related Party" Rules: September 7, 2010 - Volume 4 Issue 173 Print Report; Upon the death of Mother, a valuable parcel of "Farmland" (F) was transferred to her three children, T, B, and C, in equal shares as "tenants in comm...

Court Refuses To Dismiss Claim Based on Pall Corp. Tax Fraud: September 3, 2010 - Volume 4 Issue 172 Print Report; Pall Corporation (P) sells blood and drug filters to medical and biopharmaceutical markets worldwidethrough various subsidiaries. A lawsuit wasinstitute...

Corporations and Shareholders Are Separate Entities: September 2, 2010 - Volume 4 Issue 171 Print Report; Mr. and Mrs. Cezar, (C), owned all of the stock of R.V.J. Cezar Corporation, (RVJ). The corporation built "spec" houses that it sold to the public....

"Seamless" Conversion to 'S' Corporation Status: September 1, 2010 - Volume 4 Issue 170 Print Report; On January 1, 2009, X is organized in "State" as an unincorporated entity that is classified as a partnership. X elects, under Reg. Sec. 301.7701-3(c)(1)(...

WOTC and WtW Tax Credits Require Certification: August 31, 2010 - Volume 4 Issue 169 Print Report; Pursuant to Sec. 51 of the Internal Revenue Code, employers are entitled to tax credits if certain conditions are fufilled regarding their hiring of specified categ...

Withholding Taxes and CCE's Payment of "Boot": August 31, 2010 - Bulletin Print Report; Coca-Cola Enterprises, CCE,is in the final stages of effecting a split-off in which its shareholders, other than Coca-Cola, KO, will receive, in exchange for&...

Debt Modifications Can Result in "Deemed Exchanges": August 30, 2010 - Volume 4 Issue 168 Print Report; The gain or loss realized from the exchange of property for other property "differing materially in kind or in extent" is treated as income...

Marriott Loses "Son of Boss" Appeal: August 27, 2010 - Volume 4 Issue 167 Print Report; On April 25, 1994, MORI, Inc., a wholly-owned subsidiary of Marriott International (MI), established a short position in five-year Treasury securities with a face a...

Pharmaceutical Manufacturer Fees Will Be Operating Expenses: August 27, 2010 - Bulletin Print Report; The Financial Accounting Standards Board, FASB, has issued an Exposure Draft addressing the manner in which certain fees, newly levied on pharmaceutical manufacture...

Do Warrants Count For "Continuity of Interest" Purposes?: August 26, 2010 - Volume 4 Issue 166 Print Report; TP Corporation, (TP), owns all of the stock of Sub 1 and Sub 2. TP is a holding company which does not directly engage in the conduct of a trade or business....

Since When Are Securities "Other Property"?: August 25, 2010 - Volume 4 Issue 165 Print Report; LTR 201032017, February 5, 2010, describes a rather "typical" (if there is such a thing) "reverse Morris Trust" (RMT) transaction....

WCRX Special Dividend Update: August 24, 2010 - Bulletin Print Report; Warner-Chilcott's board of directors declared a special cash dividendin theamount of$8.50/share. The dividend is payable to shareholders of record...

"COBRA" User Hit With Accuracy-Related Penalties: August 24, 2010 - Volume 4 Issue 164 Print Report; In Murfam Farms LLC v. United States , _F.3d_ (Fed. Cl. 2010), the issue was whethercertain users of the well-known tax shelter, known as COBRA, were...

FNFG Will Acquire NAL In a "Reverse Triangular Merger": August 23, 2010 - Bulletin Print Report; In the largest bank merger since the onset of the financial crisis, First Niagra Financial Group, Inc., (FNFG), will acquire New Alliance Bankshares, Inc., (NAL), i...

Bringing Leases Onto The Balance Sheet: August 23, 2010 - Volume 4 Issue 163 Print Report; The Financial Accounting Standards Board, FASB, and the International Accounting Standards Board, IASB, have jointlyissued an exposure draft (ED)that, i...

Class Action Lawsuit Based on DTAs Permitted to Proceed: August 20, 2010 - Volume 4 Issue 162 Print Report; In Russell Hoff et al. v. Popular, Inc. et al. , _F.Supp.2d_ (DC P.R. 2010), the plaintiffs, in this class suit, purchased or acquiredPopular, Inc.,&n...

Treasury's Sale of GM Stock Will Not Create an Ownership Change: August 19, 2010 - Bulletin Print Report; General Motors Corporation, (GM), has announced an IPO in connection with which the Treasury Department, (TD),will be selling an undisclosed portion of its ap...

I.R.S. Adopts Broad Definition of "Home Equity Indebtedness": August 19, 2010 - Volume 4 Issue 161 Print Report; The tax law allows taxpayers to deduct interest on two categories of indebtedness secured by their residences. The first category is acquisition indebtedness

Distributions by 'S' Corporations: August 18, 2010 - Volume 4 Issue 160 Print Report; Mr. A and his daughter owned all of the stock of X Corporation, (X). X was an electing small business corporation (an 'S' corporation). &nb...

What Can BAC Do With Its BLK Stake?: August 17, 2010 - Bulletin Print Report; Bank of America, BAC, in connection with its acquisition of Merrill Lynch, acquired a substantial position in BlackRock, BLK, which, according to press reports, it...

Deere's Lost Research Tax Credits: August 17, 2010 - Volume 4 Issue 159 Print Report; During each of its taxable years ended October 31, 1997 through October 31, 2001, Deere & Co. (D) received income from operations conducted through unincorporat...

New Law Makes Foreign Acquisitions Less Attractive: August 16, 2010 - Bulletin Print Report; A U.S. taxpayer is allowed to claim a credit against its U.S. tax liability for the foreign income taxes that it pays. Notably, a domestic corporation that owns, di...

"Postponement" Provision in Debt Instrument Not Fatal: August 16, 2010 - Volume 4 Issue 158 Print Report; The stock of B Corporation (B) was owned by mother (249 shares); son (149 shares); daughter1 (51 shares); and daughter2 (51 shares). B redeemed the mother's shares...

I.R.S. Issues Regulations Regarding "Deferred" COD Income: August 13, 2010 - Volume 4 Issue 157 Print Report; Sec. 108(i) of the Internal Revenue Code was enacted as part of the American Recovery and Reinvestment Tax Act of 2009, Public Law 111-5, the so-called "stimul...

"Insider" Selling at WBMD: August 12, 2010 - Bulletin Print Report; WEBMD Health Corporation, (WBMD), is offering to purchase three million of its common shares, representing approximately 5.1 percent of its outstanding stock, at a...

Form Controls (Except When It Doesn't): August 12, 2010 - Volume 4 Issue 156 Print Report; P Corporation, (P), launches a tender offer for the stock of T Corporation, (T). P successfully acquires, for cash, 91 percent of T's stock. The remaining nine perc...

"Universal Service" Payments Are Gross Income: August 11, 2010 - Volume 4 Issue 155 Print Report; In AT&T, Inc.v. United States ,_F.Supp.2d_(W.D. Tx. 2009), the issue to be resolved was the tax treatment of certain payments that AT&T (T)&nb...

Option Payments Give Rise to Capital Losses: August 10, 2010 - Volume 4 Issue 154 Print Report; P Corporation (P) owned all of the stock of Sub1 (S1)and Former Sub (FS). During Month 1 of Year 2, P's equity interest in FS was cancelled after FS emerged f...

Are P's and T's Securities Substantially Identical?: August 9, 2010 - Volume 4 Issue 153 Print Report; Do the wash sale provisions of the Internal Revenue Code ("the Code") apply in a case in which a taxpayer, (TP), an individual who is not a "deale...

Tax Court Finds "LevPar" Gives Rise To a "Disguised Sale": August 6, 2010 - Volume 4 Issue 152 Print Report; One of the more popular techniques for divesting assets on a tax-deferred basis has been the so-called"leveraged partnership". In fact, Tribune Corp...

Spun-Off Corporation Does Not Inherit Distributor's Tax Attributes: August 6, 2010 - Volume 4 Issue 151 Print Report; P1 Corporation, (P1), owned all of the stock of each ofSub1, Sub2, and Sub3. The corporations joined in the filing of a consolidated income tax return....

Merger "Direction" Matters: August 5, 2010 - Bulletin Print Report; Cerberus APB Investor, LLC, (CA), which we assume is treated as a partnership for tax purposes, is an affiliate of Cerberus, LP, (CL). CA owns 55.39 percent of the...

Are "Carried Interests" Taxable Upon Receipt?: August 5, 2010 - Volume 4 Issue 150 Print Report; In 1979, Mr. William G.Campbell, (C), received a two percent "special limited partnership interest" (a "profits" or "carried" in...

The Anti-Morris Trust Rules Do Not Operate in Canada: August 4, 2010 - Volume 4 Issue 149 Print Report; M Corporation, (M), owned all of the stock of L Corporation, (L). Mr. S owned 42 percent of the stock of M; the public owned 35 percent of such stock; and B Corpora...

House Passes REIT Stimulus Legislation: August 3, 2010 - Bulletin Print Report; A foreign person is taxable on its taxable income which is "effectively connected" with the conduct of its trade or business within the U.S. For non-effec...

Can Dividend Income Be "Assigned"?: August 3, 2010 - Volume 4 Issue 148 Print Report; Mr. Caruth (C) owned 75 percent of the Class A voting common stock of NP Corp. (NP). He also owned 75 percent of NP's Class B non-voting common stock and 100 percen...

Warner-Chilcott's Debt-Financed Special Dividend: August 2, 2010 - Bulletin Print Report; Warner Chilcott plc, (WCRX), intends to incur some $2.25 billion in new indebtedness, both senior secured and unsecured indebtedness, for the express purpose of fun...

When Does Business Begin?: August 2, 2010 - Volume 4 Issue 147 Print Report; On February 15, 2004, Mr. Woody (W) started investigating the real estate market so he could acquire real estate "for investment or rental". As the year u...

Applying "Arrowsmith": July 30, 2010 - Volume 4 Issue 146 Print Report; Mr. Bresler (B) owned 39 percent of the stock of Best Ice Cream Corp. (BICC), an "electing small business corporation"---an 'S' corporation....

Avis Tops Hertz's Offer for Dollar Thrifty: July 29, 2010 - Bulletin Print Report; Avis Budget Group, Inc., (ABG), is attempting to derail the merger agreement involving Hertz Global Holdings, Inc., (H), and Dollar Thrifty Automotive Group, Inc.,...

New Markets Credit Not a Passive Activity Credit: July 29, 2010 - Volume 4 Issue 145 Print Report; On February 1, 2010, X, an individual, acquired a qualified equity investment, (QEI), in a qualified community development entity, (CDE). A "new markets tax cr...

"Sales" and "Gross Receipts" Are Not Synonymous: July 28, 2010 - Volume 4 Issue 144 Print Report; M.D.C. Holdings, Inc. (MDC) was engaged, in Arizona and elsewhere, in the construction, sale, and financing of housing. HomeAmerican Mortgage Company, (HA), a wholl...

Retirement of "Contingent" Debt Does Not Produce COD Income: July 27, 2010 - Volume 4 Issue 143 Print Report; W Corporation, (W), owned all of the stock of X Corporation, (X). X owned all of the stock of three subsidiaries. X tran...

G.E.'s "Castle Harbour" Partnership is Respected: July 26, 2010 - Volume 4 Issue 142 Print Report; On July 26, 1993, General Electric Capital Corporation, (GECC), a subsidiary of General Electric Company, (GE), through three wholly-ownedsubsidiaries, TIFD I...

Employers Get New Pension Funding Relief: July 26, 2010 - Bulletin Print Report; Employers gainedneeded time to fund their defined benefit (pension) plans with the recent enactment of H.R. 3962, "The Preservation of Access to Care for...

Prepaid Variable Forward Contracts Treated as Current Sales: July 23, 2010 - Volume 4 Issue 141 Print Report; Mr. Philip Anschutz, (PA), owned all of the stock of Anschutz Corporation, (AC). AC elected, effective August 1, 1999, to be an 'S' corporation. AC owned all of the...

Stock Is Always "Property Held for Investment": July 23, 2010 - Volume 4 Issue 140 Print Report; Mr. Russon (R) is an employee of RB Corporation (RB). R is a mortician . On December 23, 1985, R, his brother, and his cousins, agreed topurchase...

Capital Gain Dividends: July 22, 2010 - Volume 4 Issue 139 Print Report; With tax rates imposed on dividend incomepoised to increase from today's level of 15 percent to as high as 39.6 percent,attention should shift to compan...

"Deemed Paid" FTCs Require "Direct" Ownership: July 21, 2010 - Volume 4 Issue 138 Print Report; Relief from international double taxation is generally accomplished by means ofthe foreign tax credit rules. Thus, in general, a U.S. taxpayer may of...

WY and the "Wash Sale" Rules: July 20, 2010 - Bulletin Print Report; The ex-dividend date with respect to Weyerhaeuser's special dividend has been set for today, July 20. The record date for such special dividend is July 22. (Despite...

Taxpayer Cannot Exclude Gain From Sale of "Dwelling Unit": July 20, 2010 - Volume 4 Issue 137 Print Report; On December 14, 1984, Mr. G purchased the "SR property" for $150,000. The SR property included an 880 square-foot two-story building with a study on the s...

California Casts A Wide (Taxation) Net: July 19, 2010 - Volume 4 Issue 136 Print Report; Personal Selling Power, Inc. (PSP) is incorporated in Virginia. PSP publishes a magazine entitled Selling Power ; issues a monthly audio magazinenamed...

Goldman Agrees To Forgo Tax Deduction For Settlement Payment: July 16, 2010 - Bulletin Print Report; The Final Judgment to which Goldman, Sachs & Co., (GS), and the S.E.C. are parties orders GS to pay (i) "disgorgement" in the amount of $15 million an...

Surrendering or Selling a Life Insurance Contract: July 16, 2010 - Volume 4 Issue 135 Print Report; On January 1 of Year 1, Mr. A (A), an individual, entered into a life insurance contract with "cash value". A was the "insured" under the contra...

"Derivium" Agreement Ruled a Sale: July 15, 2010 - Volume 4 Issue 134 Print Report; On August 9, 2001, the taxpayer, (C), instructed First Union Securities to transfer 990 shares of IBM stock to Morgan Keegan and to credit Derivium's account accord...

More Thoughts on WY's Special Dividend: July 14, 2010 - Bulletin Print Report; WY has provided some additional information on the tax consequences of its record-breaking special dividend, and other topics, that bears mentioning. &...

Preventing Double Taxation of the Same Income: July 14, 2010 - Volume 4 Issue 133 Print Report; In many instances, residents of one state or other jurisdiction are taxed on income earned in states or other jurisdictionswith respect towhich they are...

Aon/Hewitt Associates Plan a Reorganization: July 13, 2010 - Bulletin Print Report; Aon Corporation, (AC), and Hewitt Associates, Inc., (HA), have announced their intention to effect a merger. It is intended, and in fact is a condition to closing,...

Celgene/Abraxis--An "Open" Transaction?: July 13, 2010 - Volume 4 Issue 132 Print Report; Celgene Corporation, (C), and Abraxis BioScience, Inc., (AB), recentlyannounced a merger agreement in connection withwhich a newly-created and wholly-ow...

WY Announces "REIT Qualification Dividend": July 12, 2010 - Bulletin Print Report; The board of directors of Weyerhaeuser, (WY), has declared a special dividend in the amount of $5.6 billion . This dividend includes the regular quarterly dividen...

"Black Liquor" Constitutes Cellulosic Biofuel: July 12, 2010 - Bulletin Print Report; The I.R.S. had alreadyconcluded, in CCA 200941011, June 3, 2009,that black liquor, (BL), is a liquid fuel derived from biomass and is therefore eligible...

Is Managing a Trademark "Engaging" in Business?: July 12, 2010 - Volume 4 Issue 131 Print Report; The purpose of the Blistex Bracken Limited Partnership (BBLP) is to acquire, own, manage, and maintain certain trademarks, including the well-known* BLISTE...

Compensatory Damages Can Be a Tax-Deductible Expense: July 9, 2010 - Volume 4 Issue 130 Print Report; On January 18, 2000, Fresenius Medical Care Holdings, Inc., (FR), and the United States signed a "Global Agreement" resolving a series of suits against FR...

Bankrupt Corporation Undergoes a 'G' Reorganization: July 8, 2010 - Volume 4 Issue 129 Print Report; C Corporation, (C), owned all of the stock of Sub1 Corporation, (S1), and FSub Corporation, (FS), a foreign corporation. C also owned all of the interests in LLC1 w...

FIS Offers Another Dividend Stripping Opportunity: July 8, 2010 - Bulletin Print Report; Fidelity National Information Services, Inc., (FIS), is offering to purchase for cash up to 86,206,896 of its common stock pursuant to tenders at prices specified b...

When Can A "Process" Be Patented?: July 7, 2010 - Volume 4 Issue 128 Print Report; An individual, (B), applied for a patent. His application sought patent protection for a claimed invention that explains how buyers and sellers of commodities, in t...

NOL "Poison Pill" Plan Passes Muster Under Unocal: July 6, 2010 - Volume 4 Issue 127 Print Report; A case decided by the Delaware Court of Chancery, Selectica, Inc. v. Versata Enterprises, Inc. , C.A. No. 4241-VCN (Ct. Chan. DE 2010) was, in the court's o...

"Actual Knowledge" and Ownership Changes: July 2, 2010 - Volume 4 Issue 126 Print Report; Where a "loss corporation" experiences an "ownership change" (within the meaning of Sec. 382(g)(1) of the Internal Revenue Code), certain limits...

"In Loco Parentis": July 1, 2010 - Volume 4 Issue 125 Print Report; Scholastic Book Clubs, Inc. (SBC) is a wholly-owned subsidiary of Scholastic, Inc. SBC is a Missouri corporation with headquarters in Jefferson City, Mo. SBC distri...

Celgene Will Issue "CVRs": June 30, 2010 - Bulletin Print Report; Celgene Corp., (CELG), and Abraxis BioScience, Inc., (ABII), haveannounced a merger in connection with which ABII will become a subsidiary of CELG.

General Mills' Futures Transactions Produce "Gross Receipts": June 30, 2010 - Volume 4 Issue 124 Print Report; General Mills is a unitary group of corporations operating both within and outside of California. Accordingly, the percentage of its income that is subject to Calif...

Unique "Dividend Stripping" Opportunity In Valeant/Biovail Merger: June 29, 2010 - Bulletin Print Report; The merger agreement filed by Valeant, (V),and Biovail, (B),discloses that the transaction will be structured as a merger of a newly-created second-tier...

The "Exchange" Requirement of Sec. 351: June 29, 2010 - Volume 4 Issue 123 Print Report; DuPont (DD) organized a French subsidiary (SA) to manufacture urea herbicide in France. DD granted SA a royalty-free, non-exclusive, license to "make, use, and...

FASB Addresses Revenue Recognition From Customer Contracts: June 28, 2010 - Volume 4 Issue 122 Print Report; The Financial Accounting Standards Board (FASB) has determined that the accounting for revenues arising from contracts with customers can use an overhaul and it has...

State Tax Credits Do Not Imperil REIT Election: June 25, 2010 - Volume 4 Issue 121 Print Report; LTR 200916014, January 9, 2009, addresses the case of a taxpayer (TP)which has elected to be taxed as a Real Estate Investment Trust (REIT). TP's principal as...

Another Liberty Split-Off Is In the Works: June 24, 2010 - Bulletin Print Report; Liberty Media Corporation, (L), recently announced its intention to place the assets currently attributed to the Starz Group and the Capital Group into a new corpor...

"PIK" Debt Is Not "Stock" For Purposes of Sec. 382: June 24, 2010 - Volume 4 Issue 120 Print Report; Foreign Parent (FP) owned all of the common stock of Parent (P). P's preferred stock was owned by two funds. P, a loss corporation, formed Subsidiary (S) by contrib...

Accounting For a Long-Term Contract Termination: June 23, 2010 - Volume 4 Issue 119 Print Report; On Date 1, Sub1, a subsidiary of Taxpayer (TP), entered into a fixed price contract with B for Sub1 to design, test, and fabricate C1. Sub1 consistently treated the...

VRX/BVF Agree to Merge: June 22, 2010 - Bulletin Print Report; Valeant, (VRX),and Biovail, (BVF), announced that each company's Board has approved a merger agreement in which VRX would be merged with and into BVF (or an a...

Variable Annuities--Who Owns the "Underlying"?: June 22, 2010 - Volume 4 Issue 118 Print Report; In Rev. Rul. 82-54, 1982-1 C.B. 11, the I.R.S. addressed the case of "Insurance Company", (IC), a life insurance company. IC issues"contracts&q...

Can BP Obtain Tax Deductions For Its "Compensatory" Payments?: June 21, 2010 - Volume 4 Issue 117 Print Report; Can BP America, Inc., (BPA), secure tax deductions for the amounts it will be "voluntarily" paying to compensate the parties adversely affected by its act...

"Hold Constant Principle" Reduces Likelihood of Ownership Change: June 18, 2010 - Volume 4 Issue 116 Print Report; Where a "loss corporation" experiences an ownership change , limitations are placed on the amount of taxable income, for any taxableyear end...

Sen. Baucus Weighs In On Carried Interest: June 17, 2010 - Bulletin Print Report; The Senate is drafting its own version of the "extenders" bill (the House has already passed its version thereof). While each such version contains a prov...

The "Source" of Royalty Income: June 17, 2010 - Volume 4 Issue 115 Print Report; The taxpayer, TP, a corporation, owns and licenses artistic and literary intellectual property. TP licenses this property (most of which is copyrighted or trademark...

"Book Gain" Not Included in Utility's Gross Income: June 16, 2010 - Volume 4 Issue 114 Print Report; In LTR 200852002, September 25, 2008, the taxpayer (T) is a public electric utility. T owned LX and unrelated buyer (B) agreed to purchase, from T, Unit 1 and Unit...

CVC's Asset Purchase: June 15, 2010 - Bulletin Print Report; A buyer's objective, in the case of a taxable acquisition, is to secure a "cost basis" in the target's assets. This is so because depreciation and amortiz...

Recap Makes A Spin-Off Possible: June 15, 2010 - Volume 4 Issue 113 Print Report; D Corporation, (D), a holding company, owns 97.6 percent of the voting common stock of C Corporation, (C): there are 3,692 Cshares outstanding of which D owns...

A Closer Look At The “Carried Interest” Proposal(s): June 14, 2010 - Volume 4 Issue 112 Print Report; It certainly appears that Congress is poised to pass legislation (that President Obama is sure to sign) that will increase, rather dramatically, the tax rate imposed on t...

Avoiding Pitfalls On the Sale of Rental Real Estate: June 11, 2010 - Volume 4 Issue 111 Print Report; The stock of T Corporation (T) is owned by Trustee (EE). The taxpayer (TP) and EE are equal partners in three partnerships, PS1, PS2, and PS3. TP and EE each hold a...

I.R.S. Attacks "Blocker" Partnerships: June 10, 2010 - Volume 4 Issue 110 Print Report; The taxpayer, (TP), a U.S. corporation, owns all of the stock of CFC1 and CFC2. CFC1 and CFC2 are equal partners in a domestic partnership, (PS), which owns all of...

Allscripts Will Acquire Eclipsys: June 9, 2010 - Bulletin Print Report; Allscripts, (MDRX), has announced a plan pursuant to which it will acquire Eclipsys, (ECLP), in a merger transaction intended to qualify as a reorganization, and re...

Judge Posner Breathes Life Into Sec. 269: June 9, 2010 - Volume 4 Issue 109 Print Report; South Beach Securities, Inc., (SBS), filed a petition under Chapter 11 of the Bankruptcy Code and submitted a plan of reorganization. The bankruptcy judge refused t...

E&Y Consulting Partners Cannot Defer CG Income: June 8, 2010 - Volume 4 Issue 108 Print Report; Several years ago, the consulting partners of Ernst & Young (EY) received shares in Capgemini, S.A.(CG) in exchange for their partnership interests. The shares...

"Incentive Payments" Yield Ordinary Income: June 7, 2010 - Volume 4 Issue 107 Print Report; T Corporation (T) has outstanding two classes of common stock, Class A Common Stock and Class B Common Stock. The Class A Common Stock has lesser voting rights than...

A Rare Earnings and Profits Ruling: June 4, 2010 - Volume 4 Issue 106 Print Report; Mr. A (A) holds a "paid-up" life insurance contractwith respect tohis own life. On the first day of Year 1, X Corporation (X), a C corporation...

Equity Method Under Siege: June 3, 2010 - Bulletin Print Report; Last week's proposal, in which FASB is seeking to expand the types of assets and liabilities that must be marked to market, also contains a rather radicalalte...

"Mezzanine" Loans Do Not Terminate REIT Status: June 3, 2010 - Volume 4 Issue 105 Print Report; T Corporation (T) is a REIT. T is the managing general partner of a limited partnership(LP) and owns "a%" of the common units of LP. T, through LP,...

Bay State Court Nixes TJX's Deductions: June 2, 2010 - Volume 4 Issue 104 Print Report; On November 20, 1992, on the advice of its accountants, Coopers & Lybrand, The TJX Companies,(TJX),a Massachusetts corporation,transferred &qu...

FASB Proposes to Alter The Accounting for "Financial Instruments": June 1, 2010 - Volume 4 Issue 103 Print Report; The Financial Accounting Standards Board (FASB) has published a proposal which will alter, in a fairly dramatic way, the manner in which financial instruments* are...

"Circular Flow of Funds" Ignored: May 28, 2010 - Volume 4 Issue 102 Print Report; Mr. and Mrs. Kerzner each owned 50 percent of the interests in a partnership, HCA, and 50 percent of the outstanding stock of an 'S' corporation, HCI. HCA borrowed...

Clarus Moves To "Monetize" Its NOLs: May 27, 2010 - Volume 4 Issue 101 Print Report; Clarus Corporation, (CL), was formerly in the e-commerce solutions business. That business, however, was unsuccessful and CL has since discontinued its involvement...

CCE's Split-Off Should Produce Capital Gains: May 27, 2010 - Bulletin Print Report; The Form S-4 regarding Coca-Cola Enterprise's (Old CCE) split-off was recently issued and it confirms the tax treatment for the cash element of the consideration th...

"Extenders" Bill Encourages Capital Formation: May 26, 2010 - Bulletin Print Report; While much of the "extenders" bill, the passage of which is expected shortly, raises taxes on businesses and holders of investment services partnership in...

