Givner & Kaye Submit Amicus Brief for Supreme Court Case On Economic Substance Doctrine – Los Angeles Income Tax Planning & Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on March 31, 2014

A wholly owned subsidiary of Wells Fargo Co., WFC Holdings Corp, filed a petition of certiorari with the US Supreme Court on April 26, seeking a review of an appeals court decision that affirmed the disallowance of a $423 million capital loss on the basis that the underlying transaction lacked economic substance even though the transaction generated a substantial profit.

At the heart of this matter is a disagreement over what is generally referred to as the economic substance doctrine. Simply put, this doctrine holds that a taxpayer may arrange its transactions in the most tax advantaged manner as long as those transactions have a business purpose other than tax avoidance. The petition from WFC Holdings Corp. challenges a decision from the Eighth Circuit Court of Appeals regarding a transaction in which Wells Fargo Bank N.A. undertook a series of steps to transfer non-banking real estate interests to another entity in a manner that generated tax losses when a direct transfer wouldn’t have.

In its petition, WFC pointed out the ongoing confusion regarding the economic substance doctrine. “The Eight Circuit’s novel rule deepens the growing conflict among the federal circuits over whether a transaction that objectively changes a taxpayer’s economic position can nevertheless lack economic substance.”

According to Lawrence M. Hill, a partner at Shearman & Sterling LLP in New York, the case “presents the Supreme Court with yet another opportunity to resolve conflicts in the Circuit Courts of Appeals as well as taxpayer confusion over the proper interpretation and application of the nebulous, judge-made, economic substance doctrine.”

Givner & Kaye, in its amicus brief, asks the court to take up the WFC matter because clarifying the economic substance doctrine is also important to closely held businesses, including in estate tax planning.

Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.

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