September 20, 2011
The Ninth Circuit issued its opinion in Samueli v. Commissioner, Nos. 09-72457 and 09-72458, on September 15, 2011, largely affirming the Tax Court (opinion linked below, and see our prior coverage here). In upholding the decision in favor of the IRS, the Ninth Circuit added a couple of wrinkles to the Tax Court’s rationale in responding to the taxpayers’ arguments on appeal.
The court first dispensed with the taxpayers’ argument that, contrary to the Tax Court’s finding, the transactions at issue did not reduce the purported lenders’ opportunity for gain (a statutory element of I.R.C. § 1058 non-recognition). … Read More
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
March 21, 2011
A while ago we reported on a spate of IRS successes in cases involving purported securities loans (here). The Samueli case is fully briefed in the Ninth Circuit and is expected to be argued in the next couple of months. As we anticipated, two more of those cases, Anschutz and Calloway, have been appealed to the Tenth and Eleventh Circuits, respectively. The taxpayer in Calloway filed his opening brief on March 15, 2011 (linked below). Briefing has not yet begun in Anschutz.
In Calloway, the taxpayer was an IBM employee of many years who had … Read More
September 12, 2010
Lately, the IRS has had a successful run of attacking transactions involving purported securities loans. See Anschutz Co. v. Commissioner, 135 T.C. 5 (July 2010); Calloway v. Commissioner, 135 T.C. 3 (July 2010); Samueli v. Commisioner, 132 T.C. 4 (March 2009). Two of the cases, Samueli and Anschutz, involve the construction of I.R.C. section 1058, which provides for non-recognition treatment of a loan of securities that meets the following criteria: (1) the loan agreement provides for the return of securities identical to the securities transferred; (2) the agreement provides for payments to the transferor of amounts … Read More