"Extenders" Bill Focuses on Foreign Tax Credit "Abuses": May 26, 2010 - Bulletin Print Report; U.S. taxpayers may, in order to prevent international double taxation, claim tax credits, known as foreign tax credits, against the U.S. tax otherwise payable with...

"Mutually Exclusive" Transactions Revisited: May 26, 2010 - Volume 4 Issue 100 Print Report; On Date 1, the taxpayer, (T), a domestic corporation, engaged Consultant to provide advice with respect to "restructuring". From Date 1 to Date 2, T inves...

Covenant Not To Compete Is An "Amortizable Sec. 197 Intangible": May 25, 2010 - Volume 4 Issue 99 Print Report; Mr. E, (E), owned 23 percent of the stock of RG, Inc., (RG). An agreement between E and RG called for RG to pay E a total of $805,363.33, $400,000 of which was for...

"Extenders" Bill Affects Taxation of "Carried Interests": May 24, 2010 - Bulletin Print Report; It looks as though the taxation of so-called "carried interests" will, after years of discussion, finally be altered. The vehicle for this alteration is t...

"Extenders" Bill Will Crimp RMTs and Change "Boot" Rules: May 24, 2010 - Bulletin Print Report; The American Jobs and Closing Tax Loopholes Act of 2010, H.R. 4213, ("the extenders bill"), seems headed for passage now that Congressional tax writers ha...

Can Warrants Be Used to Effect a Spin-Off?: May 24, 2010 - Volume 4 Issue 98 Print Report; W Corporation, (W), owned all of the stock of S Corporation, (S). The Board of Directors of W decided to distribute to its shareholders warrants to purchase S stock...

Excluded Preferred Stock: May 21, 2010 - Volume 4 Issue 97 Print Report; Taxpayer (TP) is a publicly-traded domestic corporation with a single class of common stock and multiple classes of preferred stock outstanding, including Series X...

CIT's Tax Attributes: May 20, 2010 - Volume 4 Issue 96 Print Report; CIT recently emerged from bankruptcy with a revamped, and presumably sustainable, capital structure. In connection with its reorganization, substantial amounts of d...

FASB Updates SOP 03-3: May 19, 2010 - Volume 4 Issue 95 Print Report; SOP 03-3 (now Subtopic 310-30) applies to entities that acquire loans, but not just any loans. It applies to a loan with evidence of deterioration of credit quality...

Split-Offs and Sec. 355(e): May 18, 2010 - Volume 4 Issue 94 Print Report; D Corporation, (D),is actively engaged in the conduct of Business M and has been so engagedfor well in excess of five years. Within the past five years,...

Validus Is Repurchasing Shares: May 17, 2010 - Bulletin Print Report; Validus Holdings, Ltd., (VH), a Bermuda corporation indirectly engaged in the insurance business, is offering torepurchase some $300 million of its stock. The...

Payments For Trade Secret Misappropriation Are Ordinary Income: May 17, 2010 - Volume 4 Issue 93 Print Report; C&F Packing Co., Inc., (CF), was an 'S corporation engaged in the business of supplying uncooked sausage (and other meats) to pizza vendors, including Pizza Hut...

Stock Transfer Restrictions Designed to Preserve NOLs: May 14, 2010 - Volume 4 Issue 92 Print Report; Prior to Date 1, P Corporation, a "loss corporation", had outstanding a single class of common stock and multiple classes of preferred stock described in...

Another "Taxable" Merger: May 13, 2010 - Bulletin Print Report; Comtech Telecommunications Corporation, (CMTL), and CPI International, Inc., (CPII), have entered into a definitive merger agreement in connection with which CMTL w...

Did The I.R.S., in Rev. Rul. 2008-25, Misuse The "Step" Doctrine?: May 13, 2010 - Volume 4 Issue 91 Print Report; In Rev. Rul. 2008-25, I.R.B. 2008-21,May 27, 2008,Mr. A owned 100 percent of the stock of T Corporation, (T). Tpossessed assets with a gross value...

Minority Veto Rights May Prevent Consolidation: May 12, 2010 - Volume 4 Issue 90 Print Report; Statement of Financial Accounting Standards No. 94, Consolidation of All Minority-Owned Subsidiaries , provides that consolidation is appropriate when one e...

HCA's Earnings Bolstered By "Recap" Accounting: May 11, 2010 - Bulletin Print Report; When HCA, Inc., (H), was "taken private" several years ago, the sponsors formed an LLC, (HHII), which in turn formed a transitory acquisition company whic...

Stubhub Need Not Collect Chicago "Amusement" Tax: May 11, 2010 - Volume 4 Issue 89 Print Report; Stubhub, Inc. (SH),as every sports fan knows, is a venue which third parties use to buy and sell tickets. SH collects the purchase price from the buyer of the...

Should You Sign a "Sec. 302 Letter"?: May 10, 2010 - Bulletin Print Report; A tax of 30 percent is imposed on U.S. source dividend income received by a non-resident alien individual. This tax, the rate of which may be reduced by the terms o...

Customers of "Data Manipulator" Largely Escape NY Sales Tax: May 10, 2010 - Volume 4 Issue 88 Print Report; New York State Department of Taxation and Finance Advisory Opinion No. TSB-A-09(8)S, February 2, 2009, addresses the case of X the "products" of which are...

Gift of Interest in Single-Member LLC "Respected": May 7, 2010 - Volume 4 Issue 87 Print Report; On July 13, 2000, the taxpayer, (T/P), an individual,organized the single-member "PLLC". Importantly, T/P did not elect to treat PLLC as a corporati...

Home Depot's Sales Tax Woes: May 6, 2010 - Volume 4 Issue 86 Print Report; The State of Ohio's tax statutes, specifically R.C. 5739.121, authorize a vendor to reduce its "taxable receipts" (for sales tax purposes) for a current s...

Accounting for "Progressive" Jackpots: May 5, 2010 - Volume 4 Issue 85 Print Report; There is apparentlya widediversity in practice regardingthe manner in whicha casino operator accounts for slot machine and other "jackp...

Can RVI Be Eliminated Tax-Efficiently?: May 4, 2010 - Volume 4 Issue 84 Print Report; Retail Ventures, Inc., (RVI), is a holding company whose principal asset is 62 percent of the stock of an operating company, DSW Inc., (DSW). In light of the fact t...

Synovus Terminates Exchange Offer: May 3, 2010 - Bulletin Print Report; Synovus Financial Corp., (SVN), is a loss corporation. Accordingly, it would like to avoid the occurrence of an "ownership change". Where a loss corporati...

Textron's "Work Papers" Not Protected From I.R.S. Scrutiny: May 3, 2010 - Volume 4 Issue 83 Print Report; Textron, Inc., (TEX), a publicly-traded corporation, is required to have public financial statements certified by an independent auditor. In order to prepare such f...

Contingent Interest Can Be "Portfolio Interest": April 30, 2010 - Volume 4 Issue 82 Print Report; Corporation A, (A), a domestic subsidiary of Corporation T, (T), a domestic corporation, proposes to issue Notes which will be issuedin registered form. Most...

IPOs and Sec. 338(h)(10) Elections: April 29, 2010 - Volume 4 Issue 81 Print Report; Parent, (P), owns all of the stock of Corporation 1, (C1), and the latter owns100 percentof the stock of Seller Corporation, (S). S, in turn, owns all o...

Are Clients of a Common Investment Adviser an "Entity": April 28, 2010 - Volume 4 Issue 80 Print Report; Where a "loss corporation" experiences an ownership change (within the meaning of Sec. 382(g) of the Internal Revenue Code), its ability to freel...

Synovus Adopts A Rights Plan: April 28, 2010 - Bulletin Print Report; Synovus Financial Corp., (SNV), has adopted a "shareholder rights" plan which is designed to insure that SNV's favorable tax attributes (primarily its &qu...

I.R.S.'s "Tardy" Notice of Deficiency Has No Force or Effect: April 27, 2010 - Volume 4 Issue 79 Print Report; Mr. and Mrs. KennethBeard (B) owned 76 percent of the stock of two 'S' corporations, MMCD and MMSD. B was persuaded to engage in a "son-of-boss" tra...

Hertz Will Acquire Dollar Thrifty: April 27, 2010 - Bulletin Print Report; Hertz Global Holdings, Inc., HTZ, and Dollar Thrifty Automotive Group, DTG, have entered intoan agreement pursuant to which HTZ will acquire all of the stock...

Is "Substantial Compliance" Sufficient?: April 26, 2010 - Volume 4 Issue 78 Print Report; In some instances, a taxpayer will fail to strictly adhere to statutory and/or regulatory requirements imposedfor securing a deduction or, perhaps, for making...

McVeigh Lawyer Denied a Tax Deduction: April 23, 2010 - Volume 4 Issue 77 Print Report; The taxpayer, Mr. Jones (J), was the lead defense counsel for Timothy McVeigh in the "Oklahoma City Bombing" trial. During the course of J's representatio...

Qwest's NOLs: April 22, 2010 - Bulletin Print Report; CenturyLink, (CTL), and Qwest Communications International, Inc., (Q), announced that their respective boards have approved a definitive merger agreement pursuant t...

Can The Device Test Be Used Offensively?: April 22, 2010 - Volume 4 Issue 76 Print Report; On July 11, 1996, United Dominion Industries, UDI,commenced an unsolicited tender offer to purchase all of the common stock of Commercial Intertech Corporatio...

Are "Surplus Notes" Disguised Equity?: April 21, 2010 - Volume 4 Issue 75 Print Report; In connection with a settlement, Ambac Assurance Corporation, AAC, will transfer some$2 billion principal amountof "surplus notes" (along with...

I.R.S. Unveils Schedule UTP: April 20, 2010 - Bulletin Print Report; The I.R.S., in an effort to increase its audit efficiency,will require corporations to disclose more information about what the Service refers to as the corpo...

Non-Resident Shareholders of N.Y. 'S' Corporation Escape Tax: April 20, 2010 - Volume 4 Issue 74 Print Report; The taxpayers were non-residents of New York Stateduring 2001. They were, during 2001, shareholders of SBS, Inc. (SBS). During the fiscal year ended August 31...

Avoiding Sec. 483 With "Escrowed" Stock: April 19, 2010 - Volume 4 Issue 73 Print Report; A privately-heldcorporation (I) was acquired by a publicly-traded corporation (KM)in a "forward triangular merger"which qualifieda...

Apache/Mariner: A "Forward" Merger Is Planned: April 16, 2010 - Bulletin Print Report; Apache Corp., (APA), and Mariner Energy Corp., (ME), announced the execution of a definitive agreement pursuant to which APA will acquire ME. &nb...

Insolvent Subsidiaries and Sec. 338(h)(10): April 16, 2010 - Volume 4 Issue 72 Print Report; P Corporation, (P), owns all of the stock of S1 Corporation, (S1), and S1 owns at least80 percent of the stock of S2 Corporation, (S2). S2, in turn, owns all...

Option Grant Not a Present Sale of Optioned Property: April 15, 2010 - Volume 4 Issue 71 Print Report; The taxpayers were stockholders of Klauer Manufacturing Co., (KM), an 'S' corporation principallyengaged in the manufacture and sale of a variety of sheet met...

I.R.S. Publishes Guidelines for 5 Year NOL Carryback: April 14, 2010 - Volume 4 Issue 70 Print Report; Sec. 1211 of"The American Recovery and Reinvestment Tax Act of 2009" (Div. B of P.L. 111-5, Stat. 115, February 17, 2009) amends Sec. 172(b)(1)(H) o...

Accrued Interest on Convertibles--Read the Fine Print: April 13, 2010 - Volume 4 Issue 69 Print Report; A corporate taxpayer (T)issued convertible subordinated debenturesfeaturing a 20 year term. The debentures were convertible, at any time, at the holder'...

MIR's NOLs: April 12, 2010 - Bulletin Print Report; Mirant Corporation, MIR, and RRI Energy, Inc., RRI, announced that they have entered into a definitive agreement to create GenOn Energy. The transactionwill b...

Hoosier State "Nexus" Not Found: April 12, 2010 - Volume 4 Issue 68 Print Report; A corporation (C) is engaged in the sale of health and personal care products. Customers of C can order these products via mail-order, internet, telephone, or facsi...

Transfers to an "Investment Company": April 9, 2010 - Volume 4 Issue 67 Print Report; Ordinarily, no gain or loss is recognized on the transfer of property by a partner to a partnership in exchange for an interest in such partnership. See Sec. 721(a)...

Maurice Greenberg Enters Into a "VPF" and Liberty Update: April 8, 2010 - Volume 4 Issue 66 Print Report; On March 17, 2010, Starr International, SI, Mr.Maurice Greenberg's investment vehicle, entered into the final agreement for a "VPF" (variable prepai...

I.R.S. Regulations Cannot Be Applied Retroactively: April 7, 2010 - Volume 4 Issue 65 Print Report; Each member of the Murphy family, through his or her single-member LLC, purchased and sold long and short foreign currency put options. These option positions were...

NYS Non-Resident Not Taxed on "Non-Compete" Payments: April 6, 2010 - Volume 4 Issue 64 Print Report; A taxpayer (T) was a resident of Connecticut and an employee of Merrill Lynch Pierce Fenner & Smith(M) in its New York City office until March 31, 2005. T...

SD and ARD Announce A "Reverse Triangular Merger": April 5, 2010 - Bulletin Print Report; SandRidge Energy, Inc., (SD), and Arena Resources, Inc., (ARD), announced that they have entered into a definitive merger agreement under which ARD's shareholders w...

The Supreme Court's Views On Investment Adviser Fees: April 5, 2010 - Bulletin Print Report; The Investment Company Act of 1940, (ICA), regulates investment companies, including mutual funds. In most cases, an "investment adviser" will create a mu...

No Discount Allowed for Gift of "FLP" Interest: April 5, 2010 - Volume 4 Issue 63 Print Report; The Heckermans wished to make a gift to their children but only if the gift taxes imposed with respect to the transfer could be minimized or entirely eliminated. Th...

Primerica Will Enjoy a "Basis Step-Up": April 1, 2010 - Volume 4 Issue 62 Print Report; Primerica, Inc., (P),in the process of being "spun-off" from Citigroup, Inc., (C), willobtain, as a result of the manner in which C is structu...

DB's Costly Overstatement of Deferred Tax Assets: March 31, 2010 - Bulletin Print Report; E*TRADE Financial Corporation and E*TRADE Bank, (E*TRADE), sued Deutsche Bank AG, (DB),for breach of a stock purchase agreement by which E*TRADE acquired the...

"ESO" Costs Need Not Be Shared--Xilinx Vindicated: March 31, 2010 - Volume 4 Issue 61 Print Report; Xilinx, Inc., (X), researches, develops, manufactures, and markets integrated circuit devices and related development software systems. With a view towards expandin...

Formation of JV Not a Present "Sale": March 30, 2010 - Volume 4 Issue 60 Print Report; C Corporation (C) and U Corporation (U) entered into a joint venture agreement on July 1, 1968, which closed on July 31, 1968....

Treasury's Sale of C Stock Will Not Cause Ownership Change: March 30, 2010 - Bulletin Print Report; The U.S. Department of the Treasury has announced its intention to "fully dispose" of its approximately 7.7 billion shares of Citigroup, Inc., C, common s...

"Passing the Baton" Tax-Efficiently: March 29, 2010 - Volume 4 Issue 59 Print Report; Assume the existence of a family corporation the stock of which is owned, largely, by the founders of the corporation who are, increasingly, curtailing their involv...

Liberty Update in Light of the Health Care Bill: March 26, 2010 - Bulletin Print Report; The Patient Protection and Affordable Care Act, recently signed into law by President Obama, codifies the venerable "economic substance" doctrine. Thus, f...

Royalty Costs Not Subject to Capitalization: March 26, 2010 - Volume 4 Issue 58 Print Report; Robinson Knife Manufacturing Co., Inc., (R), is a corporation whose business is the design, manufacture, and marketing of kitchen tools. &n...

Health Care Bill Will Cause Write-Down of DTAs: March 25, 2010 - Bulletin Print Report; The recently-enacted health care legislation (the Patient Protection and AffordableCareAct)will cause many companies to revaluate their deferred t...

Capital Contributions Are Not Income: March 25, 2010 - Volume 4 Issue 57 Print Report; The shareholders of an 'S' corporation made loans to the corporation. The corporation sustained losses which were passed through to the shareholders. The passed-thr...

Is a Holding Company "Unitary" With Its Operating Subsidiary?: March 24, 2010 - Volume 4 Issue 56 Print Report; In many leveraged buyouts (LBOs), a holding company is formed by the "sponsors" of the LBOto acquire the stock of one or more operating companies. T...

Health Care Bill Contains Some Tax Surprises: March 23, 2010 - Bulletin Print Report; The widely-heralded health care bill that the House of Representatives passed last weekend contains a few tax surprises that can hardly be described as pleasant sur...

Can Merger Expenses Ever Be Deducted?: March 23, 2010 - Volume 4 Issue 55 Print Report; It is axiomatic that expenses incurred in connection with a reorganization are non-deductible capital expenditures. Can these capitalized expenditures ever give ris...

WY Details Its Conversion Plan: March 22, 2010 - Bulletin Print Report; Weyerhaeuser Company, WY, seems to be inching closer to implementing a plan to convert the corporation into a Real Estate Investment Trust (REIT). Its recently rele...

New Jersey's Treatment of "Deemed Sale" Gains: March 22, 2010 - Volume 4 Issue 54 Print Report; McKesson Parent (MP) owned 100 percent of the stock of McKesson Water (MW). MW was incorporated in Delaware and its principal place of business was California.

I.R.S. Extends "Continuity" Regulations: March 19, 2010 - Bulletin Print Report; Under Sec. 7805(e)(2) of the Internal Revenue Code, temporary regulations expire three years after issuance, if not earlier withdrawn. Accordingly, Reg. Sec. 1.368-...

When Will Preliminary Distributions Impact Continuity of Interest?: March 19, 2010 - Volume 4 Issue 53 Print Report; In order for a transaction to qualify as a reorganization , it must, among other things, exhibit continuity of interest (COI). In fact, Reg. Sec. 1...

The Progenitor of The "Economic Substance" Doctrine: March 18, 2010 - Volume 4 Issue 52 Print Report; Congress is poised to codify a judge-made doctrine of tax law, the amorphous "economic substance" doctrine. It is doing so, ostensibly, because the courts...

WebMD's Latest Repurchase: March 17, 2010 - Bulletin Print Report; WebMD Health Corporation, (WMD), is embarking on another share repurchase in which it is seeking to retire approximately 11 percent of its outstanding stock, some 5...

Cars and Trucks Are "Like Kind" Properties: March 17, 2010 - Volume 4 Issue 51 Print Report; Taxpayer (T) operates a leasing business; T purchases vehicles for lease and sells the vehicles as the lease terminates. The vehicleswhich populateT's f...

Levin Bill Takes Aim at "Reverse Morris Trust" Transactions: March 16, 2010 - Bulletin Print Report; Often, in the case of a reverse Morris Trust (RMT) transaction, in which a corporation, (D),distributes the stock of a controlled corporation, (C),to it...

Is the NFL a Single Entity?: March 16, 2010 - Volume 4 Issue 50 Print Report; The National Football League (NFL)is an unincorporated association of 32 separately owned and operated teams that collectively produce an annualseries o...

Sec. 336(e) Elections Cannot Be Currently Made: March 15, 2010 - Volume 4 Issue 49 Print Report; P Corporation, (P), owns all of the stock of S Corporation, (S), and the latter owns all of the stock of T Corporation, (T). &n...

"Black Liquor" Withstands a Challenge: March 12, 2010 - Bulletin Print Report; Black liquor, a by-product of the paper milling process in craft mills, is a liquid fuel derived from biomass. The producer of black liquor adds a small amount of d...

More Sales Tax Woes for Home Depot: March 12, 2010 - Volume 4 Issue 48 Print Report; Several years ago, Home Depot, Inc. (HD) began providing its many customers the option of purchasing merchandise though a "private label" credit card. Som...

C Issues Trust Preferred Securities and "Smart Grid" Grants: March 11, 2010 - Bulletin Print Report; Citigroup Capital XII, a grantor trust created by Citigroup, (C), for the purpose of issuing capital securities, has issued "Fixed Rate/Floating Rate Trust Pre...

Continuity of Business Enterprise and NOLs: March 11, 2010 - Volume 4 Issue 47 Print Report; Where a loss corporation undergoes an ownership change, within the meaning of Sec. 382(g), limits are imposed on the amount of taxable income for any taxable year e...

What is the "Character" of a Sec. 16(b) Payment?: March 10, 2010 - Volume 4 Issue 46 Print Report; In 1959, Mr. Cummings, the Chief Executive Officer of Consolidated Food, Inc., purchased 51,500 shares of MGM, Inc. for approximately $1,030,000. He was promptly el...

Investment Holding Company Included In NYS Combined Return: March 9, 2010 - Volume 4 Issue 45 Print Report; The taxpayer, (IB), is a commercial bank organized and chartered under the New York State Banking Law on June 6, 1983. I...

Third Circuit Rules That ESOP Dividends Are Not Deductible: March 8, 2010 - Volume 4 Issue 44 Print Report; Conopco, Inc. (a subsidiary of Unilever USA and the successor-in-interest to Bestfoods, Inc. and CPC International, Inc.) created an Employee Stock Ownership Plan (...

BAC's Warrants--"Phantom" Income May Arise: March 5, 2010 - Bulletin Print Report; The Bank of America, (BAC),warrants sold by the Treasury Department to the public recently embody some unusual attributes that, as you might expect, engender...

'S' Corporations and MLPs: March 5, 2010 - Volume 4 Issue 43 Print Report; X Corporation (X) is an 'S' corporation--Accordingly, its income is not subject to entity level taxation. Such income, instead,is "passed-through" t...

AIG Settles Tax Dispute With I.R.S.: March 5, 2010 - Bulletin Print Report; It is being reportedthat AIG has received a favorable ruling from the I.R.S.with respect to the withholding tax issue that was impeding its sale of...

Volvo Secures a Tax Refund: March 4, 2010 - Volume 4 Issue 42 Print Report; Volvo (V) entered into an April 18, 1980 contract with Sajac Company, Inc. (S)---Manufacturers,such asV, would transfer their excess parts to S for &quo...

Foreclosure Doubles as a "Qualified Stock Purchase": March 3, 2010 - Volume 4 Issue 41 Print Report; P Corporation, (P), owned100 percentof the stock of S1 Corporation, (S1), and S2 Corporation, (S2), and owned all of the membership interests in LLC, an...

Homebuilder's Losses Are Not "Product Liability" Losses: March 2, 2010 - Volume 4 Issue 40 Print Report; Homebuilders recently achieved a majortax victory by securing the ability to carry back certain losses, referred to as "applicable NOLs", for five y...

MXB/RISK---A Taxable Merger?: March 1, 2010 - Bulletin Print Report; MSCI, Inc., (MXB), and RiskMetrics Group, Inc., (RISK), announced that they have entered into a definitive merger agreement whereby MXB will acquire RISK "in a...

Stock Redeemed for Cancellation of Non-Recourse Notes: March 1, 2010 - Volume 4 Issue 39 Print Report; Corporation (C) was formed on Date A. C's commonstock was issued to the "Initial Shareholders" (the Initial Shareholders were comprised of the "...

Defending a Shareholders' Derivative Suit: February 26, 2010 - Volume 4 Issue 38 Print Report; Mr. BA (BA) was the majority shareholder of OA Corporation (OA) and owned 50 percent of the stock of each of L Corporation (L) andA Corporation (A). OA owned...

KO/CCE: A Split-Off with "Boot"?: February 25, 2010 - Bulletin Print Report; Although the details are sparse, it appears that Coca-Cola Enterprises, Inc., (CCE), will be engineering a split-off which will be accompanied by a cash payment; a...

Taxpayer Bound By Form In Which Transaction Cast: February 25, 2010 - Volume 4 Issue 37 Print Report; Insilco Corporation, (IC), owned 66 percent of the stock of Times Fiber Communication, Inc., (TFC), and the public owned the balance of such stock. Pursuant to an i...

R.H. Donnelley Denied Much Needed Tax Refund: February 24, 2010 - Volume 4 Issue 36 Print Report; R.H. Donnelley Corporation, (RHD), filed a consolidated income tax return for the year ending December 31, 1994. The I.R.S. examined this return and did not determi...

The Case for "Collapsing" Classes of Stock Grows: February 23, 2010 - Bulletin Print Report; D2 Corporation, (D2),owns all of the stock of D1 Corporation, (D1), engaged in Business 1, and Sub3 Corporation, (S3), engaged in Business 3. &nb...

Dispelling 10 Tax Myths: February 23, 2010 - Volume 4 Issue 35 Print Report; 10. An increase in the conversion ratio of convertible debt (or convertible preferred stock) does not have immediate tax consequences. In fact, such an increase is...

SLB's Foreign Status Does Not Prevent Tax-Free Reorganization: February 22, 2010 - Bulletin Print Report; Schlumberger, Ltd. (SLB) and Smith International, Inc. (SII) announced a merger agreement in which the shareholders of SII will, in exchange for each SII share, rec...

ESOPs and 'S' Corporations: February 22, 2010 - Volume 4 Issue 34 Print Report; S1 Corporation, (S1), a foreign corporation,was owned by Shareholders 1, 2, and 3. In addition, these sameindividuals owned all of the stock of Corporat...

Avoiding "CAI" Penalties: February 19, 2010 - Volume 4 Issue 33 Print Report; Sec. 279(a), a provision enacted during the notorious"conglomerate era", in The Tax Reform Act of 1969, provides that "no deduction shall be al...

Deducting Proxy Contest Costs: February 18, 2010 - Volume 4 Issue 32 Print Report; Expenses are deductible, in computing taxable income, if the expenses constitute ordinary and necessary expenses that are paid or incurred during the taxable year i...

What Is Delaying the ALICO Sale?: February 17, 2010 - Bulletin Print Report; The widely-anticipated sale of the stock of American Life Insurance Co. (ALICO) by AIG to MetLife (ML) is, apparently, being held upby a tax issue that ML's a...

GID Is a "Disease": February 17, 2010 - Volume 4 Issue 31 Print Report; The taxpayer, (RO), was born a genetic male. However, "she" was uncomfortable in the male gender role from childhood and first wore women's clothing secre...

