Eleventh Circuit to Address Scope of Danielson Rule

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April 1, 2013

With oral argument scheduled for April 18 in Peco Foods v. Commissioner, No. 12-12169, the Eleventh Circuit will soon decide a case that involves the scope of the Danielson rule.  That rule, established in Danielson v. Commissioner, 378 F.2d 771, 775 (3d Cir. 1967), provides that “a party can challenge the tax consequences of his agreement as construed by the Commissioner only by adducing proof which in an action between the parties to the agreement would be admissible to alter that construction or to show its unenforceability because of mistake, undue influence, fraud, duress, etc.”  The Eleventh Circuit … Read More

Government Decides Against Further Review in Washington Mutual

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June 2, 2011

As we previously reported, the Ninth Circuit in Washington Mutual reversed the district court and ruled that the taxpayer did have basis in regulatory rights that it received in connection with a transaction in which it took over failed thrifts during the savings-and-loan crisis of the 1980s.  The government has now allowed the periods for seeking rehearing and certiorari to expire without taking action.  The Ninth Circuit’s decision is therefore final, and the case will move on to further proceedings on remand in the district court to determine the amount of basis.… Read More

Briefing Under Way in Anschutz

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May 17, 2011

As we’ve reported in the last few months, several securities lending cases are percolating in the appellate courts (see here and here).  On April 29, 2011, Anschutz Company filed the opening brief in its appeal of the Tax Court’s decision for the government (opinion and brief linked below).

At issue in Anschutz is the appropriate tax treatment of a set of transactions between the taxpayer and Donaldson, Lufkin & Jenrette Securities Corp. (“DLJ”).  The taxpayer sought to leverage long-held shares in publicly-traded railroad companies to obtain financing for other endeavors.  In the taxpayer’s hands, the shares had a low … Read More

The Ninth Circuit Rejects the Government’s Effort to Disregard “Economic Realities” in Washington Mutual

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April 8, 2011

[Note:  Miller & Chevalier is counsel to Washington Mutual in this case.]

In the past decade, the government has often defeated taxpayer claims that tax benefits flowed from certain transactions on the grounds that the economic substance of the transactions did not justify the tax benefits and that the taxpayer’s contrary arguments reflect a hypertechnical reading of the rules.  In Washington Mutual Inc. v. United States (9th Cir. No. 09-36109), the proverbial shoe was on the other foot.  A key element of the taxpayer’s business transaction was the receipt of regulatory rights in exchange for incurring the cost of relieving … Read More