'S' Status Not Imperiled by Transfers of Stock to LLCs: February 16, 2010 - Volume 4 Issue 30 Print Report; X Corporation (X) is an 'S' corporation. The stock of X is owned, in equal proportions, by Individual 1 (I1) and Individual 2 (I2). I1 will transfer his shares in X...

Payments "Originating" In a Spin-Off Includible in Gross Income: February 12, 2010 - Volume 4 Issue 29 Print Report; X Corporation, (X), whom we believeto beFord Motor Co., transferred to Z Corporation, (Z), whom webelieveto beVisteon Corporation, cer...

COD Income vs. "Gain on Sale": February 11, 2010 - Volume 4 Issue 28 Print Report; In March, 1978 the taxpayers (M) purchased a residence for $36,639. The property was, at the time of purchase,encumbered by a mortgage payable to P Bank. ...

Holding Property for Investment or Conducting a Business?: February 10, 2010 - Volume 4 Issue 27 Print Report; Many important taxation determinations turn on whether an entity or an individual is merely holding property for investment purposes or is, with respect to...

Vimpel Exchange Will Be Tax-Free: February 10, 2010 - Bulletin Print Report; The shareholders of Open Joint Stock Company VimpelCom (OJSC) have been asked to exchange their stock therein for stock in a newly-formed corporation, VimpelCom Ltd...

"Stripping" BOOT's Special Dividend: February 9, 2010 - Bulletin Print Report; Recently, LaCrosse Footwear, Inc., (BOOT), announced that its board of directors had approved a special cash dividend of $1.00 per share and a quarterly cash divide...

Broker Can Deduct Commission "Rebates": February 9, 2010 - Volume 4 Issue 26 Print Report; The taxpayer (TP)had been a highly successful "day trader" of stocks and securities. He became the branch manager of A Corporation's (A) office in A...

Real Estate Leasing As A "Passive" Activity: February 8, 2010 - Volume 4 Issue 25 Print Report; During 2001 and 2002, Mr. Agarwal (H)workedfull-time as anengineer. Mrs. Agarwal (W) worked full-time as a real estate agent at Century 21. W was...

FedEx Properly Claimed "Research" Credits: February 5, 2010 - Volume 4 Issue 24 Print Report; In 1996, FedEx (F) identified a need for a new computer system with "better revenue controls" to insure timely and accurate billing and to eliminate reven...

Ambac Adopts "Rights" Plan: February 5, 2010 - Bulletin Print Report; Ambac Financial Group, Inc., (ABK), has joined the growing legion of companies which have adopted a shareholder "rights plan" for the express purpose of p...

PDL Biopharma Post-Mortem: February 4, 2010 - Bulletin Print Report; PDL BioPharma, Inc. (PDLI) recently announced the tax "profile" of the distributions it made to its shareholders during 2009. In 2009, PDLI made two cash...

Deducting Fines and Penalties--Part II: February 4, 2010 - Volume 4 Issue 23 Print Report; S Corporation, (S),a subsidiary of Talley Industries, Inc. (TI),manufactured ejection seats for military aircraft. S's primary customer was the Navy Dep...

President Obama's Budget Replete With Tax Proposals: February 3, 2010 - Volume 4 Issue 22 Print Report; President Obama's budget submission contains numerous tax proposals, many of them quite "hostile" towards business in general and "high-income"...

Tax Refunds Ruled to Be "Pre-Petition" Claims: February 2, 2010 - Volume 4 Issue 21 Print Report; On December 22, 2008, the Debtors filed voluntary petitions under Chapter 11 of the Bankruptcy Code. Certain of the Debtors and non-debtor affiliates ("the Fly...

The I.R.S. Addresses DTV's Stock Buybacks: February 2, 2010 - Bulletin Print Report; LTR 201004001, October 22, 2009, appears to address the tax consequences of Liberty Media's split-off of Liberty Entertainment, Inc.; the latter's merger with Direc...

The Device Test and Earnings and Profits: February 1, 2010 - Volume 4 Issue 20 Print Report; In order for a spin-off or split-off to qualify for tax-free treatment it cannot be found to have been used principally as a device for the distribution of...

Deducting "Success-Based" Banking Fees: January 29, 2010 - Volume 4 Issue 19 Print Report; The taxpayer, (TP), a domestic corporation, in connection with the exploration of its strategic alternatives,hired each ofCorporation X, (X), and Invest...

"Downstream" Transfer Qualifies as a Reorganization: January 28, 2010 - Volume 4 Issue 18 Print Report; Where a corporation's principal asset is stock in another corporation, and the corporation determines that such stock should properlyreside with its sharehold...

The "Matching Principle" Can Defer Deductions: January 27, 2010 - Volume 4 Issue 17 Print Report; With a viewtowards preventing a particularform of "tax arbitrage", Sec. 267(a)(2) provides that if-- --by reason of the meth...

The I.R.S. Will Require Disclosure of "Uncertain Tax Positions": January 27, 2010 - Bulletin Print Report; Under FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainties in Income Taxes, an Interpretation of SFAS No. 109 , (ASC subtopic 740-10), an enter...

Cablevision Announces Record Date for Spin-off of MSG: January 26, 2010 - Bulletin Print Report; The spin-off by Cablevision (C) of the stock of its subsidiary, Madison Square Garden, Inc. (MSG) will occur on February 9, 2010. On that date holders of C's Class...

Bare Escentuals Deal Features "National Starch" Element: January 26, 2010 - Bulletin Print Report; Shiseido Co. Ltd. (P), through a U.S. affiliate, is offering to purchase the stock of Bare Escentuals, Inc. (BE) for $18.20 per share in cash. Once the tender offer...

Allowed vs. Allowable: January 26, 2010 - Volume 4 Issue 16 Print Report; The State of Illinois estate tax law, at Sec. 3(a), provided an estate tax to be imposed on "every taxable transfer involving transferred property having a tax...

"Isolated" Redemptions Do Not Trigger Constructive Distributions: January 25, 2010 - Volume 4 Issue 15 Print Report; Company, (C), a closely-heldState X corporation, has two classes of common stock outstanding; Class A common stockand Class B common stock. The classes...

"Upstream" Transfer is Ruled a 'C' Reorganization: January 22, 2010 - Volume 4 Issue 14 Print Report; P Corporation (P) owned all of the stock of H Corporation (H). H, in turn, owned all of the stock of S1 Corporation (S1) and S2 Corporation (S2). S1 was incorporate...

Kraft and Cadbury Reach an Agreement: January 21, 2010 - Bulletin Print Report; Kraft Foods (K) and Cadbury (C) have reached an agreement pursuant to which the former will acquire the stock of the latter in exchange for a combination of K commo...

NY Non-Resident Escapes Tax on Option Income: January 21, 2010 - Volume 4 Issue 13 Print Report; Mr. Robert Abodeely (RA) worked for Pfizer, Inc., in New York State, from August 7, 1988 until his retirement on January 14, 1999. At all times during his employmen...

Brink's and Tyco Announce a "Forward" Merger: January 20, 2010 - Bulletin Print Report; Tyco International Ltd. (TYC) and Brink's Home Security Holdings, Inc. (CFL) announced an agreement pursuant to which CFL will be merged with and into a newly-creat...

Deducting "Going Private" Expenses: January 20, 2010 - Volume 4 Issue 12 Print Report; In November of Year 1, the board of directors of Company (C) decided to "explore strategic alternatives", including a sale of C....

MDR's Spin-Off Should Not Have U.S. Tax Implications: January 19, 2010 - Bulletin Print Report; McDermott International, Inc. (MDR), a Panamanian corporation, owns all of the stock of The Babcock & Wilcox Company (BW), a U.S. corporation, and J. Ray McDerm...

"Derived" From Interest: January 19, 2010 - Volume 4 Issue 11 Print Report; HomeStreet, Inc. (HS)is a residential mortgage lender that services certain of the loans that it sells or securitizes. For loans sold on a "service-retai...

Bank and Bonus "Taxes" Are Proposed: January 15, 2010 - Bulletin Print Report; On Thursday, January 14, 2010,two "levies" were introduced by President Obama on the one hand and members of the House of Representatives on the oth...

Pennsylvania's "Shares Tax" Is Constitutional: January 15, 2010 - Volume 4 Issue 10 Print Report; The State of Pennsylvania imposes a so-called"Shares Tax" on the taxable amount of a banking institution's shares of capital stock. The tax is based...

"General Welfare" Payments Are Not Includible in Gross Income: January 14, 2010 - Volume 4 Issue 9 Print Report; LTR 200908025, November 5, 2008,informs usthat State A recentlyenacted legislation establishing "Program M". Under the Program, State A...

"Distressed" Sales of Realty Are Not Prohibited Transactions: January 13, 2010 - Volume 4 Issue 8 Print Report; Taxpayer (TP) isa widely-held and publicly-tradedreal estate investment trust (REIT). TP conducts its business through a limited partnership (LP) of whi...

Dueling Discount Rates: January 12, 2010 - Volume 4 Issue 7 Print Report; In 1991, three individuals, including L and S, won the Ohio State Lotto Jackpotamounting to$20 million. Each winner was entitled to receive 26 annual pa...

Accounting for "Elective" Cash/Stock Distributions: January 11, 2010 - Bulletin Print Report; Many REITs, and certain regulated investment companies (RICs), in order to (i) conserve cash, yet (ii)satisfy their dividend payment obligations, have resorte...

Wells Fargo's "SILOs" Do Not Pass Muster: January 11, 2010 - Volume 4 Issue 6 Print Report; Wells Fargo & Company(WF) claimed $115,174,203 in depreciation, interest, and transaction cost deductions for 2002. These deductions stemmed from WF's par...

"Retroactive" Taxation--Can It Withstand Scrutiny?: January 8, 2010 - Volume 4 Issue 5 Print Report; The Federalestate tax has been repealed with respect to decedents dying during 2010. Congress has threatened to reinstate the tax for 2010, even with respect...

Morgan Stanley's Windfall: January 7, 2010 - Bulletin Print Report; A New York Supreme Court Justice recently ruled that Discover Financial Services(D) could not escape its obligation underan agreement with Morgan Stanle...

Source of Income vs. Character of Income: January 7, 2010 - Volume 4 Issue 4 Print Report; Mr. Mintz (M) was a resident of Florida and a non-resident of New York. ESG, Inc. (ESG) was an New York 'S' corporation. M owned 27 percent of the stock of ESG. On...

I.R.S. Nixes Repatriation Gambit: January 6, 2010 - Volume 4 Issue 3 Print Report; Sec. 304(a)(1) of the Internal Revenue Code provides that, for purposes of Sec. 302 and Sec. 303, if one or more persons are in control of each of two corporations,...

Withholding on DIS/MVL Payment Can Be Avoided: January 5, 2010 - Bulletin Print Report; In connection with the merger of Marvel Entertainment (MVL) with and into Disney (DIS), the MVL shareholders will receive, in exchange for each MVL share, $30.00 in...

Replacing "Involuntarily Converted" Property: January 5, 2010 - Volume 4 Issue 2 Print Report; Where property is the subject of an "involuntary conversion", the gain from the transaction can be deferred if, within a specified period, the taxpayer re...

Estate Tax Repeal Affects Heirs' Basis in Inherited Property: January 5, 2010 - Bulletin Print Report; It is by now well-known that the estate taxhas beenrepealedwith respect todecedents passing away in 2010. This repeal, however, has some col...

Novartis/Alcon--Is the Merger a Reorganization?: January 4, 2010 - Bulletin Print Report; Not unexpectedly, Novartis A.G. (NVS) announced its intention to acquire full ownership of Alcon, Inc. (ACL) in a two-step transaction. The first step will see NVS...

I.R.S. Extends "AHYDO" Exemption: January 4, 2010 - Volume 4 Issue 1 Print Report; Under Sec. 163(e)(5) of the Internal Revenue Code, in the case of an Applicable High Yield Discount Obligation (AHYDO) as defined in Sec. 163(i), a corporation is n...

"Bargain Sale" Did Not Give Rise to "Constructive" Distribution: December 31, 2009 - Volume 3 Issue 254 Print Report; "...The hallmark of a constructive distribution is value passing from...the corporation to the shareholder, for which the shareholder does not give equivalent...

I.R.S. Extends REIT Stock Dividend Concession: December 30, 2009 - Volume 3 Issue 253 Print Report; Sec. 857(a)(1) of the Internal Revenue Codeprovides that the provisions of part II of subchapter M of Chapter 1 of the Internal Revenue Code(relating to...

Payments To Protect Goodwill: December 29, 2009 - Volume 3 Issue 252 Print Report; In general, payments made for the principal purpose of protecting an entity's goodwill and reputationare deductible even though such payments may also provide...

Nortel Networks, Inc. Settles I.R.S. Claim: December 28, 2009 - Bulletin Print Report; On August 20, 2009, the I.R.S. filed a "proof of claim" in which it asserted an unsecured priority claim against Nortel Networks, Inc. (NNI) for the taxab...

Reducing The Dilution Associated With Convertible Debentures: December 28, 2009 - Volume 3 Issue 251 Print Report; One of the issues surrounding the use of convertible debentures as a financing vehicle is the potential earnings per share dilution thatmight arisewhen...

What Is "Interest": December 24, 2009 - Volume 3 Issue 250 Print Report; Michigan Bell Telephone Co. (MBT) filed its Michigan "single business tax" returns and included monies received from customers as "late payment fees&...

CIT Moves To Protect Its NOLs: December 23, 2009 - Bulletin Print Report; CIT Group, Inc. (CIT) has emerged from bankruptcy with its stock in the hands of its creditors and with its debt substantially diminished. The reduction of its debt...

Rescinding a Split-Off: December 23, 2009 - Volume 3 Issue 249 Print Report; D Corporation (D) was owned by SH Corporation (SH), a foreign corporation. Dhad beenengaged for more than five years in the active conduct of each of&nb...

District Court Finds That "LevPar" Is a "Disguised Sale": December 22, 2009 - Volume 3 Issue 248 Print Report; On February 12, 1990, GAF Chemicals Corporation (GAF) and Rhone-Poulenc (RP) entered into a partnership agreement, forming RPSSLP, with GAF as a limited partner and...

TARP and Deferred Compensation: December 21, 2009 - Volume 3 Issue 247 Print Report; Through the years, Congress has, increasingly,"cracked-down" on non-qualified deferred compensation arrangements. This vigilance has culminated with...

PDL Pays A "Special Dividend": December 21, 2009 - Bulletin Print Report; PDL BioPharma, Inc. (PDL) paid a "special dividend" in the amount of $1.67/share last Tuesday, December 15, 2009. Thus, for the year ended December 31, 20...

Interstate Taxation and The Commerce Clause: December 18, 2009 - Volume 3 Issue 246 Print Report; The Commerce Clause of the United States Constitution provides that "The Congress shall have the Power...To regulate Commerce...among the several States...&quo...

Veritas Scores A Major "Transfer Pricing" Victory: December 17, 2009 - Volume 3 Issue 245 Print Report; Veritas Software Corporation (VUS) is in the business of developing, manufacturing, marketing, and selling software products. On July 2, 2005, VUS was purchased by...

WY Will Convert To A REIT: December 16, 2009 - Bulletin Print Report; It has finally happened. Weyerhaeuser Company (WY) announced that its board of directors "has determined that conversion to a REIT would best support the compa...

Ending Entanglements Through a "Cash-Rich" Split-Off: December 16, 2009 - Volume 3 Issue 244 Print Report; Where a corporation (X) owns an appreciatedequity stake in another corporation (Y), but not a controlling interest therein, the market will rarely give X full...

C Inches Closer To An Ownership Change: December 15, 2009 - Bulletin Print Report; Citigroup (C)will be raising "fresh" capital, through the issuance of "T-DECS" and common stock, and the Treasury Department will begin to...

How Does the "Wash Sale" Rule Apply to Bonds?: December 15, 2009 - Volume 3 Issue 243 Print Report; The "wash sale" rule denies a taxpayer a deduction for a loss sustained from certain sales or other dispositions of stock or securities. Thus, under Sec....

Treasury's Sale Of C Stock Will Not Impair C's NOLs: December 14, 2009 - Volume 3 Issue 242 Print Report; Were Citigroup (C) toexperience an ownership change its deferred tax assets (DTAs) would become vulnerable because its ability to realize those...

Massachusetts Enacts a "SFAS 109 Deduction": December 11, 2009 - Volume 3 Issue 241 Print Report; Statement of Financial Accounting Standards No. 109 , Accounting for Income Taxes , requires an entity to recognize a deferred tax liability (DTL) or deferre...

Extenders Bill Is Important for G.E.: December 10, 2009 - Bulletin Print Report; The "Extenders" bill passed the House, largely along party lines, on Wednesday, December 9. It faces an uncertain fate in the Senate. One of the more cont...

"Cross-Border" Spin-Offs Can Be Tax-Free: December 10, 2009 - Volume 3 Issue 240 Print Report; P Corporation (P) is a foreign corporation engaged, directly and indirectly, in the activeconduct of several businesses. P owns all of the stock of D Corporat...

Kraft Stock Will Be Taxable: December 9, 2009 - Volume 3 Issue 239 Print Report; Kraft Foods, Inc. (KFT) is offering to acquire all of the "ordinary" shares of Cadbury, plc (C), including those ordinary shares represented by ADSs. (Eac...

"Carried Interest" Changes Will Pay, In Part, For "Extenders": December 9, 2009 - Bulletin Print Report; On December 7, Rep. Rangel (D-NY), the Chairman of the House Ways & Means Committee, introduced legislation, "The Tax Extenders Act of 2009" (H.R. 421...

Standard Pacific's NOL Woes: December 8, 2009 - Bulletin Print Report; Standard Pacific Corporation (SFC), one of the homebuilders hard hit by the economic crisis, has accumulated substantial "deferred tax assets". The princi...

I.R.S. Wins Another "Son-of-Boss" Case: December 8, 2009 - Volume 3 Issue 238 Print Report; One of the most widely-used strategies marketed by accounting firms as a way to reduce tax liabilities was the so-called "son-of-boss" technique. This str...

When Are Policyholder Dividends Deductible?: December 7, 2009 - Volume 3 Issue 237 Print Report; The taxpayer (TP) issues "participating" life insurance policies that entitle policyholders to receive two types of dividends: annual dividends and termin...

House Members Propose a "Transactions" Tax: December 4, 2009 - Bulletin Print Report; Members (there are at least 15 co-sponsors)of the House of Representatives, led by Congressman DeFazio, proposed legislation ominously entitled "Let Wall...

Complications Involving a REMIC Holder's Charitable Impulses: December 4, 2009 - Volume 3 Issue 236 Print Report; LTR 200850027, August 28, 2008, addresses the case of a corporation (T)that holds a "residual interest" in a Real Estate Mortgage Investment Conduit...

CFCs and "Voting Power": December 3, 2009 - Volume 3 Issue 235 Print Report; The Obama Administration's tax proposals, focused heavily on altering the manner in which U.S.-basedmultinational corporations are taxed, has once again raise...

Disavowing a Covenant Not to Compete—“Strong Proof” Required: December 2, 2009 - Volume 3 Issue 234 Print Report; On March 31, 1998, representatives of C Corporation (C) and J Corporation (J) executed an "asset purchase agreement" which provided that C would acquire a...

"Basis Shifting" Scheme Thwarted: December 1, 2009 - Volume 3 Issue 233 Print Report; O Corporation (O) was in the business of developing, owning, and managing commercialreal estate. The stock of O was owned by a father (F) and his sons (S1 and...

Does BHI's S-4 Shed Light on the COI Issue?: November 30, 2009 - Bulletin Print Report; Berkshire Hathaway, Inc. (BHI), in connection with its planned acquisition of Burlington Northern Santa Fe Corporation (BNSF), has filed a preliminary proxy stateme...

Mr. Wygod Seeks "Exchange" Treatment For His Redemption: November 30, 2009 - Volume 3 Issue 232 Print Report; WebMD Health Corporation (WBMD) has been an activepurchaser of its stock for quite some time. In fact, its buybacks have been so extensive that they caused th...

Voting Trust Does Not Insulate Beneficiary From Subpart F: November 27, 2009 - Volume 3 Issue 231 Print Report; In 1989, Textron, Inc. (T) acquired substantially all of the stock of Avdel (A), a U.K. corporation. The FTC, however, intervened. The agency believed there might b...

Cost of "Supplies" Qualify for Research Credit: November 25, 2009 - Volume 3 Issue 230 Print Report; The taxpayer, TG Missouri Corporation (TGM), is in the business of manufacturing injection-molded products (steering wheels, air bags) for customers in the automoti...

Zions Is Keeping Busy: November 24, 2009 - Bulletin Print Report; Zions Bancorporation (ZION) recently announced its intention to engage in certain "financial" transactions that will have the effect of shoring up the com...

What If BHI's Stock Interest In BNSF Is Not "Old and Cold"?: November 24, 2009 - Volume 3 Issue 229 Print Report; Berkshire Hathaway, Inc. (BHI) currentlyowns approximately 22 percent of the stock of the stock of Burlington Northern Sante Fe Corporation (BNSF). The compan...

People's United Will Acquire Financial Federal Corporation: November 24, 2009 - Bulletin Print Report; People's United Financial, Inc. (PBCT), the holding company for People's United Bank, hasannounced a definitive agreement to acquire Financial Federal Corpora...

Exploiting the "HYDO" Suspension--Buyer Beware: November 23, 2009 - Volume 3 Issue 228 Print Report; In Rev. Rul. 2002-31, 2002-1 C.B. 1023, the I.R.S. bestowed itsstamp of approvalon a variety of debt instrument the issuance of which would provide the...

When To "Collapse" An Acquisition Merger and Upstream Merger: November 20, 2009 - Volume 3 Issue 227 Print Report; In Rev. Rul. 90-95, 1990-2 C.B. 67, P Corporation (P) formed S Corporation (S) and the latter merged with and into unrelated T Corporation (T). In the merger, the s...

E*TRADE's Ownership Change: November 19, 2009 - Bulletin Print Report; E*TRADE Financial Corporation (ETFC) has disclosed that, during the third quarter, it exchanged some $1.76 billion principal amount of "interest-bearing debt&q...

Lessee Can Deduct Capital Expenditures: November 19, 2009 - Volume 3 Issue 226 Print Report; A partnership (PS) operated the Sheraton Cleveland Airport Hotel. The Hotelwas owned by the City of Cleveland, Ohio. The Sixth "Supplement to Lease"...

Peet's Is Proposing A "Taxable Merger": November 18, 2009 - Bulletin Print Report; Peet's Coffee & Tea, Inc. (PEET) is in the process of acquiring Diedrich Coffee, Inc. (DDRX) in a two-step transaction that entails a tender offer, launched on...

Can An "(h)(10)" Election Be Made In Connection With an IPO?: November 18, 2009 - Volume 3 Issue 225 Print Report; P Corporation (P) owned all of the stock of S Corporation (S); the latter was engaged in Business A. P desired to exit Business A and, to accomplish its objective,...

Accruing Disputed Payments: November 17, 2009 - Volume 3 Issue 224 Print Report; In Trinity Industries and Subsidiaries v. Commissioner , 132 T.C. No. 2 (2009), Trinity Industries (T) had entered into a series of contracts (the first con...

BMY Will Split-Off Mead Johnson: November 16, 2009 - Bulletin Print Report; Bristol-Myers Squibb Company (BMY) has announced its intention to effect a "split-off" of its holdings in Mead Johnson Nutrition Company (MJN). Such a spl...

Surrendering A Life Insurance Contract: November 16, 2009 - Volume 3 Issue 223 Print Report; On December 31, 1980, New England Mutual (later acquired by MetLife) issued a life insurance policy insuring the life of Mr. HarveyBarr's mother. The policy s...

Sale of Partial Interests in Property Produces Capital Gains: November 13, 2009 - Volume 3 Issue 222 Print Report; In order for a capital gain to arise, a taxpayer must "sell or exchange" a capital asset. Ordinarily,a transaction willnot rise to the level o...

Capital Losses and RIC Distributions: November 12, 2009 - Volume 3 Issue 221 Print Report; It is reasonable toexpect that many regulated investment companies (RICs) racked up substantial capital losses in 2008. These losses will be carried forward t...

DOL Finds I.R.A. Owner Will Engage in a Prohibited Transaction: November 11, 2009 - Bulletin Print Report; A taxpayer's representative asked the Department of Labor (DOL)for advice on whether a transaction the taxpayer was contemplating would give rise to a pro...

The Expanding Concept of "Nexus": November 11, 2009 - Volume 3 Issue 220 Print Report; Inlight of the fact that most states are quitestrapped for revenue, we can expect increasedefforts on their part tobring out-of-state entiti...

"CERT" Rules Restrict NOL Carrybacks: November 10, 2009 - Volume 3 Issue 219 Print Report; Congress has passed, and the President has signed, legislation extending the period to which Net Operating Losses (NOLs) sustained in 2008 or 2009 may be carried. T...

Tendering OSG America, LP Units: November 9, 2009 - Bulletin Print Report; Overseas Shipholding Group, Inc. (OSG), through its subsidiary, OSG Bulkships, Inc. (OSB), is seeking to acquire all of the partnership interests in OSG America, LP...

The "Compensatory Element" of an ISO Is Never Deductible: November 9, 2009 - Volume 3 Issue 218 Print Report; Corporation1 (C1) acquired the stock of Target Corporation (T). T granted incentive stock options (ISOs) and offered a Sec. 423 Employee Stock Purchase Plan (ESPP)...

MLPs Can "Manage" Their Interest Rate Exposure: November 6, 2009 - Volume 3 Issue 217 Print Report; C is a limited partnershipthe interests in which arepublicly-traded. C is engaged in the transportation, storage, and marketing of natural gas and propa...

Hedge Fund Legend Not A NYC "Resident": November 5, 2009 - Volume 3 Issue 216 Print Report; The issue confronting Mr. Julian H. Robertson, the legendary founder and Chairmanof Tiger Management,and his spouse, Ms. Josephine Robertson, was whethe...

Tax Issues Surrounding BRK/BNI Transaction: November 4, 2009 - Bulletin Print Report; Itseems clear that the acquisition of Burlington Northern Santa Fe Corporation (BNI) by Berkshire Hathaway, Inc. (BRK) will be structured as a forward merger....

Accruing "Unbilled Receivables": November 4, 2009 - Volume 3 Issue 215 Print Report; LTR 200903079, October 8, 2008 (a Technical Advice Memorandum ) addresses the case of a taxpayer (T) who enters into contracts with the U.S. Government...

TARP Beneficiaries Will Be Excluded From NOL Relief: November 3, 2009 - Bulletin Print Report; The statutory languageembodied in"The Worker, Homeownership, and Business Act of 2009" (H.R. 3548) has nowbeen released and such languag...

Invesco Will Acquire Van Kampen From Morgan Stanley: November 3, 2009 - Volume 3 Issue 214 Print Report; Invesco, Ltd. (I), a Bermuda corporation, has entered into an agreement to acquire the "Van Kampen" businesses from Morgan Stanley, Inc. (MS). The conside...

Retaining an "Interest" in the Corporation Under Sec. 302(c)(2)(A): November 2, 2009 - Volume 3 Issue 213 Print Report; If a taxpayer's directly-owned stock is redeemed by the corporation, and if the taxpayer's only indirectownership of stock immediately after the redemption is...

NOL Carryback Extension and SunPower Update: October 30, 2009 - Bulletin Print Report; Congress seems to be moving closer to implementing a lengthening of the period to which Net Operating Losses (at least those that are sustained in 2008 and 2009) ma...

PDL BioPharma Will "Monetize" Its Royalty Rights: October 30, 2009 - Bulletin Print Report; PDL BioPharma (PDL)announced a transaction that will have the effect of "monetizing" its assets, which consist primarilyof the right to receiv...

'S' Corporations Are Taxed on "Built-In Gains": October 30, 2009 - Volume 3 Issue 212 Print Report; Although 'S' corporations are ordinarily not subject to tax, an 'S' corporation that was formerly a 'C' corporation can incur tax liability if it has "net reco...

Royalties Must Be Capitalized: October 29, 2009 - Volume 3 Issue 211 Print Report; In Robinson Knife Manufacturing Co., Inc. v. Commissioner , T.C. Memo. 2009-9, the taxpayer (R) was activelyengaged in the business of designing, deve...

DTV's Buybacks: What Can We Expect?: October 29, 2009 - Bulletin Print Report; The ruling the I.R.S. issued to Liberty Media, with respect to its split-off of Liberty Entertainment, Inc. (LEI), will not be published for public consumption unti...

New Legislation Would Affect "Total Return Swaps": October 28, 2009 - Bulletin Print Report; The Foreign Account Tax Compliance Act of 2009 (the Act)introduced on October 27, 2009 by Rep. Charles Rangel (D-NY) and Senator Max Baucus (D-Mont.), the cha...

Accounting For "Optional" Stock Distributions: October 28, 2009 - Volume 3 Issue 210 Print Report; Sec. 305(a) of the Internal Revenue Code provides that gross income does not include the amount of any distribution of the stock of a corporation made by such corpo...

How To Repatriate Foreign Earnings Tax-Free: October 27, 2009 - Volume 3 Issue 209 Print Report; Sec. 956(c) of the Internal Revenue Codedefines "U.S. property" to include an obligation of a "related U.S. person" held by a controlled f...

"Fresh Start" Reporting Gives Bankrupts a Boost: October 26, 2009 - Volume 3 Issue 208 Print Report; The American Institute of CPAs, through the vehicle of Statement of Position (SOP) 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy...

Chipotle Proposes a Share "Collapse": October 23, 2009 - Bulletin Print Report; Chipotle Mexican Grill, Inc. (CMG) has announced its intention to amend its certificate of incorporation to, at long last, effect a "reclassification" of...

Accounting for "Troubled Debt Restructurings": October 23, 2009 - Volume 3 Issue 207 Print Report; Many companies nowforced to convince their creditors to accept equity or other assets in settlement of their indebtedness will be required tocharacteriz...

Equinix/Switch & Data: Constrained by Sec. 368(a)(2)(E): October 22, 2009 - Bulletin Print Report; Equinix, Inc. (EQIX) and Switch & Data Facilities Company, Inc. (SDXC) have entered into a definitive agreement for EQIX to acquireSDXC for a combination...

When Does Stock Become Worthless?: October 22, 2009 - Volume 3 Issue 206 Print Report; When stock becomes worthless, the taxpayer is entitled to a loss deduction in an amount equal to the taxpayer's unrecovered basis in the stock. Thus, Sec. 165(g) pr...

Brazil Imposes a Transactions "Tax": October 21, 2009 - Bulletin Print Report; Brazil's finance minister, Mr. Guido Mantega,on October 19, 2009, announced the imposition of a new "tax" (more accurately described as a fee or lev...

Deducting "Termination Fees": October 21, 2009 - Volume 3 Issue 205 Print Report; In Santa Fe Pacific Gold Co. v. Commissioner , 132 T.C. No. 12 (2009), the issue was whether Santa Fe (SF)was entitled to a deduction for a payment ma...

Nordstrom's State Tax Gambit Fails: October 20, 2009 - Volume 3 Issue 204 Print Report; One of the most venerable techniques for reducing state and local tax burdenshas beento transfer intangible assets, such as trademarks and tradenames, t...

"Excluded" Corporations are "Members" of a Controlled Group: October 19, 2009 - Volume 3 Issue 203 Print Report; A single enterprise may be "artificially divided" between two or more related corporations in order to exploit, among other things,statutory allowan...

'S' Corporation Shareholder Denied Loss Pass-Through: October 16, 2009 - Volume 3 Issue 202 Print Report; In Russell v. Commissioner , T.C. Memo. 2008-246, the taxpayer was a shareholder in an 'S' corporation that had sustained operating losses. Sec. 1366(a) pro...

Black Liquor Is Eligible For "Sec. 40" Credits: October 15, 2009 - Bulletin Print Report; Inthis morning'sedition of Tax Notes Today , the highly-regardedeconomics writer, Mr. Martin A. Sullivan, points out that, when the altern...

FASB Eases Rules for "Multiple Deliverable" Arrangements: October 15, 2009 - Volume 3 Issue 201 Print Report; Vendors often provide their customers withmultiple products, services, rights to use assets, or a combination thereof ("deliverables"). EITF Issue N...

Must "Indirect Costs" Be Capitalized?: October 14, 2009 - Volume 3 Issue 200 Print Report; The taxpayer (T) is a diversified financial services company. In 2005, T opened "a" banking stores, "b" regional commercial banking offices, and...

Emmis Communications Restates Earnings: October 13, 2009 - Bulletin Print Report; Emmis Communications Corp. (ECC) recently announced a restatement of its financial statements for the full year ended February 28, 2009 and for the interim period e...

The S.E.C. Weighs In On the Subject of Impairments: October 13, 2009 - Volume 3 Issue 199 Print Report; The S.E.C.'s accounting staff, in response to recent FASB initiatives in the area, has decided to offer its own views with respect to the controversial topic of imp...

I.R.S. Confirms Availability of "Black Liquor" Credit: October 12, 2009 - Bulletin Print Report; "Black Liquor" is the name given to a byproduct of the paper milling process in craft mills. Its chemical composition does not include alcohol or biodiese...

When Warrants Are Received In a Reorganization: October 12, 2009 - Volume 3 Issue 198 Print Report; On March 12, 1958, Mr. Bateman (B) owned 7,350 shares of WP Corporation (WP). On that day, WP wasmerged with and into SG Corporation (SG). The "two party...

Contributions to Capital Do Not Constitute Gross Income: October 9, 2009 - Volume 3 Issue 197 Print Report; State S (S) established a Fund to encourage economic development within its borders. Taxpayer (T), a C corporation, negotiated (with S) the terms of an "econom...

Can BMS Dispose of Mead Johnson "Tax Efficiently"?: October 8, 2009 - Bulletin Print Report; Most observers have conceded that a disposition of Mead Johnson Nutrition Co. (MJ) by Bristol-Myers Squibb (BMS) will be a taxable transaction andthe tax liab...

The Book and Tax Income Chasm: October 8, 2009 - Volume 3 Issue 196 Print Report; BusinessWeek's exhaustive survey of the rates at which "cash taxes" are remitted by the members of the S&P 500 produces, for those who are steeped in the su...

"Hedging" Income is "Qualifying" Income for a RIC: October 7, 2009 - Volume 3 Issue 195 Print Report; The corporation (C)addressed in LTR 200916016, December 11, 2008, has elected to be treated as a "business development company" under the auspices o...

TransDigm Group Will Pay a "Special Dividend": October 7, 2009 - Bulletin Print Report; TransDigm Group, Inc. (TDG) announced the completion of a private placement of five-year notes the proceeds of which will be used to fund a "special dividend&q...

Can Stock of a Merger Candidate Be Effectively Donated?: October 6, 2009 - Volume 3 Issue 194 Print Report; A taxpayer owns stock in a companywhich has agreed to be acquired by another company. The taxpayer's basis in the stock, which has been held for more than one...

Liberty's Proxy Statement Bolsters Our Confidence: October 6, 2009 - Bulletin Print Report; Liberty Media (LM) released proxy materials regarding the split-off of Liberty Entertainment, Inc. (LEI) and the second-step business combination involving LEI and...

Taxpayer Cannot Use "Anti-Abuse" Rule "Offensively": October 5, 2009 - Volume 3 Issue 193 Print Report; In CCA 200916023, February 27, 2009, the I.R.S. addressed the case of a domesticpartnership (PS)which had three partners. LP1 owned a 94 percent capital...

CIT Proposes a Recapitalization: October 5, 2009 - Bulletin Print Report; CIT Group, Inc. (CIT), in an attempt to stave off bankruptcy, is proposing a recapitalization in which itwill offerin exchange for a large array of its...

Sec. 1031(f)'s Long Reach: October 2, 2009 - Volume 3 Issue 192 Print Report; TE Corporation (TE), a real estate developer, transferred property OV to TGE, an unrelated party, and the latter sold OV to A, also unrelated to TE, for $1,468,500....

FDIC Requests Prepayment of Banks' Risk-Based Assessments: October 1, 2009 - Bulletin Print Report; The FDIC hasannounced that it will require insured institutions to prepay their entire quarterly risk-based assessments for the fourth quarter of 200...

Taxpayer Barred From "Grouping" Activities: October 1, 2009 - Volume 3 Issue 191 Print Report; In Senra v. Commissioner , T.C. Memo. 2009-79, the taxpayer, (Mr. S),owned 86.75 percent of the stock of KG, a C corporation engaged in the business o...

Xerox's Acquisition of ACS Should Constitute a Reorganization: September 30, 2009 - Bulletin Print Report; Xerox, (X),to the surprise of many observers, announced an agreement pursuant to which it will acquire Affiliated Computer Services (ACS) in exchange for a co...

Share Lending In Contemplation of a Financing: September 30, 2009 - Volume 3 Issue 190 Print Report; TheEmerging Issues Task Force (EITF), a committee operating under the auspices ofthe Financial Accounting Standards Board (FASB),recently reached...

Basis Overstatement Can Lead to Gross Income "Omission": September 29, 2009 - Volume 3 Issue 189 Print Report; In response to certain recent defeats at the hands of the courts, the I.R.S. has taken the unusual step of issuing temporary regulations which it hopes will have th...

Foreign Lender Found Engaged in a U.S. Trade or Business: September 25, 2009 - Volume 3 Issue 188 Print Report; Foreign Corporation (FC) makes loans to U.S. persons within the United States. FC, however, has no office or employees in the United States. Instead, to originate l...

Capital One Can Defer "Interchange" Income: September 24, 2009 - Volume 3 Issue 187 Print Report; Capital One Financial Corp. (CO), it will come as no surprise to learn,is one the world's largest issuers of credit cards. One variety of income earned by CO...

TARP Beneficiaries Need Not Fear An Ownership Change: September 23, 2009 - Volume 3 Issue 186 Print Report; Most, if not all, of theinstitutions that have succumbed to thesubtle charmsof the "TARP" program, in which the Treasury Department (TD)...

Stripping BKE's Special Dividend: September 23, 2009 - Bulletin Print Report; The Buckle, Inc. (BKE) announced a $1.80/share special one-time cash dividend to be paid to holders of record at the close of business on Oct. 15, 2009. It will als...

Closed-End Redemption Plans: September 22, 2009 - Volume 3 Issue 185 Print Report; X is a partnership all of the "ordinary shares" of which are owned by a single entity, A. X also has outstanding 'B' shares. Prior to Date 2, these 'B' sh...

I.R.S. Continues to Pursue "Inversion" Transactions: September 21, 2009 - Volume 3 Issue 184 Print Report; At one time, so-called "inversion" transactions were quite popular. A U.S. corporation, for example Ingersoll-Rand and Nabors Industries, would create a n...

Barclays Excises "Toxic" Assets: September 21, 2009 - Bulletin Print Report; Barclays PLC, (B), recently announced a "structured" transaction which will have the effect of removing from its balance sheet (although not for regulator...

NNI's Tax Deficiencies--What About the Statute of Limitations?: September 18, 2009 - Volume 3 Issue 183 Print Report; The I.R.S. recently issued a "proof of claim" for taxes to Nortel Networks, Inc. (NNI). The claim includes some $1.8 billion in tax deficiencies and appro...

Loan Modifications Will Not Terminate REMIC Status: September 17, 2009 - Bulletin Print Report; Many commercialmortgage loans are held in "securitization" vehicles, such as REMICs and investment trusts. In each case, the entity is not subject t...

Taxpayer Denied Access to the "Bankruptcy Exception": September 17, 2009 - Volume 3 Issue 182 Print Report; In CCA 200915033, December 24, 2008, a corporation,Acquirer, (A), on Date 3, purchased "AA" shares of Target's (T) stock (representing less than fiv...

TRB's Divestiture of the Cubs Reprises "LevPar" Structure: September 16, 2009 - Volume 3 Issue 181 Print Report; Tribune Corporation (TRB) is attempting to dispose of substantially all of its interest in the Chicago Cubs, Wrigley Field, and certain other assets (including its...

MER's "Cross-Chain" Sales Are Still Sales: September 15, 2009 - Volume 3 Issue 180 Print Report; In 1987, Merrill Lynch & Co., Inc. (MER) engineered a transaction that was designed to producelargecapital losses that could be offset against capit...

Ford Moves To Protect Its "Tax Assets": September 14, 2009 - Bulletin Print Report; Ford Motor Company (F), following the lead of many other "troubled" companies, has taken affirmative steps to preserve its copious tax assets--most notabl...

Attribute Reduction Is the Price of COD Exclusion: September 14, 2009 - Volume 3 Issue 179 Print Report; Sec. 108(a)(1) of the tax codeprovides that gross income does not include income from the discharge of indebtedness (COD income) if the discharge occurs in a&...

The Service Chooses Equity Over Expediency: September 11, 2009 - Volume 3 Issue 178 Print Report; Sometimes, as a matter of principle, the I.R.S. will turn its back on tax revenue that is there for the taking. It will do this in cases where it perceives that suc...

I.R.S. Will Accommodate "PPIP" RICs: September 10, 2009 - Bulletin Print Report; The I.R.S. recently ruled that Public-Private Investment Partnerships (PPIPs) created under the Public-Private Investment Program will not constitute "taxable...

Interim Disclosures Reveal Loan Deterioration: September 10, 2009 - Volume 3 Issue 177 Print Report; We are pleased to present an additionalspecial report by our summer intern, David Feinberg.
Recording assets o...

SGP Denied a Tax Refund: September 9, 2009 - Volume 3 Issue 176 Print Report; Schering-Plough Corporation, (SGP), similar to many multinational corporations, had accumulated significant profits in subsidiaries located outside of the United St...

Expenses Attributable to "Alternative" Transactions: September 8, 2009 - Volume 3 Issue 175 Print Report; A corporate taxpayer (T) wished to conduct certain research and development (R&D) with public financing. Accordingly, it turned to a transaction that was in the...

BHI/BJS: Smooth Sailing: September 8, 2009 - Bulletin Print Report; Baker Hughes, Inc. (BHI) and BJ Services Company (BJS), BHI's former subsidiary, have announced a definitive merger agreement in connection with which BJS will be m...

Market Discount Bonds Yield Ordinary Income: September 4, 2009 - Volume 3 Issue 174 Print Report; It goes without saying that many debt instruments issued in better times are now trading in the markets at substantial discounts to their principal amounts. Some of...

"PPIP" Funds Will Not Be Taxed: September 3, 2009 - Bulletin Print Report; Pursuant to the "Public-Private Investment Program" (PPIP), the Treasury Department, in its ongoing efforts to "stabilize" the financial markets...

Trading Health Benefits for Salary Increases: September 3, 2009 - Volume 3 Issue 173 Print Report; In LTR 200914018, December 19, 2008, the taxpayer (T) is a corporation which provides retiree health insurance benefits to certain employees represented by "As...

DIS/MVL: "Belt and Suspenders"?: September 2, 2009 - Bulletin Print Report; The Walt Disney Company (DIS) has agreed to acquire Marvel Entertainment, Inc. (MVL) in a stock and cash transaction. &nb...

GW/PDS Ruling Published: September 2, 2009 - Volume 3 Issue 172 Print Report; LTR 200913008, December 15, 2008, appears to be the ruling the I.R.S. issued to Grey Wolf International, Inc. (GW) with respect to its acquisition by Precision Dril...

Worthless Stock Deductions for "Operating Companies": September 1, 2009 - Volume 3 Issue 171 Print Report; The taxpayer, (T), a domestic corporation, owned all of the stock of FSub, (F), a foreign corporation. As of December 31, Year 1, F's balance sheet showed liabiliti...

"True" Ownership Counts for Purposes of Sec. 382: August 31, 2009 - Volume 3 Issue 170 Print Report; In LTR 9104043, October 31, 1990, A Corporation (A), a domestic loss corporation, was wholly-owned by a foreign corporation, B Corporation (B). C Corporation, (C),...

PG and WCRX Will Execute an "(h)(10)" Election: August 28, 2009 - Bulletin Print Report; The purchase agreement in connection with which Warner Chilcott plc (WCRX)will acquire the pharmaceuticals business of The Procter & Gamble Company (PG) d...

Can the I.R.S. "Seize" Season Tickets?: August 28, 2009 - Volume 3 Issue 169 Print Report; A recalcitrant taxpayer (TP) owes Federal taxes that have not been paid.TP has alreadyreceived a "lien notice", under Sec. 6330 of the Interna...

Tax "Controversy" Expenditures Are Broadly Deductible: August 27, 2009 - Volume 3 Issue 168 Print Report; The petitioner, Mr. S, was the majority shareholder of SOC, Inc., (SOC), a Delaware corporation. In 1957, SOC acquired a leasehold interest in certain Venezuelan oi...

Navigating the Partial Liquidation Rules: August 26, 2009 - Volume 3 Issue 167 Print Report; If a distribution by a corporation to its shareholders qualifies as a distribution in partial liquidation, the distribution is treated as "in part or full paym...

Is CNO's Deferred Tax Asset in Jeopardy?: August 26, 2009 - Bulletin Print Report; Conseco, Inc., (CNO), in its latest 10-Q, is reporting "income tax assets" of $1.607 billion. Its shareholders' equity is some $2.415 billion. The income...

"Reasonable Prospect of Recovery": August 25, 2009 - Volume 3 Issue 166 Print Report; Taxpayers who havesuffered theft losses through, for example, their participation in Ponzi schemes, may deduct these losses for tax purposes and in the proces...

"AHYDO" Exception Will Expire Soon: August 24, 2009 - Bulletin Print Report; Where a debt instrument is classified as an "Applicable High Yield Debt Obligation" (AHYDO), certain unattractive results ensue. Most notably, the Origina...

I.R.S. Guidance on COD Deferral Is Magnanimous: August 24, 2009 - Volume 3 Issue 165 Print Report; Sec. 108(i), enacted in the "stimulus bill" (the American Recovery and Reinvestment Tax Act of 2009, Public Law 111-5)earlier in 2009, provides that...

Do Sales of "Toxic" Assets Produce Deductible Losses?: August 21, 2009 - Volume 3 Issue 164 Print Report; Taxpayer, a corporation, is the parent of "Companies". The latter own interests in "Assets" that have declined in value vis a vis the price the&...

When Is A Redemption Part of a Plan?: August 20, 2009 - Volume 3 Issue 163 Print Report; A redemption of stockwill qualify for "exchange" treatment if the redeemed shareholder suffers a "sufficient" reduction of his or her prop...

LIFO Accounting Under Siege--by David Feinberg: August 19, 2009 - Volume 3 Issue 162 Print Report; We are pleased to present a special edition of The Willens Reporttoday, written by our summer intern, David Feinberg.
Invent...

Contingencies and Business Combinations: August 18, 2009 - Volume 3 Issue 161 Print Report; SFAS No. 141(R), Business Combinations ,was issued in December, 2007 and is effective for business combinations for which the acquisition date is on o...

Dynegy Will Redeem a Portion of Its Stock: August 18, 2009 - Bulletin Print Report; Dynegy, Inc. (DYN) is undertaking a complicated transaction in which it willconvey a portion of its assets and a note (of which DYN will be the obligor)...

FASB Will Seek to Expand Mark-to-Market Coverage: August 17, 2009 - Bulletin Print Report; At present, with respect to financial institutions, only debt and equity securities are required to be reported at fair value. See SFAS No. 115, Accounting for...

Psychologist Cannot Deduct Education Expenses: August 17, 2009 - Volume 3 Issue 160 Print Report; The taxpayer, (O), earned a master's degree from the University of Nebraska, in clinical psychology, in 1996. From April, 1977 through August, 2003, O worked for th...

CIT Seeks To Preserve Its NOL: August 14, 2009 - Bulletin Print Report; CIT Group, Inc. (CIT) has announced the adoption of a "Tax Benefits Preservation Plan" along the lines of the plan adopted recently by Citigroup....

Accruing Interest on "Troubled" Loans: August 14, 2009 - Volume 3 Issue 159 Print Report; During 1918, the taxpayer (T), a bank, made loans to B Corporation (B). Interest on the loans was accrued on T's books. B went into receivership on December 31, 191...

Barnes & Noble--No Sec. 338(h)(10) Election: August 13, 2009 - Bulletin Print Report; Barnes & Noble, Inc., (BN), has entered into an agreement to purchase the stock of Barnes & Noble College Booksellers, Inc., (BC), from its sole shareholder...

"Trust Preferred Securities"--The Best of All Worlds: August 13, 2009 - Volume 3 Issue 158 Print Report; If a financial instrument can be treated as "equity" for non-tax purposesyet as "indebtedness" for Federal income tax purposes, the issuer...

Good News for WY: I.R.S. Rules Favorably on a "REIT Spin-off": August 12, 2009 - Volume 3 Issue 157 Print Report; D Corporation, (D),a publicly-traded corporation, was engaged, through its subsidiaries, in Business A and Business B; the latter appears to be a real-estate...

Comparing Canadian and U.S. NOL "Trafficking" Rules: August 11, 2009 - Volume 3 Issue 156 Print Report; The rules designed to inhibit "trafficking" in Net Operating Losses (NOLs) in the United States are principally found in Sec. 382 of the Internal Revenue...

Redeeming Shareholder Found to Be Corporation's "Agent": August 10, 2009 - Volume 3 Issue 155 Print Report; The taxpayer (P) and Mr. JL (JL) each owned 50 percent of the stock of Arrow Capital Associates, Inc. (A). A lent JL a total of $700,000 and, on August 13, 2001, le...

State Taxes Can Mitigate The Benefit of an "(h)(10)" Election: August 7, 2009 - Volume 3 Issue 154 Print Report; In January, 1997,K Corporation (K) became a wholly-owned subsidiary of C Corporation (C). Some four months later, C sold 100 percent of K's capital stock to N...

Pepsico's Acquisitions Should Constitute Reorganizations: August 6, 2009 - Bulletin Print Report; Pepsico, Inc. (PEP) has reached an agreement to acquire both Pepsi Bottling Group, Inc. and PepsiAmericas, Inc. (BG). The transaction is conditioned on, among many...

"Hot Stock": August 6, 2009 - Volume 3 Issue 153 Print Report; The mostfundamental of therequirements imposed for a spin-off to be tax-free is the active business requirement . See Sec. 355(a)(1)(C) and Sec....

Broadcom Co-Founder Did Not "Lend" Securities: August 5, 2009 - Volume 3 Issue 152 Print Report; The co-founder of Broadcom Corporation, Mr. Henry Samueli (S), decided to take a flyer on the direction of interest rates in late 2001. If he was correct, the arran...

Debt vs. Equity In the Reorganization Context: August 4, 2009 - Volume 3 Issue 151 Print Report; H Corporation (H) merged with and into newly-formedL Corporation (L). L will operate exclusively for charitable and educational purposes and was incorporated...

Limits on Deduction of Mortgage Interest Affirmed: August 3, 2009 - Volume 3 Issue 150 Print Report; During Year 1, Year 2, and Year 3 , Taxpayer (T)owned a principal residence (P). Prior to Year 1, T acquired the propertyfor "$u" and...

Rescinding a Merger: July 31, 2009 - Volume 3 Issue 149 Print Report; Prior to Date 1, T Corporation (T) had two classes of stock outstanding; convertible preferred stock and common stock. During Date 1 and Date 2, A Corporation (A) p...

CVC Will Spin-Off MSG: July 30, 2009 - Bulletin Print Report; Cablevision Systems Corporation (CVC) announced that its board of directors has authorized the company's management to proceed with the spin-off of the Madison Squa...

Deducting Payments to Settle Litigation: July 30, 2009 - Volume 3 Issue 148 Print Report; A consolidated class action complaint was filed against a taxpayer, a C corporation, (TP). The complaint alleges that TP violated provisions of the securities laws...

An Unusual Way to "Monetize" a Corporation's Tax Attributes: July 29, 2009 - Volume 3 Issue 147 Print Report; T Corporation (T), a publicly-traded corporation, owned all of the stock of TS1, engaged in business A, and TS2, engaged in business B. T's principal asset was a bl...

I.R.S. Addresses "Fails Charges": July 29, 2009 - Bulletin Print Report; I.R.S. Notice 2009-61, issued on July 28, 2009, observes that, "in light of persistent delivery failures" in the pay-for-delivery market for U.S. Treasury...

Payment for "Idea" is Ordinary Income: July 28, 2009 - Volume 3 Issue 146 Print Report; Mr. Bachmann (B) developed a "novel" idea for small community banks to issue "trust preferred stock" (TPS) as a group and thereby lower the cost...

Wells Fargo Benefits From Recent FASB Pronouncement: July 27, 2009 - Bulletin Print Report; Wells Fargo's second quarter earnings report indicates that the bank continues to benefit from a recent FASB concession regarding the manner in which debt securitie...

Valuing the Loss Corporation for Purposes of Sec. 382: July 27, 2009 - Volume 3 Issue 145 Print Report; T Corporation (T)is a "loss corporation". B Corporation (B) is also a loss corporation and T's acquisition of B, in which it issued its stock to the...

SGP/MRK Update: July 24, 2009 - Bulletin Print Report; It appears that the Schering-Plough/Merck business combination will be closing on schedule. The structure of the deal is unusual because the parties were attempting...

I.R.S. Addresses Tax Issues Surrounding "Backdated" Options: July 24, 2009 - Volume 3 Issue 144 Print Report; In 2006, the I.R.S. became aware of instances in which stock options were granted with exercise prices which were less than the fair market value of the stock on th...

Senators Seek to Rein In Option Compensation Deductions: July 23, 2009 - Bulletin Print Report; When an option is granted to an employee (or independent contractor) in connection with the performance of services, Sec. 83 (which governs the taxation of property...

What is a "Gift"?: July 23, 2009 - Volume 3 Issue 143 Print Report; Sec. 61(a) of the Internal Revenue Code provides that, "except as otherwise provided in this subtitle", gross income means all income from whatever so...

Analyzing Sec. 351's "Control Immediately After" Requirement: July 22, 2009 - Volume 3 Issue 142 Print Report; Sec. 351(a) (and its predecessors) is one of the most venerable non-recognition provisions in the Internal Revenue Code. The provision was originally enacted to enc...

Caterpillar's LIFO Liquidation: July 22, 2009 - Bulletin Print Report; Caterpillar Inc. (CAT) reported second-quarter earnings of $0.60 per share, a figurewhich exceeded analysts' estimates, and CAT's stock price reacted accordin...

Warrants Issued To Guarantors--Does Sec. 83 Apply?: July 21, 2009 - Volume 3 Issue 141 Print Report; 47 percent of the stock of F Corporation (F) was owned by E Corporation (E), Mr. G (G), and Mr. D (D). In March, 1978, in recognition of the risks assumed by D, G,...

House Delays "Worldwide Allocation of Interest Expense": July 20, 2009 - Bulletin Print Report; In order to fund universal health care coverage, the House of Representatives is expected to propose a surtax on "high income" taxpayers. For taxpayers wi...

Trust Taxed on Gains From Sale of "Margined" Securities: July 20, 2009 - Volume 3 Issue 140 Print Report; "The Cornell Trust" is a tax-exempt non-profit organization pursuant to Sec. 501(c)(3) of the Internal Revenue Code which was formed for the exclusive pur...

Acquisitions of Debt by Related Parties: July 17, 2009 - Volume 3 Issue 139 Print Report; In order to insure that a taxpayer whose indebtednessis "effectively" retired or otherwise discharged does not escape the tax consequences that woul...

FASB's Ambitious Disclosure Plan for "Financing Receivables": July 16, 2009 - Volume 3 Issue 138 Print Report; The Financial Accounting Standards Board (FASB) has issued, in the form of an "Exposure Draft", an ambitious new plan that will dramatically increase the...

Accounting for "Gift Cards": July 15, 2009 - Volume 3 Issue 137 Print Report; In LTR 200849015, August 22, 2008, the taxpayer (T) oversaw the gift card program for P Corporation's (P) consolidated group. All gift cards used in stores operated...

Paying for Universal Health Coverage: July 14, 2009 - Bulletin Print Report; The opening salvo in the health care debate has been fired by the House Ways & Means Committee. The bill proposed by the Committee, "America's Affordable H...

A Member of an LLC or LLP Is Not "Limited": July 14, 2009 - Volume 3 Issue 136 Print Report; The taxpayers owned interests in no fewer than seven Limited Liability Partnerships (LLPs) and two Limited Liability Companies (LLCs) that were allengaged in...

California's "IOUs" May Offer Unique Tax Advantages: July 13, 2009 - Volume 3 Issue 135 Print Report; The State of California, as aconsequence of its well-publicized budgetary woes, has issued (and will continue to issue)"registered warrants" t...

How Is a "Walking Billboard" Taxed?: July 10, 2009 - Volume 3 Issue 134 Print Report; Professional tennis players and golfers, you may have noticed, are, if they are fortunate, adorned in logos representing the many products that they endorse. They a...

Taxes and Credit Cards: July 10, 2009 - Bulletin Print Report; Credit and debit card companies charge a "convenience fee" to customers who pay their income taxes, electronically,employing a credit or debit card....

Depreciating "Listed" Property: July 9, 2009 - Volume 3 Issue 133 Print Report; Sec. 280F of the Internal Revenue Code limits depreciation deductions, otherwise available, with respect to what is referred to as"listed" property....

Do "Preferred Stock Dividend Rolls" Work?: July 8, 2009 - Volume 3 Issue 132 Print Report; Sec. 243(a)(1) provides that, in the case of a corporation, there shall be allowed as a deduction 70 percent of the amount received as dividends from a domestic cor...

General Motors--A 'G' Reorganization?: July 7, 2009 - Bulletin Print Report; One issuesurrounding the "movement" of "old" G.M.'s assets to "new" G.M. (now that the bankruptcy court has "signed off&quo...

Data Firm Qualifies as an MLP: July 7, 2009 - Volume 3 Issue 131 Print Report; Xoperates asa limited partnership. Xhasbeenengaged throughout its existencein the business of acquiring and licensing both...

AHYDO Status Avoided By "Timely" Payments of Accrued Interest: July 6, 2009 - Volume 3 Issue 130 Print Report; During the 1980s, many deals were financed, at least in part, with "deferred interest" debt securities. Under the original issue discount (OID) rules, how...

Is an "Infringement" an "Involuntary Conversion"?: July 2, 2009 - Volume 3 Issue 129 Print Report; In LTR 200625032, March 3, 2006, an employee ofCorporation A (A) discovered, during Year4, that a Corporation B (B) product incorporated portions of A's copyr...

S.E.C. Will Allow "Covered Writing" With Respect to ESOs: July 1, 2009 - Volume 3 Issue 128 Print Report; The Securities Exchange Commission (S.E.C.)has approved a proposal submitted to it by theChicago Board Options Exchange (CBOE)which will allow acc...

Can Abbott Deduct (for tax purposes) Its Payments to JNJ?: June 30, 2009 - Bulletin Print Report; Abbott Laboratories (AL)has been ordered to pay $1.67 billion to Johnson & Johnson's Centocor unit for using the latter's invention to produce the Humira...

NOLs and "Inactive" Corporations: June 30, 2009 - Volume 3 Issue 127 Print Report; Where a loss corporation undergoes an ownership change , the amount of taxable income for any taxable year ending after the date of the ownership change whi...

The Citigroup Exchange Offer and the Wash Sale Rules: June 29, 2009 - Volume 3 Issue 126 Print Report; Under the well-known wash sale rules, a taxpayer cannot deduct a loss claimed to have been sustained from the sale of stock or securities if, within a peri...

Interest Deductions Not Saved By Treaty: June 26, 2009 - Volume 3 Issue 125 Print Report; In FAA 20090801F, April 24, 2008, a U.S. corporation, conducting a regulatedinsurance business,issuedseveral notes to its indirect foreign parent...

NQO's and "Substantial Risk of Forfeiture": June 25, 2009 - Volume 3 Issue 124 Print Report; Sec. 83 governs the taxation of property thatis transferred "in connection with the performance of services". The property so transferred is taxable...

A "Substantial" Portion: June 24, 2009 - Volume 3 Issue 123 Print Report; Many important tax determinations are premised on the issue ofwhether a particular quantity constitutes a "substantial part or portion" of the whole...

"Pay for Performance" Payments Excludible From Gross Income: June 24, 2009 - Bulletin Print Report; Large numbers of homeowners are struggling to currently make their mortgage payments and are at risk of losing their homes. In response, the Federal Government anno...

Specified Liability Losses: June 23, 2009 - Volume 3 Issue 122 Print Report; A Net Operating Loss (NOL), in general,may be carried back to the two taxable years preceding the taxable year in which the NOL was sustained. See Sec. 172(b)...

HLTH's "Downstairs" Merger: June 22, 2009 - Bulletin Print Report; HLTH Corporation (HLTH) and WebMD Health Corporation (WBMD) have revived their off-again on-again proposal to combine. Thus, HLTH announced that it will be merging...

What is "Money": June 22, 2009 - Volume 3 Issue 121 Print Report; Where property is sold or otherwise disposed of in a transaction not qualifying for non-recognition treatment, the gain or loss from the sale or disposal must be ca...

Distressed Investment Primer: June 19, 2009 - Volume 3 Issue 120 Print Report; The credit crisis has thrust into prominence certain tax issues that are, in better times, a mere afterthought. Thus, we are now quite concerned with the survival o...

I.R.S. Addresses Basis Recovery for Extraordinary Dividends: June 18, 2009 - Volume 3 Issue 119 Print Report; P Corporation (P) owned all of the stock of S Corporation (S) with which it filed a consolidated income tax return. S owned "a%" of the stock of R Corpora...

Identifiable Intangible Assets Are Not Part of Goodwill: June 17, 2009 - Volume 3 Issue 118 Print Report; Inyears past, prior to the enactment of Sec. 197 in 1993, the I.R.S.consistently took the position that so-called "customer based" intangible...

Consolidating "VIEs": June 16, 2009 - Volume 3 Issue 117 Print Report; The Financial Accounting Standards Board (FASB) has issued an important new pronouncement that supplements and amends previous guidance regarding the issue of when...

FASB's Rules on Valuing "Alternative" Investment Vehicles: June 15, 2009 - Volume 3 Issue 116 Print Report; The Financial Accounting Standards Board (FASB) is proposing another in what has become a regularseries of amendments and clarifications to its landmark prono...

Accounting for "Share Lending" Arrangements: June 15, 2009 - Bulletin Print Report; The Emerging Issues Task Force of FASBhas reached a consensus on the manner in which certainspecializedshare lending arrangements are to be accoun...

Baucus/Grassley Inch Closer to Alternative Fuel Mixture Reform: June 12, 2009 - Bulletin Print Report; Instead of simply proposing legislation, Senators Baucus (D-Mont.) and Grassley (R-Iowa) have taken the unusual (in our experience) step of issuing a "legislat...

Can Citigroup Issue Equity?: June 12, 2009 - Bulletin Print Report; Citigroup (C), in connection withthe recapitalization in which it is issuing massive amounts of common stock in exchange for its preferred stock and trust pre...

I.R.S. Shoots Down Repatriation Gambit: June 12, 2009 - Volume 3 Issue 115 Print Report; An obscure, but highlyeffective, repatriation technique (the "cross-chain" sale")was recently closed by the I.R.S. through themediu...

New York State Imposes a New Tax on Non-Residents: June 11, 2009 - Bulletin Print Report; New York State has recently enacted a broad array of new taxes designed to assist it in closing its gaping budget deficit. One of the more obscure of these new levi...

Ramius/Cowen--The Need for Newco: June 11, 2009 - Volume 3 Issue 114 Print Report; Ramius LLC (R) and Cowen Group, Inc. (COWN) announced, on June 4, 2009,that they have signed an agreement to create a diversified financial services company w...

Citigroup Will Adopt a "Tax Poison Pill" Plan: June 10, 2009 - Bulletin Print Report; Citigroup (C) announced the finalization of a definitive agreement with the U.S. Government and, accordingly, will now launch its long-awaited exchange offers for i...

Redemptions From Estates--Who Is a Beneficiary?: June 10, 2009 - Volume 3 Issue 113 Print Report; Where a redemption of stock is treated as a distribution in part or full payment in exchange for suchstock, the amount included in the redeemed shareholder's...

FASB Addresses Accounting For "Subsequent Events": June 9, 2009 - Volume 3 Issue 112 Print Report; The Financial Accounting Standards Board (FASB) has issued a brandnew accounting pronouncement, Statement of Financial Accounting Standards (SFAS) No. 165,

States and Localities Reduce Corporate Tax Burden: June 8, 2009 - Bulletin Print Report; Even though most states and cities are strapped for revenue, some haveadopted a "supply side" approach to the problem and have proposed corporate ta...

Who Can Replace "Converted" Property"?: June 8, 2009 - Volume 3 Issue 111 Print Report; P1 is a generalpartnership which isengaged in the business of farming on Blackacre (B). The limited partners of P1 are AB and CD, each of which is...

Is G.M.'s Stock "Wholly Worthless"?: June 5, 2009 - Volume 3 Issue 110 Print Report; Sec. 165(g)(1) of the Internal Revenue Code provides that if any security which is a capital asset becomes worthless during the taxable year, the loss resu...

Cisco Systems Affected by Xilinx Decision: June 4, 2009 - Bulletin Print Report; The decision rendered by the Ninth Circuit Court of Appeals in the Xilinx case, the subject of today's report, impacts a tax positionadopted by...

"Cost Sharing" Arrangements Come Under Scrutiny: June 4, 2009 - Volume 3 Issue 109 Print Report; Many multinational companies establish joint venture arrangements with their foreign affiliates, particularly with those affiliatesthat are organized in count...

New York State Issues "Ponzi Scheme" Guidance: June 3, 2009 - Bulletin Print Report; The I.R.S. recently issued Rev. Rul. 2009-9 which describes the tax rules that apply to losses from "Ponzi-type" fraudulent investment arrangements. In ad...

A Loan With an "Equity Kicker" Is a Unitary Instrument: June 3, 2009 - Volume 3 Issue 108 Print Report; In LTR 200846019, August 5, 2008, the taxpayer (T) is a newly-formed limited liability company thatintends to elect to be treated as a "business developm...

Historic Shareholder Continuity of Interest: June 2, 2009 - Volume 3 Issue 107 Print Report; In order for a merger to qualify as a tax-free reorganization, under Sec. 368(a)(1)(A), it must meet not only the terms of the specifications (the merger must be a...

Recent Purchase Causes Disqualified Distribution: June 1, 2009 - Volume 3 Issue 106 Print Report; LTR 200905018, October 21, 2008, describes a split-off which features an inordinate number of "moving parts" and demonstrates how preliminary steps, under...

The SGP Merger Will Be A Redemption: May 29, 2009 - Volume 3 Issue 105 Print Report; The proxy statement issued withrespect to the historic combination of Merck & Co., Inc. (MRK) and Schering-Plough, Inc. (SGP) confirms what we had suspected;&nb...

"Hot Stock" Regulations Will Benefit Time Warner: May 29, 2009 - Bulletin Print Report; Time Warner, Inc. (TWX) announced that its Board of Directors has authorized management to proceed with plans to complete the "legal and structural separation&...

Will G.M. Experience an Ownership Change?: May 28, 2009 - Bulletin Print Report; Where a loss corporation experiences an "ownership change", certain limits are imposed on the corporation's ability to freely utilize its losses to offset...

REITs Receive Relief From Tax on "Prohibited Transactions": May 28, 2009 - Volume 3 Issue 104 Print Report; Sec. 857(b)(6) of the Internal Revenue Code imposes a tax for each taxable year of a Real Estate Investment Trust (REIT) equal to 100 percent of the net income the...

The President Seeks to Alter the Treatment of Intangibles: May 27, 2009 - Volume 3 Issue 103 Print Report; The President's budget proposals entail sweeping changes to the manner in which multinational corporations are taxed. One such proposal envisions radical changes wi...

An NOL Waiver is "Property": May 26, 2009 - Volume 3 Issue 102 Print Report; In United States v. Kapila , _F.Supp2d_(USDC SD FLA 2009), the taxpayer (T) purchased a sign manufacturing franchise, through his wholly-ownedL Corpor...

FASB Poised To Eliminate QSPEs: May 26, 2009 - Bulletin Print Report; FASB has approved the issuance of pronouncements which will alter the manner in which transferred financial assets are accounted for and expand the circumstances un...

"Fragmentation" Averted: May 22, 2009 - Volume 3 Issue 101 Print Report; In LTR 200903075, October 9, 2008, an 'S'corporation, (D),was engaged in the active conduct of business Bwhile its wholly-owned subsidiary, a &quo...

NetApp Will Acquire Data Domain: May 21, 2009 - Bulletin Print Report; On May 20, 2009, Data Domain, Inc. (DD) and NetApp, Inc. (NA) entered into an Agreement and Plan of Merger the structure of which is somewhat unusual. Thus, NA will...

The President's Plan To Overturn the Guardian Industries Case: May 21, 2009 - Volume 3 Issue 100 Print Report; The President's budget proposal contains a provision that is aimedcuring a perceived"defect" in current law. Thus, the proposal observes that...

ESOP Dividends Engender A Conflict Among the Circuits: May 20, 2009 - Volume 3 Issue 99 Print Report; General Mills, Inc. (GMI) established, for the benefit of its employees, three employee stock ownership plans (ESOPs). GMI contributed funds to the ESOPs for the be...

What Is An "Option": May 19, 2009 - Volume 3 Issue 98 Print Report; Certain importanttax determinations are dependent on whether a financial instrument possessed by the taxpayer in questionis properly characterized as an...

Deferring Estate Tax Requires A Closely-Held Business Interest: May 18, 2009 - Volume 3 Issue 97 Print Report; In order to insure that theowners of closely-held businesses would not have toliquidate the businesses in order to fund estate tax obligations, Congress...

Verizon's Latest Reverse Morris Trust: May 15, 2009 - Volume 3 Issue 96 Print Report; Verizon Communications, Inc. (VZ) recently announced a transaction with which it has more than a passing familiarity; a "reverse Morris Trust" transaction...

"Killer 'B'" Subject to Sec. 367(a)(1): May 14, 2009 - Volume 3 Issue 95 Print Report; Taxpayer (T/P), a domestic corporation, owned all of the stock of X Corporation (X), a domestic corporation, and owned all of the stock of Y Corporation (Y), a fore...

DTV: When Is a Repurchase a "Separate" Transaction?: May 13, 2009 - Volume 3 Issue 94 Print Report; For a split-off to be tax-free (at the distributing corporation level), it must meet all of the requirements imposed by Sec. 355 of the tax code and, in addition, i...

More Details on President Obama's Tax Proclivities Released: May 13, 2009 - Volume 3 Issue 93 Print Report; On May 11, 2009, the so-called "Green Book", describing the "revenue" provisions of the President's budget plan, was published. It provides more...

Sen. Durbin Takes Aim at "Excessive Compensation": May 12, 2009 - Bulletin Print Report; Sen. Richard Durbin (D. Ill.), the Senate Majority Whip,has introduced a bill, S.1007, that would amend the rules regarding an employer's ability to secure a...

I.R.S. Addresses "Return of Capital" Distributions: May 12, 2009 - Volume 3 Issue 92 Print Report; Accounting for distributions which are not, because they exceed the corporation's earnings and profits, dividends, is probably not a topic that will capture the ima...

Interest On Debt To "Carry" Municipal Bonds: May 11, 2009 - Volume 3 Issue 91 Print Report; In Vainisi v. Commissioner , 132 T.C. No. 1 (2009), FF, Inc. (FF) elected, on January 1, 1997, to be treated as an 'S' corporation. FF alsoelected to...

Can DTV Repurchase Stock?: May 11, 2009 - Bulletin Print Report; One issue that has arisen regarding the transaction to which Liberty Entertainment, Inc. (LEI) and DIRECTV (DTV) are parties--a transaction in which LEI will be &qu...

Exchanging Securities in a Reorganization: May 8, 2009 - Volume 3 Issue 90 Print Report; Where a transaction qualifies as a reorganization , the shareholders of the acquired corporation can exchange their stock for stock in the acquiring corpora...

T/RHD Update: May 8, 2009 - Bulletin Print Report; AT&T, Inc. (T) sufferedadefeat in the U.S. District Court (W.D. Tx.) that will depriveT of a more than $500 million tax refund it was seeking....

Unchecking the Box: May 7, 2009 - Volume 3 Issue 89 Print Report; President Obama's international tax proposalsattempt to accomplish two major goals. First and foremost, these proposals seek to curtail the benefit of deferra...

How Are Multinationals Taxed?: May 6, 2009 - Volume 3 Issue 88 Print Report; President Obama's tax proposals have placed an unwelcomespotlight on the manner in which U.S. "multinational" corporations are taxed. Particularly i...

Liberty Entertainment and DIRECTV Will Combine: May 5, 2009 - Bulletin Print Report; Liberty Entertainment, Inc. (LEI) and DIRECTV (DTVG) have entered into a definitive agreement for a business combination that will beundertaken immediately af...

I.R.S. Extends International Liquidity Concessions: May 5, 2009 - Volume 3 Issue 87 Print Report; It is well-known that U.S. corporations are incontrol of earnings, which arelodged in theirforeign subsidiaries,which they areloath to...

Physical Presence, Substantial Nexus and the Commerce Clause: May 4, 2009 - Volume 3 Issue 86 Print Report; A state's ability to tax businesses that operate in interstate commerce is, it is well-established, constrained by the commerce clause of the Constitution ....

Ascertaining the Fair Value of a Liability: May 4, 2009 - Bulletin Print Report; Companies, particularly those in the financial institutions space, have recorded massive write-downswith respect to their investments in debt and equity secur...

"Black Liquor" Tax Credit On the Brink of Elimination?: May 1, 2009 - Bulletin Print Report; Tax Notes , a highly regarded trade publication,is reporting that the powerful Chairman of the Senate Finance Committee, Sen. Baucus (D. Mont.), will...

Related-Party Indebtedness: May 1, 2009 - Volume 3 Issue 85 Print Report; Many investors have fond memories of the American Jobs Creation Act of 2004, Public Law 108-357, which, among other things,added Sec. 965 to the Internal Reve...

Indirect Repatriations Have Tax Consequences: April 30, 2009 - Volume 3 Issue 84 Print Report; When earnings accumulated by a controlled foreign corporation (CFC) are "repatriated", the U.S. shareholders of the CFC who benefit therefrom will be taxe...

Taxing "CVRs": April 29, 2009 - Volume 3 Issue 83 Print Report; In some cases, in connection with an acquisition, the parties are simplyunable to agree on the value of the acquired corporation. The gap, in these instances,...

G.M. Announces Its Restructuring Plan: April 28, 2009 - Volume 3 Issue 82 Print Report; General Motors Corporation(GM) announced, on April 27, 2009, its long-awaited restructuring proposal. The centerpiece of the proposal is a swap of newly-issue...

WFC and SOP 03-3: April 27, 2009 - Volume 3 Issue 81 Print Report; Wells Fargo & Co. (WFC), in the course of reporting its first quarter earnings, devoted an entire section of its press release to the vagaries of SOP 03-3, a pr...

Why Can't CMG Get an I.R.S. Ruling on a Share "Collapse"?: April 24, 2009 - Bulletin Print Report; In order to accomplish a tax-free spin-off or split-off, thedistributing corporation must be, immediately before the spin-off or split-off, "in control&q...

Debt Forgiveness Is Rarely a Gift: April 24, 2009 - Volume 3 Issue 80 Print Report; Gross income, the kind on which taxes are imposed, is very broadly defined. Gross income, in fact, includes all income "from whatever source derived" unle...

Securing a "Cost" Basis in a Bankruptcy Reorganization: April 23, 2009 - Volume 3 Issue 79 Print Report; Invirtuallyeverybankruptcy reorganization, the debtor'spre-petition creditors willsucceed to ownership of most or all of the reorganiz...

WFC Benefits From FASB's Munificence: April 22, 2009 - Bulletin Print Report; Wells Fargo & Company (WFC) hasreported, by any standard,impressive first quarter earnings. Moreover, its financial position appears to be quite sou...

Development Rights Constitute "Real Property": April 22, 2009 - Volume 2 Issue 78 Print Report; Sec. 1031(a) of the Internal Revenue Code provides that no gain or loss shall be recognized on the exchange of property held for productive use in a trade or busine...

Exchanging Multiple Properties: April 21, 2009 - Volume 3 Issue 77 Print Report; Sec. 1031(a) of the Internal Revenue Code provides that no gain or loss shall be recognizedon the exchange of property held for productive use in a trade or bu...

PEP/PBG/PAS: The "Direction" of the Merger is Critical: April 20, 2009 - Bulletin Print Report; PepsiCo (PEP) has proposed to acquire all of the outstanding shares of common stock it does not already own in its two largest "anchor" bottlers, The Peps...

"Risk Reduction" As A Business Purpose For A Spin-Off: April 20, 2009 - Volume 3 Issue 76 Print Report; In order for a spin-off to achieve tax-free status certain familiarstatutory requirements, enumerated in Sec. 355 of the Internal Revenue Code, must be satisf...

Citi's "Beneficial Conversion Feature": April 17, 2009 - Bulletin Print Report; Citigroup (C) is reporting, in connection with its impending exchange offer (in which it will issue common stock in exchange for specifiedamounts of its prefe...

PNC and MER Restructure Their Interest in BlackRock: April 17, 2009 - Volume 3 Issue 75 Print Report; In light of the fact that Merrill Lynch & Co., Inc. (MER)recently underwent a "change of control" (it was just recentlyacquired by Bank of...

Centex's "Deferred Tax Assets": April 16, 2009 - Bulletin Print Report; During the conference call in which the Pulte Homes (P)/Centex Corp. (C) merger was announced, the noted housing analyst, Ivy Zelman, posed the following question--...

Accounting for Refundable State Tax Credits: April 16, 2009 - Volume 3 Issue 74 Print Report; Surprisingly, there has never been a reported case or I.R.S. pronouncement addressing the Federal incometax treatment of refundable state tax credits. This vo...

Accounting for Rebates--Part II: April 15, 2009 - Volume 3 Issue 73 Print Report; The taxpayer in question(T) is a retailer of consumer products. T has, as so many retailers do, a "cash rebate" program. Under the cash rebate progr...

ESRX Will Enjoy a Basis "Step-Up": April 14, 2009 - Volume 3 Issue 72 Print Report; Express Scripts, Inc. (ESRX) and WellPoint, Inc. (WLP) announced that they have signed a definitive agreement under which ESRX will acquire WLP's "NextRX subsi...

Other Than Temporary Impairments: April 14, 2009 - Volume 3 Issue 71 Print Report; The Financial Accounting Standards Board (FASB) has issued new guidance with respect to the accounting for debt securities that have become other-than-temporarily i...

"HAMP" Modifications Will Not Imperil REMIC Status: April 14, 2009 - Bulletin Print Report; REMICsare securitization vehicles for mortgages. Under Sec. 860A(a), a REMIC shall not be subject to taxation "under this subtitle". If the REMIC wa...

FASB "Clarifies" Fair Value Reporting: April 13, 2009 - Volume 3 Issue 70 Print Report; The Financial Accounting Standards Board (FASB) recently issued a document which purports to clarify the circumstances under which a market is properly regarded as...

I.R.S. Identifies a "Transaction of Interest": April 9, 2009 - Volume 3 Issue 69 Print Report; One problem that tax advisers frequently grapple withis how to avoid inclusion in the income of a "U.S. shareholder" ofsuch shareholder's shar...

Credit Card Fees Incurred In Paying Taxes are Deductible: April 9, 2009 - Bulletin Print Report; Reg. Sec. 301.6311-2T(a) provides that "internal revenue taxes" may be paid by credit card or debit card. The issuers of such cards typicallyimpose...

Pulte/Centex--What Happens to the NOLs?: April 8, 2009 - Bulletin Print Report; Pulte Homes, Inc. (PHM) and Centex Corp. (CTX) announced, today, that their boards of directors have approved a definitive merger agreement "under which PHM an...

Is the Accumulated Earnings Tax a Threat?: April 8, 2009 - Volume 3 Issue 68 Print Report; In the current environment corporations may find it prudent tohusband their cash reserves bycurtailing or reducing their dividend payments and postponin...

Metavante: Prior Spin Should Not Be Affected by Merger: April 7, 2009 - Bulletin Print Report; Recently, Metavante Technologies, Inc. (M) entered into a plan and agreement with Fidelity National Information Services, Inc. (F) in connection with which the form...

The Courts Will Not Permit Disavowal Of One's Own Agreement: April 7, 2009 - Volume 3 Issue 67 Print Report; A taxpayer is, almost always, bound by the terms of the agreement whichhe willingly enters into. The tax consequences arising from the transaction to which th...

Medical Expense Deductions Are Hard To Come By: April 6, 2009 - Volume 3 Issue 66 Print Report; Sec. 213(a) of the Internal Revenue Codeprovides for the deduction of expenses, which arenot compensated for "by insurance or otherwise", for...

International Paper's Tax Credits: April 3, 2009 - Bulletin Print Report; Recently, International Paper Company (IP) announced that its registration as an "alternative fuel mixer"had beenapproved. In light of that ap...

Citigroup's Exchange Offer: April 3, 2009 - Volume 3 Issue 65 Print Report; Citigroup, Inc.(C) is on the verge of effecting a massive recapitalization in which the holders of much of C's preferred stock (each ofitsstraight...

IRA Transfers Must Be Handled With Care: April 2, 2009 - Volume 3 Issue 64 Print Report; In Jankelovits v. Commissioner , T.C. Memo. 2008-285, the taxpayer (J) inherited twoIndividual Retirement Accounts (IRAs)from her aunt, MM. J me...

A Sec. 338 Election Is Not A Purchase of Assets: April 1, 2009 - Volume 3 Issue 63 Print Report; On December 8, 1986, Brunswick Corp. (B) acquired all of the stock of BM Corporation (BM), an 'S' corporation, and USM Corporation (USM), a C corporation. Each acqu...

S.E.C. Opines on "Impairment" With Respect to Preferred Stock: March 31, 2009 - Volume 3 Issue 62 Print Report; On October 14, 2008, in a letter from the Office of theChief Accountant (of the S.E.C.) to the Chairman of the Financial Accounting Standards Board (FASB), th...

Disposing of a "USRPI": March 30, 2009 - Volume 3 Issue 61 Print Report; Sec. 897(a) of the tax code provides that gain or loss of a foreign corporation (or of a non-resident alien individual) from the disposition of a United States...

Tax Consequences of a "Taxable Merger": March 27, 2009 - Volume 3 Issue 60 Print Report; Assume that a taxpayer (TP)owns stock in "Target Co.", (T), with an adjustedbasis, in his hands, of $500,000. "Parent Co.", (P), and...

Assessing When Compensation Is "Reasonable": March 26, 2009 - Volume 3 Issue 59 Print Report; Sec. 162(a) provides that there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on a tr...

Agrium Proposes a "Taxable" Reorganization: March 25, 2009 - Bulletin Print Report; Agrium, Inc. (AGU), a Canadian corporation, is attempting to acquire CF Industries Holdings, Inc. (CF) which is, itself,seeking to acquire Terra Industries. A...

FASB's New Approach To "Impairments": March 25, 2009 - Volume 3 Issue 58 Print Report; In cases where the fair value of a debt or equity security is less than the cost basis of the security at the "measurement date", U.S. Generally Accepted...

NDS Group's Letter Ruling Published: March 24, 2009 - Volume 3 Issue 57 Print Report; LTR 200912006, December 8, 2008 is, we have no doubt, the ruling that was issued to News Corp. (N) in connection with the transaction in which its affiliate, NDS Gr...

Petro-Canada and Suncor Will Effect an 'A' Reorganization: March 24, 2009 - Bulletin Print Report; Suncor Energy, Inc. (SU) and Petro-Canada (PCZ) have agreed to merge. The merger will be effected pursuant to a "Plan of Arrangement" under the Canadian B...

Payments In Lieu of Dividends: March 23, 2009 - Volume 3 Issue 56 Print Report; A taxpayer seeking to convert difficult to deduct capital losses into ordinary losses might consider entering into a short sale of stock shortly before the ex-divid...

Senate Bonus Bill is Both Draconian and Complex: March 20, 2009 - Bulletin Print Report; The Senate's effort in the area of taxation of bonuses is called the "Compensation Fairness Act of 2009" (S. 651); it has an impressive and therefore ...

Deductions For Worthless Stock of a Financial Institution: March 20, 2009 - Volume 3 Issue 55 Print Report; Ordinarily, a "worthless security" loss is a classified as a capital loss. See Sec. 165(g)(1).*This is unfortunate because capital losses are exceed...

House Set To Vote on Confiscatory Tax on "Bonuses": March 19, 2009 - Bulletin Print Report; Therancor surrounding the bonuses paid to certain executives of A.I.G. has escalated and now, perhaps predictably, Congress has fashioned a "tax solution...

I.R.S. Accommodates Ponzi Scheme Victims: March 19, 2009 - Volume 3 Issue 54 Print Report; The I.R.S. has published guidanceaddressing the complex tax consequences confronting victims of Ponzi Schemes--referred to in the guidance, more delicately, a...

FASB "Relaxes" Fair Value Standards: March 18, 2009 - Bulletin Print Report; In some quarters, so-called "mark to market" accounting for financial assets and liabilities has been accorded an inordinate degree of blame for the credi...

"Mutual Into Stock" Merger Qualifies As a Reorganization: March 18, 2009 - Volume 3 Issue 53 Print Report; Mutual organizations are owned by their members. Typically, such membersoccupy a dual relationship to the organization: as members they have proprietary inter...

Reorganizations of Insolvent Corporations: March 17, 2009 - Volume 3 Issue 52 Print Report; Congress intended that "troubled" corporations,with a view towards affording theseentities a meaningfulchance for rehabilitation, be per...

The I.R.S. Permits the Tax-Free Swap of Intangible Assets: March 16, 2009 - Bulletin Print Report; On 1/13/06, the I.R.S. issued a Technical Advice Memorandum--LTR 200602034--in which it concluded that theregistered trademarks and tradenames of a business e...

Harrah's Is De-Leveraging: March 16, 2009 - Volume 3 Issue 51 Print Report; Harrah's Entertainment, Inc. (H) recently announced that its wholly-owned subsidiary, Harrah's Operating Company, Inc. (HOC), is seeking to consummate exchange offe...

Ownership Changes in Bankruptcy: March 13, 2009 - Volume 3 Issue 50 Print Report; Where a "loss corporation" experiences an ownership change , certain limits are placed on the use of its net operating losses (NOLs) and "bui...

Tax-Efficient Withdrawal From a Corporate JV: March 12, 2009 - Volume 3 Issue 49 Print Report; A corporation (T) and an individual (I)are equal shareholders in a joint venture (JV) arrangement whichisoperated as a corporation. However, as&nb...

Interest Rate Swaps, Treasury Locks, and MLPs: March 11, 2009 - Volume 3 Issue 48 Print Report; LTR 200841017, June 16, 2008 addresses the case of a publicly-traded partnership, C, which is principally engaged, as most such MLPs are, in the acquisition, exploi...

MRK/SGP: A "Reverse Merger" is Planned: March 10, 2009 - Volume 3 Issue 47 Print Report; Merck, Inc.'s(MRK)"acquisition" of its rival,Schering-Plough, Inc.(SGP), is being structured in an unusual manner. Despite the rel...

Renaissance Technologies Secures A NYS Advisory Opinion: March 10, 2009 - Volume 3 Issue 46 Print Report; A State of New York Advisory Opinion (Petitioner No. C070517B, TSB-A-08(6)(C), Corporation Tax, November 6, 2008) was recentlyissued to Renaissance Technologi...

Level 3's "Lost" NOLs: March 9, 2009 - Volume 3 Issue 45 Print Report; Level 3 Communications, Inc. (L3) was in possession of some $9.7 billion in net operating losses (NOLs) when 2008 commenced. However, as reported in its recently-fi...

Ford Will Redeem Its Convertible Notes: March 6, 2009 - Bulletin Print Report; Ford Motor Co. (F) is beginning the process of restructuring its indebtedness although, unlike G.M., F is not compelled to do so by the terms of loans obtained from...

Tax Deferral With Private Annuities: March 6, 2009 - Volume 3 Issue 44 Print Report; Mr. Katz owned all of the stock of ELA, a company that he hadfounded and that grew to be very successful in a brief period of time. He entered into a plan and...

Imputed Interest on Stock Issued in a Reorganization: March 5, 2009 - Volume 3 Issue 43 Print Report; Sec. 483 of the Internal Revenue Code applies to a contract for the sale or exchange of property if the contract (i) provides for one or more payments due more than...

"Revenue Raisers" In The Administration's Budget Plan: March 4, 2009 - Volume 3 Issue 42 Print Report; President Obama's budget is reflective of his campaign stance and, if enacted, will make good on many ofthose campaign promises. It does entail a major commit...

Citi Eschews Valuation Allowance: March 3, 2009 - Bulletin Print Report; Citi's recently-filed 2008Form 10-K reveals that it has accumulated some $44.5 billion in netdeferred tax assets (DTAs). These DTAs arise from carryforw...

Defining an "Intermediary Tax Shelter": March 3, 2009 - Volume 3 Issue 41 Print Report; In a taxable acquisition (as opposed to a tax-free reorganization) a buyer's principal objective, from a tax viewpoint, is to secure a "cost" basis in the...

Citi's Recapitalization Should Not Cause an Ownership Change: March 2, 2009 - Bulletin Print Report; Citi has announced a recapitalization plan in connection with which preferred securities held by the U.S. Government (USG) and by private investors will be converte...

Trafficking in NOLs? Yes We Can!: March 2, 2009 - Volume 3 Issue 40 Print Report; A corporation, LC, had been engaged, without noticeablesuccess, in the active conduct ofa trade or business which it has now ceased to conduct.LC&...

"Inverted" Corporations Are Moving to Switzerland: February 27, 2009 - Bulletin Print Report; Several of the corporations that accomplished, in the late 1990s and early 2000s, "inversion" transactions, have now decided that, in order to make their...

CF Industries Will Be Going "Hostile": February 27, 2009 - Volume 3 Issue 39 Print Report; CF Industries, Inc. (CF) recently announced that it will take its exchange offer directly to the shareholders of Terra Industries, Inc. (T) in light of the fact tha...

Redemptions and Options on "Unissued" Stock: February 26, 2009 - Volume 3 Issue 38 Print Report; If a corporation redeems its stock and if Sec. 302(b) applies to the redemption such redemption shall be treated as a distribution "in part or full payment in...

What Is a "Parachute Payment": February 25, 2009 - Volume 3 Issue 37 Print Report; The tax law frowns upon parachute payments and certain, rather severe, penalties are exacted from both the paying corporation and the recipient "disqu...

Sirius XM Radio Inc.'s NOL Status: February 24, 2009 - Volume 3 Issue 36 Print Report; In July, 2008,Sirius Satellite Radio, Inc.(SSR)acquired the stock of XM SatelliteRadio, Inc.(XMR)in a transaction intended...

Wells Fargo Secures Tier 1 Capital Dispensation: February 24, 2009 - Bulletin Print Report; Under accounting rules, a deferred tax asset (DTA) is recognized for "temporary differences" that will result in (tax)deductible amounts in future y...

Time Warner Cable Will Be Spun (Not Split) Off: February 23, 2009 - Bulletin Print Report; Time Warner (TW)has announced that it intends to effect the distribution of Time Warner Cable's (TWC)stock as a pro-rata distribution (a spin-off) rathe...

No Tax Succor For a "Bubble" Era Victim: February 23, 2009 - Volume 3 Issue 35 Print Report; Many employees of technology firms exercised employee stock options at the height of the market hysteria now popularly known as the "bubble era". However,...

WAMU--To Whom Does the NOL "Belong"--Part II: February 20, 2009 - Volume 3 Issue 34 Print Report; In a case entitled In re Prudential Lines, Inc. v. PSS Steamship Co., Inc. , 928 F.2d 565 (2nd Cir. 1992), PSS owned all of the stock of PLI. The latter, wi...

The Ricketts' Redemption: February 19, 2009 - Bulletin Print Report; TD AMERITRADE Holding Corp. (AMTD) has announced that its Board of Directors has authorized the repurchase of 34 million shares from the family of the company's fou...

A "Transitory" Corporation is Disregarded: February 19, 2009 - Volume 3 Issue 33 Print Report; In some cases, a corporation which is both created and extinguished in an integrated transaction will be, for tax purposes, disregarded. Thus, a reverse triangular...

Business Tax Cuts Populate the Stimulus Bill: February 18, 2009 - Volume 3 Issue 32 Print Report; The "economicstimulus bill" (formally known as The American Recoveryand Reinvestment Tax Act of 2009, H.R. 1) contains several provisions that...

Goodwill Impairment/Equity Method Update: February 17, 2009 - Volume 3 Issue 31 Print Report; The stock market'shistoric decline raises the issue of whether the goodwill existing on Corporate America's collective balance sheet has become "impaired...

Charter's COD: February 17, 2009 - Bulletin Print Report; The announcement by Charter Communications, Inc. (C) of its intention topursue a restructuring of its copious indebtednessmay wellhave been prompt...

Citigroup Transfers Assets to "HTM": February 13, 2009 - Volume 3 Issue 30 Print Report; Citigroup has transferred some $80 billion of debt securities to the "held to maturity" category. SFAS No. 115, Accounting for Certain Investments in...

Conferees Drop Extended NOL Carryback: February 12, 2009 - Bulletin Print Report; It is very unusual, almost unprecedented, for a conference committee, whose objective is to reconcile competing pieces of tax legislation, to drop (from the final b...

CBS Taxed on Its "Transfer" of Real Estate to Viacom: February 12, 2009 - Volume 3 Issue 29 Print Report; In March of 2000, CBS Corporation (CBS)and Viacom, Inc. (V)effected a merger in connection with which V was the "issuing" corporation. (Since...

Managers' Amendment Provides Clues to Conference Outcome: February 11, 2009 - Bulletin Print Report; Sen. Baucus' Managers' Amendment to H.R. 1, "The American Reinvestment and Recovery Act of 2009", was blocked by Senate Republicans. However, such Manager...

The “Cash Issuance Exception” and NOLs: February 11, 2009 - Volume 3 Issue 28 Print Report; Dow Jones recently reported that a group of telecommunications companies "is seeking to loosen tax rules to allow them to raise equity capital without eroding...

SPG Will Pay Its Dividend Largely In Stock: February 10, 2009 - Bulletin Print Report; Simon Property Group, Inc. (SPG) is one REIT that's taking full advantage of the I.R.S.'s concession with respect to the composition of a REIT's dividend. Thus, SPG...

Timing "Deferred Compensation" Deductions: February 10, 2009 - Volume 3 Issue 27 Print Report; Ordinarily, in the case of an accrual method taxpayer, a liability is incurred, and is therefore "taken into account", in the taxable year in which "...

Sequenom's "Two-Step": February 9, 2009 - Volume 3 Issue 26 Print Report; Sequenom, Inc.(S) is proposing to acquire all of the stock of EXACT Sciences Corp. (E) through a two-step process embodying both a tender offer and a&qu...

Senate Focuses on Bonuses Paid By TARP Recipients: February 9, 2009 - Bulletin Print Report; An amendment to the Senate's version of the stimulus legislation,that was adopted by avoice vote lateon February 6, 2009, provides for an extraord...

WAMU--To Whom Does the NOL "Belong": February 6, 2009 - Volume 3 Issue 25 Print Report; WMB,in connection withthe seizure of its assets, almost certainly sustained a loss. The amount of the loss which it sustained should be measured by the...

TARP Beneficiaries and Sec. 382: February 5, 2009 - Volume 3 Issue 24 Print Report; The I.R.S. recently issued Notice 2009-14 for the purpose of providing guidance regarding the application of Sec. 382 of the tax codeto corporate issuers with respe...

Senate Makes Progress on Tax Legislation: February 4, 2009 - Bulletin Print Report; The Senate is, slowly but surely, making progress with respect to the tax proposals that will form an integral part of the stimulus bill that President Obama has be...

Focus Media Will Be Distributing SINA's Stock: February 4, 2009 - Volume 3 Issue 23 Print Report; Recently, Focus Media Holding Ltd. (FMCN) and SINA Corp. (SINA) announced that they had reached agreement on a transaction the structure of which is, in our experie...

GM Needs More Tax Relief: February 3, 2009 - Bulletin Print Report; It has been reported that General Motors is seeking "relief" with respect to tax liabilities it might incur as a result of the "restructuring plan" it...

Relief for REMICs: February 3, 2009 - Volume 3 Issue 22 Print Report; The credit crisis has galvanized the I.R.S. (and the Treasury Department)into action. It has issued many ameliorative pronouncements, in the form of Notices and...

FASB Increases Disclosure Requirements for Financial Instruments: February 2, 2009 - Bulletin Print Report; FASB has issued (in proposed form) guidance that will increase, dramatically, the frequency with which issuers will be called upon to disclose information regarding the fai...

The Elusive Notion of “Income From Discharge of Indebtedness”: February 2, 2009 - Volume 3 Issue 21 Print Report; Gross income, for Federal income tax purposes, means "all income from whatever source derived", including, but by no means limited to, the items expressly enumerated...

Pfizer's Stock Will Be Taxable: January 30, 2009 - Bulletin Print Report; The merger agreement filed by Pfizer, Inc. (PFE) with respect to the Wyeth (WYE)deal indicates that the transaction will be structured as a "reverse triangular merger". Thus, PFE...

Fannie and Freddie Preferred Stock--Ordinary Loss Rule Expanded: January 30, 2009 - Volume 3 Issue 20 Print Report; In most cases, equity securities are, in the hands of the owners thereof, capital assets with the result that gain or loss from the sale or other disposition (includi...

"Value Fluctuations" Will Not Precipitate An "Ownership Change": January 29, 2009 - Volume 3 Issue 19 Print Report; Where a "loss corporation" experiences an "ownership change", certain limits, sometimes quite restrictive, areimposed on the amount of tax...

Expect Mutual Funds and REITs To Be Less Charitable: January 28, 2009 - Volume 3 Issue 18 Print Report; Would taxpayers be less charitable if a tax deduction for charitable contributions was unavailable? We may find out in the case of mutual funds (RICs)and Real...

COD Update--SFC Begins Markup of Stimulus Bill: January 27, 2009 - Bulletin Print Report; As the Senate Finance Committee (SFC)begins its "mark up" of the tax portion of the stimulus legislation, we find that certain changes have already...

Can A Buyer's Losses Offset a Target's Profits?: January 27, 2009 - Volume 3 Issue 17 Print Report; Although the tax law places numerous restrictions on a buyer's ability to utilize the accumulated (and built-in) losses of an acquired corporation--not the least of...

WFC and PNC: Tax Refunds In the Offing?: January 26, 2009 - Volume 3 Issue 16 Print Report; Wells Fargo (WFC) and PNC will be acquiring Wachovia (WB) and National City Corp. (NCC), respectively, in transactionswhich willbestructured as di...

Senate Tax Bill Provides Relief For COD Income: January 23, 2009 - Bulletin Print Report; On Tuesday, January 27, 2009, the Senate Finance Committee (SFC) will begin "marking up"its version of the American Recovery and Reinvestment Tax Ac...

Amendments to NOL Provisions of Stimulus Bill Proposed: January 23, 2009 - Bulletin Print Report; As the House Ways & Means Committee began its "mark-up" of the "stimulus legislation" (the formal name for the bill is the "American Re...

I.R.S. Is Scrutinizing Foreigners' "Infrastructure" Investments: January 23, 2009 - Volume 3 Issue 15 Print Report; The I.R.S. has announced its intention to more closely examine the Federal incometax profile of foreign persons who make what the agency is referring to as in...

"TARP" Reform Bill Benefits Automakers: January 22, 2009 - Bulletin Print Report; On January 21, 2009 the House, by a comfortable margin (260 in favor and 166 opposed), passed the "TARP Reform and Accountability Act", H.R. 384. The bill...

Is New York Times' "Slim" Loan an "AHYDO"?: January 22, 2009 - Volume 3 Issue 14 Print Report; During the 1980s,scores ofdeals were financed, at least in part,with "deferred interest" securities. Due, however, to the operation of t...

The Tax Treatment of Foreclosure: January 21, 2009 - Volume 3 Issue 13 Print Report; In any downturn, particularly one that is precipitated by a marked decline in real estate values, the number of properties that are the subject of foreclosure proce...

VNO's "In-Kind" Dividend: January 21, 2009 - Bulletin Print Report; Vornado Realty Trust (VNO) recently announced that its Board of Trustees has declared a "regular quarterly dividend" of $0.95 per share. This dividend is...

Partnership Debt/Equity Swaps Clarified: January 20, 2009 - Volume 3 Issue 12 Print Report; Sec. 108(e)(8) of the Internal Revenue Code provides that, for purposes of determining income of a debtor from discharge of indebtedness, if (i)a debtor corpo...

House Ways & Means Committee Releases Details of Tax Plan: January 20, 2009 - Bulletin Print Report; Chairman Rangel (D-NY), on behalf of the House Ways & Means Committee, has released details of the tax component of the stimulus plan President-elect Obama has...

Citi's Gain From The Smith Barney "Sale": January 16, 2009 - Bulletin Print Report; The Citi (C)/Morgan Stanley (MS)"joint venture" will result in the combination of C's Smith Barney unit with MS's Global Wealth Management Group. Under the term...

Amazon.com's New York Sales Tax Problem: January 16, 2009 - Volume 3 Issue 11 Print Report; Since 1995, Amazon.com (A) has been operating a retail internet business. Its goods are sold online and shipped to buyers worldwide, including to New York. A, howev...

First Draft of Stimulus Bill Contains Some Disappointments: January 15, 2009 - Bulletin Print Report; Rep. Rangel (D-NY), the Chairman of the House Ways and Means Committee, has released details of the tax component of the Economic Recovery Package andparticul...

Citigroup's Deferred Tax Assets: January 15, 2009 - Volume 3 Issue 10 Print Report; Citigroup (C) has approximately $28 billion worth of deferred tax assets (DTAs) with respect to which a "valuation allowance" (VA) has not been appended....

Continuity of Interest--How Low Can You Go?: January 14, 2009 - Volume 3 Issue 9 Print Report; In order for a forwardmerger (one in which the acquiring corporation is the surviving corporation)to qualify as a reorganization both "the terms of...

What Are "Receipts"?: January 13, 2009 - Volume 3 Issue 8 Print Report; One would think that a term as pedestrian as "receipts" would have a well-accepted meaning and that parties would not have to litigate thequestion o...

Sen. Ensign's New Year's Gift to Debtors: January 12, 2009 - Bulletin Print Report; Sen. Ensign (R-NV) has introduced a bill (S 33) which provides debtors with tax incentives to restructure their debts.The bill would add Sec. 108(a)(1)(F) to...

Preserving WorldCom’s NOLs: January 12, 2009 - Volume 3 Issue 7 Print Report; When the words employed in a tax statute are not inescapably ambiguous and the application of those words to the issue under scrutiny would not thwart the purpose o...

CTL/EQ--Who Is the Acquirer?: January 9, 2009 - Volume 3 Issue 6 Print Report; In the case of a business combination effected wholly, or at least primarily,through an exchange of equity interests--like the one recently announced by Centu...

I.R.S. Expands REIT Stock Dividend Dispensation: January 8, 2009 - Bulletin Print Report; Last month, the I.R.S. granted REITs permission to use stock to satisfy up to 90 percent of their dividend paymentobligations. This dispensation was granted f...

Tax Issues for Dreier "Investors": January 8, 2009 - Volume 3 Issue 5 Print Report; Although, in sheer dollar terms, the ruse allegedly perpetrated by Mr. Marc Dreier does not measure up to the one engineered by Mr. Bernard Madoff, press reports in...

Debtors Lobbying For a "COD" Exclusion: January 7, 2009 - Bulletin Print Report; There is a powerful lobbying effort underway to insure that the President-elect's tax plan includes a provision that will allow even solvent debtors to exclude canc...

The Origin of the Claim Test Prevents a Tax Deduction: January 7, 2009 - Volume 3 Issue 4 Print Report; One of the more difficult tax determinations that taxpayers are almost daily called upon to make is whether an outlay is a deductible expense or is, instead, a capi...

What is "Computer Software": January 6, 2009 - Volume 3 Issue 3 Print Report; Many important tax determinations depend on whether property is properly characterized as "computer software". For example, where an acquisition of a trad...

Tax Considerations for Victims of "Ponzi Schemes": January 5, 2009 - Volume 3 Issue 2 Print Report; There have been severaldecided cases and I.R.S. pronouncements addressing the Federalincometax issues faced by victims of "Ponzi Schemes"...

The Obama Stimulus Plan Has a Tax Component: January 5, 2009 - Bulletin Print Report; It now appears clear that President-elect Obama's stimulus plan will, perhaps to secure Republican approval of the plan, be heavily freighted with tax reductions. W...

Open Market Purchaser Denied Theft Loss Deduction: January 2, 2009 - Volume 3 Issue 1 Print Report; P Corporation (P) had purchased, on the open market, shares in Novatek (N) on six separate occasionsduring 1995 and 1996. P purchased the shares through a sto...

Can Pre and Post-Judgment Interest Be Deducted?: December 31, 2008 - Volume 2 Issue 344 Print Report; In CCA 200836025, May 20, 2008,a taxpayer (T)was called upon to pay judgments in product liability suitsin connection witha product it had b...

Deducting Fines and Penalties: December 30, 2008 - Volume 2 Issue 343 Print Report; In FAA (Field Attorney Advice Memorandum)20084301F, September 25, 2008, States X, Y, and Z each filed a lawsuit against taxpayer, (T), in Federal court, accus...

FASB Sets New Disclosure Requirements for "Financial Assets": December 29, 2008 - Volume 2 Issue 342 Print Report; FSP FAS No. 107-a establishes enhanced disclosure requirements for certainfinancial assets. It amends the disclosure requirements set forth in SFAS No. 107,&n...

Payments to Avoid "Breaking the Buck": December 29, 2008 - Bulletin Print Report; The I.R.S. has issued numerous pronouncements this year designed to insure that adverse tax consequences do not get in the way of transactions that are otherwise he...

Options Can Reduce Corporate AMT Obligations: December 26, 2008 - Volume 2 Issue 341 Print Report; Although the Alternative Minimum Tax (AMT) has received the bulk of its notoriety for the privations it visits on individual, "middle-class", taxpayers, t...

Deferring Estate Tax With Closely-Held Business Interests: December 24, 2008 - Volume 2 Issue 340 Print Report; In order to insure that the estate tax can befunded without having to precipitouslyliquidate the business the value of which accounted for the bulk, if...

FASB Will Relax "Impairment" Rules: December 23, 2008 - Volume 2 Issue 339 Print Report; There have been numerous complaints lodged with the Financial Accounting Standards Board (FASB) regarding the rigidity of the rules that currently exist with respec...

Preserving Reorganization Treatment: December 23, 2008 - Volume 2 Issue 338 Print Report; InLTR 200842029, July 18, 2008, FC, a foreign corporation, created a domesticsubsidiary, MS, with andinto which T Corporation (T),an unrelat...

Will the Auto Bailout Dissipate GM's NOLs?: December 22, 2008 - Bulletin Print Report; Oneelement of the "auto bailout" is the requirement that the recipients of the Treasury Department's loan, G.M. and Chrysler, reduce their funded in...

Continuity of Interest and the "Signing Date Rule": December 22, 2008 - Volume 2 Issue 337 Print Report; In order for a merger to qualify as a reorganization it must, among severalother requirements, exhibit continuity of interest (COI). It will...

Senator Grassley May Pursue Inversions: December 19, 2008 - Volume 2 Issue 336 Print Report; A once popular transaction, commonly known as an "inversion", is, due to a combination of unfavorable publicity and legislative actions, no longer being p...

"Start-Up" Expenditures Are Not Currently Deductible: December 18, 2008 - Volume 2 Issue 335 Print Report; Even though times are, to put it mildly, challenging, we have witnesseda number of new hedge funds (and other businesses, such as tax and accounting advisory servic...

A "Casual" Gambler's Wagering Activities Have Tax Implications: December 18, 2008 - Bulletin Print Report; The tax code provides, in Sec. 165(a),that there shall be allowed as a deduction any loss sustained during the taxable year (which is)not compensated fo...

Cinematic Alternative Investment: December 17, 2008 - Bulletin Print Report; Hedge funds interested in investing in "the arts" may be encouraged to do so by certain beneficial tax rules that have recently been extended for an addit...

Eli Lilly and "In-Process" R&D/Goodwill Impairments: December 17, 2008 - Volume 2 Issue 334 Print Report; Eli Lilly (LLY) recently completed the acquisition of ImClone. As a directresult of that acquisition, LLY dramatically reduced its earnings forecast for 2008....

Liberty Media Will Split-Off Liberty Entertainment: December 16, 2008 - Volume 2 Issue 333 Print Report; Liberty Media Corporation (L) recently announced that its board of directors has authorized a plan to distribute to the holders of its Liberty Entertainment group t...

Financial Institutions Receive More Treasury Largesse: December 16, 2008 - Volume 2 Issue 332 Print Report; One of the lesser known aspectsof the government's reaction to thecredit crunch has been an unprecedented relaxation by Treasury and the I.R.S. of punit...

Tax Issues Arising From The Madoff Revelations: December 15, 2008 - Volume 2 Issue 331 Print Report; Investors caught up in the apparent fraud perpetrated by Mr. Bernard Madoff (BM) may find that certain Federal income tax provisions,dealing with taxpayers wh...

Accruing Rights Fees: December 12, 2008 - Volume 2 Issue 330 Print Report; FAA (Field Attorney Advice)20084101F, June 11, 2008, addresses the case of a taxpayer (T) which is a TV network and cable/satellite programming provider. T&nb...

Sec. 382 and the "Auto Bailout": December 11, 2008 - Bulletin Print Report; During the course of the credit crisis, the Treasury Department and the I.R.S. have taken steps to neutralize aspects of Sec. 382 of the Internal Revenue Codew...

A REIT Can Pay Its Dividends In Its Stock: December 11, 2008 - Volume 2 Issue 329 Print Report; Sec. 857(b) provides that "there is hereby imposed for each taxable year on real estate investment trust taxable income of every realestate investment tr...

U.S./U.K. Treaty Does Not Override Internal Revenue Code: December 11, 2008 - Volume 2 Issue 328 Print Report; Recently, in AM 2008-009, August 21, 2008, the I.R.S. was called upon to answer a question that had been posed to it by numerous taxpayers. The question involved th...

The Nature of a Put Option With Respect to ESOP Stock: December 10, 2008 - Volume 2 Issue 327 Print Report; LTR 200841042, June 17, 2008, addresses the case ofa corporation (T) which maintains an Employee Stock Ownership Plan (ESOP). The plan provides that "the...

Tax Issues Arising From TRB's Filing: December 9, 2008 - Volume 2 Issue 326 Print Report; Tribune Co. (TRB) announced, on December 8, 2008, that it is filing for bankruptcy. Tribune is an 'S' corporation and, presently, all of its outstanding stock is ow...

FASB Opines on "Going Concern" and "Subsequent Event" Issues: December 9, 2008 - Volume 2 Issue 325 Print Report; The Financial Accounting Standards Board, (FASB), on October 9, 2008, issued two Proposed Statements of Financial Accounting Standards ("Exposure Drafts) one d...

A "Passive" Partner Can Be "Active" for Spin-Off Purposes: December 8, 2008 - Volume 2 Issue 324 Print Report; Under what circumstances, if any, can a partner in a partnership be treated as engaged in the active conduct of a trade or business, for purposes of the spin-off ru...

When Is Option Income Reported?: December 5, 2008 - Volume 2 Issue 323 Print Report; The tax consequencesarising fromexercising an employee stockoption are governed by Sec. 83 of the Internal Revenue Code. In general, income (equal...

Taxpayer Not a "Victim" of the 9/11 Terrorist Attacks: December 4, 2008 - Volume 2 Issue 322 Print Report; It is often said that almost every aspect of life and deathembodies a tax consequence and this point was recently made painfully clear in a decision rendered...

GW/PDS--No "Helen of Troy" Problem: December 3, 2008 - Bulletin Print Report; Grey Wolf International, Inc. (GW) is scheduled to merge, later this month, with and into a controlled subsidiary of Precision Drilling Trust (PDS)for a combination of cash an...

Bailing Out of Midway Games: December 3, 2008 - Bulletin Print Report; National Amusements, Inc. (NAI), Sumco, Inc. (SI), and Mr. Redstone himself (SMR) announced that, on November 28,2008, each had sold its entire interest in Midway Games,...

Curtailing DRD "Arbitrage": December 3, 2008 - Volume 2 Issue 321 Print Report; In an attempt to prevent what might be termed "tax arbitrage" the tax law contains rules that are designed to prevent the unfettered enjoyment of certain...

AllianceBernstein's Competitive Advantage: December 2, 2008 - Volume 2 Issue 320 Print Report; AllianceBernstein Holding L.P. (AB)has a competitive advantage vis a vis its peers that operate as C corporations. AB, by contrast, is a partnership and a par...

Does Notice 2008-91 Incorporate Jacobs Engineering?: December 1, 2008 - Volume 2 Issue 319 Print Report; Where a controlled foreign corporation (CFC)--a foreigncorporation more than 50 percent of the stock of which is owned by one or more U.S. persons who each&nb...

Treating a Stock Transfer as an Asset Transfer under Sec. 336(e): November 28, 2008 - Volume 2 Issue 318 Print Report; Sec. 336(e) was enacted some 22 years ago, in The Tax Reform Act of 1986 (P.L. 99-514), in connection with the repeal, in that Act, of the so-called"Gene...

H.R. 7300 Is Premised on "Separation of Powers": November 26, 2008 - Volume 2 Issue 317 Print Report; Sec. 382(a) of the Internal Revenue Code is designed to inhibit a practice, referred to pejoratively, as"trafficking" in net operating losses (NOLs)...

Can An Acquirer's NOLs Offset a Target's Profits?: November 25, 2008 - Volume 2 Issue 316 Print Report; Many companies, particularly in the environment in which we currentlyfind ourselves,are in possession of copiousnet operating losses (NOLs) which...

Requiem for Notice 2008-83: November 24, 2008 - Bulletin Print Report; Where a "loss" corporation experiences an "ownership change", the amount of taxable income, for any taxable year ending after the date of the ow...

I.R.S. Issues Regulations Regarding "Outbound" Reorganizations: November 24, 2008 - Volume 2 Issue 315 Print Report; Where a domestic corporation acquires the properties of another domestic corporation in a transactionwhich qualifies as a reorganization--for example, in...

Berkshire Hathaway Takes A Stake in Goldman Sachs: November 21, 2008 - Volume 2 Issue 314 Print Report; Goldman Sachs (GS) recently announced that it had reached an agreement with Berkshire Hathaway (BH) in connection withwhich GS will issue to BH50,000 sh...

Taxes and Debt Swaps: November 20, 2008 - Volume 2 Issue 313 Print Report; It seems inevitable, as the credit crisis moves into new stages, that many debtors will be seeking to refinance outstanding indebtedness that, under current conditi...

Gannett Is a Unitary Business: November 20, 2008 - Bulletin Print Report; In 1995, Gannett (G) purchased the stock of Multimedia, Inc. (MM). G immediately sold off MM's entertainment and security alarm businesses but chose not to sell its...

The Investment Company Rules and REIT Formations: November 19, 2008 - Volume 2 Issue 312 Print Report; When property is transferred to a corporation in exchange for stock in such corporation, the exchange will be tax-free to the transferors (even though the value of...

Capital Contributions Can Affect NOL Usage: November 18, 2008 - Volume 2 Issue 311 Print Report; Sec. 382(a) of the Internal Revenue Code provides that the taxable income of a "new loss corporation", (1) for a taxable year follow...

Fannie and Freddie Establish a Valuation Allowance: November 17, 2008 - Bulletin Print Report; The third quarter earnings reports for both Fannie Mae and Freddie Mac embody massive non-cash charges resulting, primarily, from the establishment, by each such entity, of a substa...

MLPs and Tax-Exempt Organizations: November 17, 2008 - Volume 2 Issue 310 Print Report; Sec. 7704(a) of the Internal Revenue Code provides, as a general rule, that a publicly-traded partnership (PTP or MLP) "shall be treated as a corporation"...

I.R.S.'s Views Regarding The Auction Rate Securities Settlement: November 14, 2008 - Volume 2 Issue 309 Print Report; As many investors now know all too well, an auction rate security (ARS) is a security in which the payment rate is reset periodically pursuant to an auction rate se...

JPM's Unusual "Capital Raise": November 13, 2008 - Bulletin Print Report; A parent company's share of the earnings of a subsidiary is included in consolidated earnings simply by inclusion of the subsidiary in the consolidated financial st...

Exelon/NRG--Are Two Steps Sufficient?: November 13, 2008 - Volume 2 Issue 308 Print Report; Exelon Corp. (EXC) recently announced thatit will launch, through a newly-created subsidiary (EX), an exchange offer for all of the outstanding shares of NRG...

HLTH's Buyback and NOLs: November 12, 2008 - Volume 2 Issue 307 Print Report; HLTH Corp. recently announced a massive stock buyback as an alternative to, and in lieu of, its planned merger, subsequently cancelled, with its 84 percent owned subsidia...

Taxpayer Denied "Trader" Status: November 11, 2008 - Volume 2 Issue 306 Print Report; There are any number of benefits associated with being designated as a trader (as opposed to an investor ) with respect to a taxpayer's activities...

Barring "Sidewise" Attribution: November 10, 2008 - Volume 2 Issue 305 Print Report; A corporation seekingto avail itself ofthe myriadtax advantages of Real Estate Investment Trust (REIT) status will not be successful unless, among...

Stock Distributions by REITs Can Be "Dividends": November 7, 2008 - Volume 2 Issue 304 Print Report; Sec. 857(b)(1 ) of the Internal Revenue Code imposes, for each taxable year, a tax on a real estate investment trust's (REIT) taxable income. However, unlike...

CFCs and Partnerships--Ruling Breaks New Ground: November 6, 2008 - Volume 2 Issue 303 Print Report; A "U.S. shareholder" of a controlled foreign corporation (CFC) is required to include in gross income such U.S. shareholder's share of the CFC's "att...

A Guide to Pension Accounting: November 5, 2008 - Volume 2 Issue 302 Print Report; With the market in the doldrums investors have turned their attention to the vagaries of pension accounting on the theory that a declinein the value of pensio...

WFC Alters Terms of Merger With WB: November 4, 2008 - Bulletin Print Report; The S-4 recently filed by Wells Fargo (WFC) in connection with its acquisition of Wachovia (WB) reveals a change in the structure of the business combination. Originally,...

TARP Warrants Constitute Permanent Equity: November 4, 2008 - Bulletin Print Report; The warrants that the Treasury Department (TD) is purchasing in connection with the CPP portion of TARP have a 10 year term and are immediately exercisable. The TD will a...

I.R.S. Will Not Rigorously Apply the "AHYDO" Rules: November 4, 2008 - Volume 2 Issue 301 Print Report; Where a debt instrument is classified as an "Applicable High Yield Discount Obligation" (AHYDO), the issuer will be stripped of its ability to deduct the...

A Change in Plans--BAC's Acquisition of MER May Be Taxable: November 3, 2008 - Volume 2 Issue 300 Print Report; Bank of America (BAC) has gone to some lengths to insure that its pending acquisition of Merrill Lynch (MER) will constitute a tax-free reorganization. However, if...

On Target?: October 31, 2008 - Bulletin Print Report; We read with great interest the plan formulated by Pershing Square LLP with respect to the restructuring of Target Corp. (TGT). The plan involves a strategy that we...

Fannie Mae's DTA Will Be Eliminated: October 31, 2008 - Volume 2 Issue 299 Print Report; It comes as no surprise that Fannie Mae (FNM) announced, on October 29, 2008, its intention to "take" a valuation allowance against its deferred tax asset (DTA)...

Tax Court Concludes That Redemption Dividends Are Not Deductible: October 30, 2008 - Volume 2 Issue 298 Print Report; One of the more contentious tax issues that has cropped up over the past few years is the question of whether distributions in redemption of stock held by an Employ...

WAMU's Insolvency Does Not Remove It From the WMI Group: October 29, 2008 - Volume 2 Issue 297 Print Report; The issue of who is entitled to the tax refund that will result from the carryback of the losses sustained by Washington Mutual Bank (WAMU) in connection with the t...

PNC/NCC - Big Profits in RBILs: October 28, 2008 - Bulletin Print Report; The PNC Financial Services Group, Inc. (PNC) and National City Corp. (NCC) signed a definitive merger agreement for PNC to acquire NCC for some $2.23/share. NCC sha...

Short Sales and Wash Sales: October 28, 2008 - Volume 2 Issue 296 Print Report; The well-known and universally feared wash sale rule, found in Sec. 1091(a) of the tax code,disallows as a deduction (under Sec. 165))any...

Will the Liquidation of a "SPAC" Produce Capital Gains?: October 27, 2008 - Volume 2 Issue 295 Print Report; During the bull market that has now so unceremoniously come to ajarring halt, a new type of corporation appeared on the investment scene and, for a time, thes...

Is Stock Held By A Voting Trust "Owned" By The Settlor?: October 24, 2008 - Volume 2 Issue 294 Print Report; It goes without saying that many important tax determinations turn on the issue of who "owns" a share of stock. For example, the ability to file a consoli...

Marriott is Denied A Loss Deduction: October 23, 2008 - Volume 2 Issue 293 Print Report; In 1994, Marriott International, Inc. (M)found itselfin need of some tax deductions and entered into a transaction, the principal element of which was a...

Analyzing OMX's Tax Profile: October 22, 2008 - Volume 2 Issue 292 Print Report; OfficeMax, Inc. (OMX) is paying "cash taxes" each year yet is reporting, at the same time, a substantial amount of "credit carryforwards" that,...

More Tier 1 Capital News from the Fed: October 21, 2008 - Bulletin Print Report; Over the past few weeks, the Fed has taken some "heroic" measures to bolster the Tier 1 Capital ratios of its constituents. We have written about the first two initiatives...

Options and the Wash Sale Rules: October 21, 2008 - Volume 2 Issue 291 Print Report; The wash sale rules are, in broad outline, very well known to most investors and traders. However, there are certainintricacies that are not nearlyas we...

The Fed Bolsters Bank Capital: October 20, 2008 - Volume 2 Issue 290 Print Report; One of the provisions of The Emergency Economic Stabilization Act of 2008 (EESA) is designed to address the hardships faced by banks who invested in the preferred s...

Can Merger Arbitrage Be Used To Convert The "Character" of Gain?: October 17, 2008 - Volume 2 Issue 289 Print Report; Merger arbitrage, in the best of times,is a difficult business. Successful practitioners of this craft must be able to predict the likely outcome of a propose...

IVGN and ABI Amend Their Merger Agreement: October 16, 2008 - Volume 2 Issue 288 Print Report; Invitrogen Corp. (IVGN) and Applied Biosystems, Inc. (ABI) announced, on October 15, 2008,an amendment to their pending merger agreement. Under the prior term...

Valuing Liabilities With Credit Enhancement/"Defensive" Intangibles: October 15, 2008 - Volume 2 Issue 287 Print Report; Statement of Financial Accounting Standards(SFAS)No. 159, The Fair Value Option for Financial Assets and Financial Liabilities , hase...

Wells Fargo and Wachovia--What The Merger Agreement Reveals: October 14, 2008 - Volume 2 Issue 286 Print Report; The merger agreement,pursuant to the terms ofwhich Wachovia Corp. (WB) will be acquired by Wells Fargo & Co. (WFC), reveals some interesting informa...

Who Is Entitled to WAMU's Refund?: October 14, 2008 - Volume 2 Issue 285 Print Report; Ordinarily, thecommon parent of a consolidated tax returngroup (in this case Washington Mutual, Inc. or WMI) for any consolidated return year is th...

Precision Drilling Wins The Battle for Grey Wolf: October 13, 2008 - Volume 2 Issue 284 Print Report; Precision Drilling Trust (PDS),a Canadian mutual fund trust,has reacheda definitive agreement with Grey Wolf, Inc. (GW) in connection with which t...

NDS Group plc Is Going Private: October 10, 2008 - Volume 2 Issue 283 Print Report; NDS Group plc (NNDS) is largely owned by News Corporation (NWS). The latter owns all 42 million sharesof the former's Class B (high vote) stockwith the result...

Tax-Exempt Money Market Funds Get A Reprieve: October 8, 2008 - Volume 2 Issue 281 Print Report; A corporation shall be considered a Regulated Investment Company (RIC) with the result that itwill beentitled to reduce its taxable income by the divide...

Government Guarantees Will Not Imperil Variable Annuity Contracts: October 8, 2008 - Volume 2 Issue 282 Print Report; Once again, the I.R.S. is providing relief from certain untoward tax consequences that might otherwise result from the Treasury Department's extraordinary efforts t...

TY's "In-Kind" Redemption Should Be Tax-Efficient: October 8, 2008 - Volume 2 Issue 280 Print Report; Tri-Continental Corporation (TY) is a closed-end management investment company. Recently, it announced a settlement with a shareholder group whereby the members of...

Deducting Restitution Payments: October 7, 2008 - Volume 2 Issue 279 Print Report; In LTR 200834016, May 20, 2008, the taxpayer (T) was a physician who practiced medicine through his professional corporation, an 'S' corporation. T was indicted for...

Determining Fair Value in "Inactive" Markets: October 6, 2008 - Volume 2 Issue 278 Print Report; FASB has issued FSP FAS 157-d, a pronouncement of immense importance in light of current market conditions, which has as its objective the "clarification"...

I.R.S. Permits Increased Access To Funds Accumulated Abroad: October 6, 2008 - Volume 2 Issue 277 Print Report; The I.R.S. istaking actionto ease the credit crunch bypermitting U.S. corporations to access earnings accumulated by their foreign subsidiaries wi...

Tax Provisions of the "Bailout" Legislation: October 3, 2008 - Volume 2 Issue 276 Print Report; The Emergency Economic Stimulus Act of 2008, popularly known as the "bailout" legislation, contains some tax provisions that will benefit some taxpayers a...

PG/SJM--Assessing The Impact of the Anti-Morris Trust Rules: October 2, 2008 - Volume 2 Issue 275 Print Report; Procter & Gamble (PG) and J.M. Smucker Co. (SJM) will be engaging (for the second time in the past six years)in a "reverse Morris Trust" transac...

S.E.C. and I.R.S. Issue Ameliorative Guidance: October 1, 2008 - Volume 2 Issue 274 Print Report; The S.E.C. and FASB took the extraordinary step of issuing, jointly, guidance with respect to the application of SFAS No. 157, Fair Value Measurements , in...

Spread the Word: Acquired NOLs Are More Valuable Than Ever: October 1, 2008 - Volume 2 Issue 273 Print Report; It has been five years since the I.R.S. issued a pronouncement, Notice 2003-65, I.R.B. 2003-40 (September 12, 2003), that had the effect of increasing the value, so...

Calculating Gain On A Deferred Payment Sale: September 30, 2008 - Volume 2 Issue 272 Print Report; Assume a taxpayer owns a parcel of real estate and enters into a contract for the sale of such realty for an ascertainable amount. The buyer remits a down payment, repres...

Lehman's Bankruptcy Will Not Adversely Affect Stock Lenders: September 29, 2008 - Volume 2 Issue 271 Print Report; The Internal Revenue Servicehas taken decisivesteps to insure that taxpayers who loaned stock or securities to Lehman Brothers, Inc. (LB) will not suffe...

BAC/MER: A Reorganization Is Intended: September 26, 2008 - Volume 2 Issue 270 Print Report; In contrast to the manner in which the JP Morgan Chase/Bear Stearns deal was carried out, the acquisition by Bank of America (BAC) of Merrill Lynch (MER) is intende...

The Fed Proposes To Change The Calculation of Tier 1 Capital: September 25, 2008 - Volume 2 Issue 269 Print Report; Recently, the Federal Reserve Board requested public comments on an interagency notice of proposed rulemaking that would alter the manner in which a banking organiz...

Can Income Be Accelerated?: September 24, 2008 - Volume 2 Issue 268 Print Report; Although it is generally preferable to defer reporting income for tax purposes, certain taxpayers, in exigent circumstances, will seek to do the exact opposite: The...

Mr. Ergen's GRAT: September 23, 2008 - Volume 2 Issue 267 Print Report; Mr. Charles W. Ergen has, a recently filed Form 4 reveals, transferred some 75 million Class B common shares of DISH to a trust for the benefit of his children. The...

SJM's "Extraordinary" Dividend: September 22, 2008 - Volume 2 Issue 266 Print Report; In connection with the acquisition of Folgers Coffee Company (FCC)by JM Smucker Company(SJM), the latter has announced the payment of a $5 special divid...

Post-Acquisition Spin-Offs Can Be Tax-Free: September 19, 2008 - Volume 2 Issue 265 Print Report; What, if any, tax rules operate to discourage a spin-off which closely follows an acquisition of the distributing corporation's stock? The onepotential impedi...

Settlement of "Equity Forward" Is a Non-Recognition Event: September 18, 2008 - Volume 2 Issue 264 Print Report; Many companies have chosento repurchase their shares bymeans of "equity forward" contracts. InCCA 200832002, April 23, 2008, A Corporati...

FASB Proposes Changes to the EPS Calculation: September 17, 2008 - Volume 2 Issue 263 Print Report; The Financial Accounting Standards Board (FASB) is proposing changes to the manner in which earnings per share (EPS)is calculated. The vehicle for the changes...

Dissecting Met Life's Split-Off of RGA: September 16, 2008 - Volume 2 Issue 262 Print Report; Met Life's (M) "split-off" of Reinsurance Group of America (RGA) is one of the most highly engineered transactions we have ever encountered. The private l...

Discovery Becomes a Pure Play Programmer: September 15, 2008 - Volume 2 Issue 261 Print Report; Discovery Holding Company (DHC) was, several years ago, spun-off from Liberty Media. DHC is now undertaking its own spin-off in conjunction with a series of re-stru...

Involuntary Conversions: September 12, 2008 - Volume 2 Issue 260 Print Report; When property is "involuntarily converted" in one of certain enumerated ways specified in Sec. 1033the tax code, the taxpayer can elect to defer the...

HOV's Tax "Poison Pill": September 11, 2008 - Volume 2 Issue 259 Print Report; Hovnanian Enterprises, Inc. (HOV) announced, on August 4, 2008, that its Board of Directors has adopted a "shareholder rights" plan but not for the usual...

Deposits vs. Advance Payments: September 10, 2008 - Volume 2 Issue 258 Print Report; One of the most difficultdeterminations a tax accountant is called upon to make is whether a sum of money received by a taxpayer is properly characterized as...

The Fannie and Freddie "Bail-Out" Has A Tax Component: September 9, 2008 - Volume 2 Issue 257 Print Report; In addition to all of their other woes, Fannie Mae and Freddie Mac are, almost certainly, "loss corporations" for Federal income tax purposes. A loss corp...

Senators Seek to "Punish" Investors in Certain Commodities: September 9, 2008 - Volume 2 Issue 256 Print Report; On the dubious theory that the startling increase in oil prices (which, of late, certainlyseems to have abated) is caused, at least in part, by persons w...

Carolina Group Post-Mortem: September 8, 2008 - Volume 2 Issue 255 Print Report; The private letter ruling that was issued to Loews (L) in connection with its split-off of Lorillard (LO) was recently released by the I.R.S. for public consumption...

Can Idearc Repurchase Its Debt?: September 5, 2008 - Volume 2 Issue 254 Print Report; Idearc, Inc., (I)the exclusive publisher of Verizon's yellow and white pages, was spun-off from Verizon (V), in November, 2006. The spin-off featured a debt f...

Liberty Media Will Redeem Some Tracking Stock: September 4, 2008 - Volume 2 Issue 253 Print Report; Liberty Media Corporation (L) announced on September 3, 2008 that its board of directors has authorized its management to "proceed with thedevelopment of...

Allscripts Update: September 3, 2008 - Volume 2 Issue 252 Print Report; Allscripts Healthcare Solutions, Inc. (A) is inching closer towards completing its transformative deal with Misys plc (M). On September 22, 2008, the Ashareho...

The Lessons of Thor Power Tool Resonate In a Recession: September 2, 2008 - Volume 2 Issue 251 Print Report; Over the course of a recession corporate inventories tend to accumulate, particularly at companies that were unsuccessful in accurately forecasting the (depressed)...

Home Depot Denied a Refund of Indiana Sales Taxes: August 29, 2008 - Volume 2 Issue 250 Print Report; Home Depot, Inc.(HD)does business in Indiana. It offers its customers the option of purchasing merchandise with "private label" credit cards....

When Vested Shares Become Non-Vested: August 28, 2008 - Volume 2 Issue 249 Print Report; In Rev. Rul. 2007-49, 2007-31, I.R.B. 237, a group of investors formed a corporation (X). In exchange for Mr. A's agreement to perform services on behalf of X, X, a...

Fording/Teck: Exit Stage Left?: August 27, 2008 - Volume 2 Issue 248 Print Report; Fording Canadian Coal Trust (FDG), an unincorporated,open-ended "mutual fund trust", and Teck Cominco Ltd. (TCK) have entered into a "plan of a...

Investor Denied Deductions for "Seminar" Expenses: August 26, 2008 - Volume 2 Issue 247 Print Report; Under Sec. 212(1) of the Internal Revenue Code, an individual is allowed a deduction for all of the ordinary and necessary expenses paid or incurred during the taxa...

Taxing Interest and Dividend Arrearages: August 25, 2008 - Volume 2 Issue 246 Print Report; Where debtsecurities with interestarrearagesorcumulativepreferred stock with accumulated dividends are purchased, the tax treatment of...

I.R.S. Issues New Rules Regarding Amortization of "Start-Up" Costs: August 22, 2008 - Volume 2 Issue 245 Print Report; Sec. 162(a) of the Internal Revenue Code provides that there shall be allowed as a deduction all of the "ordinary and necessary" expenses paid or incurred durin...

How the "Expansion Doctrine" Facilitates CY's Spin-Off of SPWR: August 21, 2008 - Volume 2 Issue 244 Print Report; LTR 200830005, April 16, 2008,permitsthe shareholders of acorporation that had acquired control of another corporation in a taxable transaction wi...

Will the "Active Financing Exception" Be Allowed to Expire?: August 20, 2008 - Volume 2 Issue 243 Print Report; General Electric's (GE) effective tax rate, for the year ended December 31, 2007, was only 15.5 percent. The statutory rate, of course, is 35 percent. Virtually all...

Deducting an MBA Candidate's Education Expenses: August 20, 2008 - Volume 2 Issue 242 Print Report; Can a candidate for a Masters of Business Administration (MBA) degree deduct, for Federal income tax purposes,her educational expenses? This is a question that...

Newsday Post-Mortem: August 19, 2008 - Volume 2 Issue 241 Print Report; Tribune Company (TRB) is an 'S' corporation. Its 'S' corporation election filed on March 14, 2008became effective on January 1, 2008. Sec. 1363(a) provides that &qu...

What Is a Deferred Tax Asset?: August 18, 2008 - Volume 2 Issue 240 Print Report; It is well-known that, in light of their different goals and objectives, income tax accounting and financial accountingtreat, in many cases,identical it...

Daxor's Unusual Tax Status: August 16, 2008 - Volume 2 Issue 239 Print Report; The July 21edition of Barrons , in Shirley Lazo's Speaking of Dividends column, discusses the recent announcement by Daxor (DXR) of its intention t...

Teva's Acquisition of Barr Will Constitute a Reorganization: August 15, 2008 - Volume 2 Issue 238 Print Report; Teva Pharmaceutical Industries, Ltd. (T) and Barr Pharamceuticals, Inc. (B) have entered into a definitive agreement pursuant to which T, a foreign corporation, will acqu...

"RMA" Accounts and Estate and Gift Taxes: August 14, 2008 - Volume 2 Issue 237 Print Report; Rev. Rul. 2008-35 tackles the issue of whether a taxpayer a portion of whose assets are held in a Restricted Management Account (RMA) at a bankmay, in li...

NYMEX--Is There a Case for Capital Gains?: August 13, 2008 - Volume 2 Issue 236 Print Report; The merger of NYMEX with and into a subsidiary of CME, a transaction intended to qualify as a reorganization under Sec. 368(a)(1)(A), has run into some turbulence fr...

Deducting Mortgage Interest: August 13, 2008 - Volume 2 Issue 235 Print Report; Sec. 163(a) of the Internal Revenue Code provides, generally, that there shall be allowed as a deduction all interest paid or accrued within the taxable year on indebtedn...

Tax Court Rejects I.R.S. Attempt to Find "Constructive" Dividend: August 12, 2008 - Volume 2 Issue 234 Print Report; Where a corporation makes a distribution of property to one or more of its shareholders "with respect to its stock", the distribution will be included in the re...

The "Open Transaction" Doctrine Lives: August 11, 2008 - Volume 2 Issue 233 Print Report; The I.R.S. may well have to pay out a large number of tax refunds as a result of a decision rendered by the United States Court of Federal Claims in a case entitled F...

Ashland/Hercules: The Stock Is Taxable: August 9, 2008 - Volume 2 Issue 232 Print Report; Recently, the boards of directorsof Ashland, Inc. (A) and Hercules, Inc. (H) reached an agreement with respect to a transaction in which A would acquire all of the...

How to Disqualify a Pension Plan: August 8, 2008 - Volume 2 Issue 231 Print Report; It has been reported that financial institutions have been eyeing underfunded,"frozen",corporate pension plans. The transaction that has...

Accounting for "Rebates": August 7, 2008 - Volume 2 Issue 230 Print Report; In Chief Counsel Advice Memorandum (CCA) 200826006, March 12, 2008, the taxpayer (T) was a retailer of consumer products which had adopted a "cash rebate program&quo...

PCH Will Be Blazing New Spin-Off Trails: August 6, 2008 - Volume 2 Issue 229 Print Report; Potlatch Corporation (PCH), a real estate investment trust (REIT), recently announced that its Board of Directors had approved a plan pursuant to which PCH will spi...

BMY/IMCL--Time Is Of The Essence: August 5, 2008 - Volume 2 Issue 228 Print Report; Bristol-Myers Squibb Company (BMY) recently announced a proposal in which it seeks to enter into an agreement to acquire ImClone Systems, Inc. (IMCL)for $60 p...

ICGE's "Hidden" Tax Asset: August 4, 2008 - Volume 2 Issue 227 Print Report; Internet Capital Group, Inc. (ICGE) is a company which both builds and acquires internet software and service companies. ICGE refers to these companies as its "...

When Is Income "Constructively" Received?: August 2, 2008 - Volume 2 Issue 226 Print Report; Reg. Sec. 1.451-1(a) provides that gains, profits, and income are to be included in gross income for the taxable year in which they are eitheractually or...

Can "Retainer Fees" Be Deducted?: August 1, 2008 - Volume 2 Issue 225 Print Report; Frequently, corporations are required, in order to secure the services of a professional, to pay such professional a "retainer fee". In some cases, the fee...

The Limits of the "Claim of Right" Rule: July 31, 2008 - Volume 2 Issue 224 Print Report; During the years 1973 through 1981, Texaco, Inc. engaged insales of crude petroleum and refined petroleum products at prices that exceeded the price controls set by...

Deducting Expenses Incurred in a "Private Equity" Transaction: July 30, 2008 - Volume 2 Issue 223 Print Report; LTR 200830009, April 11, 2008 considers certain tax consequences associated with a "typical" private equity transaction. The conclusions the ruling reache...

"Peripheral" Oil and Gas Income Constitutes Qualifying Income: July 29, 2008 - Volume 2 Issue 222 Print Report; In the Revenue Act of 1987 (P.L. 100-203), Congress passed provisions designed to prevent the erosion of the corporate tax base. During the years leading up to the enactm...

Some Investment Interest Is Not An Itemized Deduction: July 28, 2008 - Volume 2 Issue 221 Print Report; Rev. Rul. 2008-12, 2008-10, I.R.B. 520, addressed the case of a taxpayer (LP)who was a partner in a partnership (perhaps a hedge fund) that is engaged in the trade...

A REIT Must Earn "Rents From Real Property": July 26, 2008 - Volume 2 Issue 220 Print Report; In order for a Real Estate Investment Trust (REIT) to preserve its status as such, substantially all of its gross income must be derived from certain sources, most n...

BAC Will Reap the Benefits of "Purchase Accounting": July 25, 2008 - Volume 2 Issue 219 Print Report; The acquisition of Countrywide (C) by Bank of America Corp.(B) was recently completed and preliminary details regarding the accounting for this transaction--w...

Fund of Fund's Management Fees Are "Sec. 212" Expenses: July 24, 2008 - Volume 2 Issue 218 Print Report; Rev. Rul. 2008-39 addresses the tax treatment of management fees paid by a partnership--popularly known as a "fund of funds"--which is, itself, a partner in one...

New Regulations Encourage Foreign Leasing Activity: July 23, 2008 - Volume 2 Issue 217 Print Report; In order to prevent undue deferral of U.S. taxeswith respect toforeign source income the Internal Revenue Code provides thata "United States shareh...

Navigating the 'S' Corporation Distribution Rules: July 22, 2008 - Volume 2 Issue 216 Print Report; When a C corporation seeks toelectto be taxed as a Real Estate Investment Trust (REIT) it must, among other things, rid itself of its earnings and profit...

Cleveland-Cliffs/Alpha Natural Resources---The "72% Solution": July 21, 2008 - Volume 2 Issue 215 Print Report; On July 16, 2008, Cleveland-Cliffs, Inc. (CLF) and Alpha Natural Resources, Inc. (ANR) announced that each suchentity's board of directors had approved a defi...

Converting Capital Gain Into Dividend Income: July 19, 2008 - Volume 2 Issue 214 Print Report; When a corporation sells assets to another corporation, it is often a matter of indifference to the seller whether, in cases where the deal has to be financed, it receive...

Supreme Court Upholds Florida's Imposition of Stamp Taxes: July 18, 2008 - Volume 2 Issue 213 Print Report; The Bankruptcy Code provides a stamp tax exemption for any asset transfer under a plan confirmed under Chapter 11 of the Bankruptcy Code . At issue in a case whic...

FASB's Plan Will Bloat Balance Sheets: July 17, 2008 - Volume 2 Issue 212 Print Report; The Financial Accounting Standards Board (FASB) has signaled its intention to revise two important accounting pronouncements for the express purpose of making these...

InBev's Interest Expense--Deductible in the U.S.?: July 16, 2008 - Volume 2 Issue 211 Print Report; The Wall Street Journal for July 10, 2008 ran an article in its regular Breaking Views column regarding an interesting, tax-oriented, aspect of the pote...

Shell Oil's "Double Dipping" Strategy Pays Off: July 15, 2008 - Volume 2 Issue 210 Print Report; In the early '90s, with (if you can imagine it) oil prices severely depressed, many integrated oil companies were holding properties the market value of which was substan...

EK's Stock Repurchase Funded by Tax Refund: July 14, 2008 - Volume 2 Issue 209 Print Report; On June 24, 2008, Eastman Kodak Company (EK) announced that its Board of Directors had authorized a stock repurchase program totaling as much as $1 billion of the company...

I.R.S. Clamps Down on "Effective" Repatriations of Foreign Earnings: July 12, 2008 - Volume 2 Issue 208 Print Report; For the second time since early June, 2008 the I.R.S. has taken decisivesteps to prevent what it obviously considers one of the most objectionable tax outcomes in t...

How Will SJM's "Special Dividend" Be Taxed?: July 11, 2008 - Volume 2 Issue 207 Print Report; Procter & Gamble (PG) and J.M. Smucker Company (SJM), as we previously reported are teaming up (See The Willens Report,Volume 2 Issue 171, June 5, 2008), once a...

Student Loan Forgiveness Need Not Give Rise to Income: July 10, 2008 - Volume 2 Issue 206 Print Report; Under Sec. 61(a)(12) of the Internal Revenue Code, gross income includes incomefrom the discharge of indebtedness. However, certain exceptions to this general rule...

Has The Service Taken Undue Liberties With the Wash Sale Rule?: July 9, 2008 - Volume 2 Issue 205 Print Report; Sec. 1091(a) provides that in the case of any loss claimed to have been sustained from any sale or other disposition of shares of stock or securities where it appears tha...

Digimarc's "Two-Step"--How Will the Distribution Be Taxed?: July 8, 2008 - Volume 2 Issue 204 Print Report; Digimarc Corporation (D) is engaged in two businesses; the "secure ID" business and the "digital watermarking" business. L-1 Identity Solutions, Inc....

Gain From Sale of "CO2 Emission Allowances" Is Not "FPHCI": July 7, 2008 - Volume 2 Issue 203 Print Report; Sec. 951 of the Internal Revenue Code requires a "U.S. shareholder" of a Controlled Foreign Corporation (CFC) to include in its gross income its pro-rata share...

How To Handle Restricted Stock and Options In A Spin-Off: July 6, 2008 - Volume 2 Issue 202 Print Report; In the case of a spin-off, ordinarily a whollytax-free transaction, the possibility for income recognition, on the part of both the distributing corporation and the...

KFT's Will Divest Post in A "Reverse Morris Trust": July 5, 2008 - Volume 2 Issue 201 Print Report; Kraft Foods, Inc. (K) will be divesting its Post Cereals business (P) in a tax-efficient manner. In fact, Kshould be able to retire an amount of itsstock (uti...

FASB Offers New Guidance Regarding EPS Determinations: July 3, 2008 - Volume 2 Issue 200 Print Report; The staff of the Financial Accounting Standards Board (FASB) has, it seems, increased the rate at which accounting guidance is being issued. The latest offering involves...

Can STI Efficiently "Monetize" Its KO Stake: July 2, 2008 - Volume 2 Issue 199 Print Report; For many years, SunTrust Banks, Inc. (STI) has owned shares in Coca-Cola (KO). These shares have been, and continue to be, highly appreciated. Currently, the "unreal...

Can A Former Executive Be An "Outside" Director?: July 1, 2008 - Volume 2 Issue 198 Print Report; The Internal Revenue Code, at Sec. 162(m)(1), imposes certain limitations on a publicly-held corporation's ability to deduct certain compensation paid to a group of emplo...

A REIT Escapes "Prohibited Transaction" Treatment: June 30, 2008 - Volume 2 Issue 197 Print Report; It seems hard to believe, I know, but the Internal Revenue Code actually imposes, with respect to certain highlyobjectionable transactions, a 100 percent tax. For e...

Adding A "Liquidity Facility" to ARPS: June 29, 2008 - Volume 2 Issue 196 Print Report; The I.R.S. has recentlyobserved that "...in response to recent auction failures, issuers and third parties mayseek to add liquidity facilities to auction...

A Utility is Found to Have Changed Its "Method of Accounting": June 28, 2008 - Volume 2 Issue 195 Print Report; Rev. Rul. 2008-30 addresses the case of a regulated public utility (U) that operates and maintains sewer lines and sewerage disposal plants. U charges a "customer co...

Will MasterCard's Payments to Amex Be Deductible?: June 27, 2008 - Volume 2 Issue 194 Print Report; MasterCard Incorporated (M) announced, on June 25, 2008, that it had reached an agreement to settle its outstanding litigation with American Express (A). The form of the...

Index Product Avoids "FIRPTA" Sanctions: June 26, 2008 - Volume 2 Issue 193 Print Report; A foreign person's investment in United States real property is robbed of some of its allure by the specter of income taxes. Thus, under Sec. 897(a) of the Internal Reven...

New Jersey's "Throw Out" Rule Judged to be Constitutional: June 25, 2008 - Volume 2 Issue 192 Print Report; New Jersey, in common with most States, taxes the income of a multistate enterprise by applying an "allocation factor"tothe group's total income. Th...

Willis Group and HRH Are Planning a Reorganization: June 24, 2008 - Volume 2 Issue 191 Print Report; Willis Group Holdings Limited (W) and Hilb Rogal & Hobbs (H) recently announced a transaction in which H will be absorbed by W in a transaction that will be structure...

GAP Retires Warrants--Is the Payment Tax Deductible?: June 23, 2008 - Volume 2 Issue 190 Print Report; On June 5, 2008, The Great Atlantic & Pacific Tea Company, Inc. (GAP) announced that it had "settled",for cash amounting to $45.7 million, some 4.657...

Repaying Debt In Connection With a "Leveraged" Spin-Off: June 22, 2008 - Volume 2 Issue 189 Print Report; Where a spin-off (or, for that matter, a split-off) is part of a 'D' reorganization--because the distributing corporation transfers property to the controlled corporation...

Will Goodwill Gain Earned by a REIT Be Qualifying Income?: June 21, 2008 - Volume 2 Issue 188 Print Report; The acquisition of a Real Investment Trust (REIT) almost always takes the form of an asset acquisition. This format enables the buyer to secure a "cost basis" i...

Service Denies Refund of "Erroneously Paid" FICA Taxes: June 20, 2008 - Volume 2 Issue 187 Print Report; The benefits of deferring compensation are well-known. The hope is that these amounts will be includible in gross income in a taxableyear, subsequent to the employe...

How Are Termination Fees Taxed?: June 19, 2008 - Volume 2 Issue 186 Print Report; LTR 2008823012, March 10, 2008, addresses the often-encountered, but surprisingly elusive,question of how termination fees (sometimes known as "break-up"...

FASB Seeks To Improve Loss Contingency Disclosure: June 18, 2008 - Volume 2 Issue 185 Print Report; Many important "users" of financial statements, particularly in uncertaintimes like those in which we nowfind ourselves, have groused that companies...

Will The Celera Split-Off Be Tax-Free?: June 17, 2008 - Volume 2 Issue 184 Print Report; Applera Corp. (A) and Invitrogen Corp. (I) have announced a business combination in which A will be merged with and into a LLC created by I for purposes of the transactio...

Accounting for Sales With A "Right of Return": June 17, 2008 - Volume 2 Issue 183 Print Report; When an enterprise sells its products but affordsthe buyers a right to returnsuch products,revenue from the sales transaction is to be recognized, for f...

Capital One Is Denied a Tax Benefit: June 16, 2008 - Volume 2 Issue 182 Print Report; Capital One Financial Corporation (CO) owns subsidiaries whose principal business activity is the issuance of credit cards. These subsidiaries are among the largest such...

Combining A PE's Portfolio Companies: June 15, 2008 - Volume 2 Issue 181 Print Report; Many private equity (PE) enterprises in possession, on behalf of their clients, of a stable of portfolio companies, may find that one or more these investments have not &...

Qualifying for Partnership Tax Status: June 14, 2008 - Volume 2 Issue 180 Print Report; In general, a publicly-traded partnership (PTP) is treated, for Federal income tax purposes, as a corporation. See Sec. 7704(a). A PTP, in turn, is defined as a par...

O'Reilly Automotive and CSK's Path to a Business Combination: June 13, 2008 - Volume 2 Issue 179 Print Report; O'Reilly Automotive, Inc. (O) and CSK Auto Corporation (C) are taking steps to implement the merger agreement the parties entered intoon April, 1, 2008. The transac...

Retiring Debt In Connection With a Spin-Off: June 12, 2008 - Volume 2 Issue 178 Print Report; It has become standard operating procedurefor corporations engaging in spin-off transactions to, in addition to accomplishing the corporate business purpose or purp...

FASB Wants Better Disclosure of Credit Default Swaps: June 11, 2008 - Volume 2 Issue 177 Print Report; It ishardly arevelation that the credit derivative market has exploded over the recent past yet, in many (if not most)cases, investors are blissfully&nb...

Selling A Bank Charter: June 10, 2008 - Volume 2 Issue 176 Print Report; Franchises, including bank charters and insurance charters, can be exceedinglyvaluable commodities. Ordinarily, however, the charter, alone, cannot be sold. Instead...

District Court Upends "SILOs": June 9, 2008 - Volume 2 Issue 175 Print Report; One of the most popular tax shelters of the recent past, the so-called "SILO",was dealt a stunning blow at the hands of the U.S. District Court for the No...

No "Doubtful Collectability" Exception for OID: June 8, 2008 - Volume 2 Issue 174 Print Report; Debt instruments which contain a "pay in kind" (PIK) feature are considered to have been issued with Original Issue Discount (OID). OID is defined, in Sec...

Donating Appreciated Property: June 7, 2008 - Volume 2 Issue 173 Print Report; One of the most widely-recommended tax planningstrategies isthe donation ofappreciated property to an organization to which tax deductible contributions...

Accounting for Financial Guarantee Insurance Contracts: June 6, 2008 - Volume 2 Issue 172 Print Report; In light of the recentturmoil surrounding the purveyors offinancial guarantee insurance, the Financial Accounting Standards Board (FASB) decided it was high&n...

SII and WHQ Are Cutting It Close: June 5, 2008 - Volume 2 Issue 170 Print Report; Smith International, Inc. (SII) and W-H Energy Services, Inc. (WHQ) recently announced a "strategic combination" that will be structured as a "forward"...

PG and SJM Team Up Again: June 5, 2008 - Volume 2 Issue 171 Print Report; For the second time in the past six years, theProcter & Gamble Company(PG) and theJ. M. Smucker Company (SJM) will be collaborating on a tax-efficie...

What If the Charity Promptly Sells Donated Stock?: June 4, 2008 - Volume 2 Issue 169 Print Report; "...A sale by one person cannot be transformed...into a sale by another (person) by using the latter as a mere conduit through which to pass title..." See...

MetLife and RGA To Part Company: June 3, 2008 - Volume 2 Issue 168 Print Report; MetLife, Inc. (M) presently owns 51.8 percent of the outstanding common stock of Reinsurance Group of America, Inc. (R). Some 3,000,000 shares of R were purchased by M in...

An ‘S’ Corporation’s “Built-In Gains”: June 3, 2008 - Volume 2 Issue 167 Print Report; An ‘S' corporation that was formerly a C corporation-for example Tribune Corp.-may be taxed on a particular variety of income know as "net recognized built-in...

I.R.S. Eliminates The Utility of “Killer ‘B’s”: June 2, 2008 - Volume 2 Issue 166 Print Report; One of the most difficult tasks a tax adviser is called upon to accomplish is the extraction of earnings from a U.S. corporation's foreign subsidiaries in a "tax-eff...

Clear Channel Communications--A "Public" LBO: June 1, 2008 - Volume 2 Issue 165 Print Report; Clear Channel Communications, Inc. (CCU) recently announced that the company, the sponsors of its long-running LBO, and the financiers of such LBO, had entered into a set...

Waiving Dividends: May 31, 2008 - Volume 2 Issue 164 Print Report; In some cases, a corporationis desirous of increasingits dividend payout but, in order to minimize the drain on the company's resources that such higher divid...

How Is A Foreclosure Taxed?: May 30, 2008 - Volume 2 Issue 163 Print Report; A taxpayer owns real property the acquisition of which was financed, largely, with debt. Assume that the mortgage secures a recourse obligation against the taxpa...

Contributions to Capital Do Not Constitute Gross Income: May 29, 2008 - Volume 2 Issue 162 Print Report; Virtually all "accessions to wealth" over which the taxpayer has "dominion and control" constitute gross income under Sec. 61 of the Internal Revenue...

UBS's Rights Offering--Part II: May 28, 2008 - Volume 2 Issue 161 Print Report; UBS's setbacks in the mortgage securities arena have caused it to visit the marketplace for the purpose of replenishing the capital its mortgage losses have eroded. Its l...

I.R.S. Weighs In On the Credit Crisis: May 27, 2008 - Volume 2 Issue 160 Print Report; The United States shareholders of a Controlled Foreign Corporation (CFC; a foreign corporation more than 50 percent of the voting power or value of the stock of which is...

"Instrument C"--The Verdict Is In: May 26, 2008 - Volume 2 Issue 159 Print Report; The Financial Accounting Standards Board (FASB) has finalized its "guidance" with respect to the accounting for a certain, immensely popular, variety of convert...

Allocating Earnings and Profits In a Spin-Off--Time For a Change?: May 25, 2008 - Volume 2 Issue 158 Print Report; In the case of a spin-off or split-off to which Sec. 355 applies, the Internal Revenue Code (see Sec. 312(h)(1))provides that "proper adjustment" with res...

I.R.S. Ignores Technical Violation of the Control Requirement: May 24, 2008 - Volume 2 Issue 157 Print Report; Where property is transferred by one or more persons to a corporation in exchange forthe latter'sstock, no gain or loss will be recognized by such transferors...

TWX Announces Details of Its Separation Plan: May 23, 2008 - Volume 2 Issue 155 Print Report; Time Warner, Inc. (TWX) and Time Warner Cable, Inc. (TWC) announced, on May 21, 2008, that their respective boards of directors have approved an agreement that will resul...

Calpine/NRG--Are the NOLs in Peril?: May 23, 2008 - Volume 2 Issue 156 Print Report; NRG Energy, Inc. (N) recently proposed a business combination with Calpine Corp. (C) in connection with which N would acquire each of C's outstanding shares in exchange f...

I.R.S. Endorses Most Types of Post-Reorganization Transfers: May 22, 2008 - Volume 2 Issue 154 Print Report; Where the assets or stock acquired in a potentialreorganizationaretransferred shortly after the