In this issue:
- Swiss Bank Settlement Dilemma
- District Court Upholds STARS Transaction Ruling Payment Is Included in Pre-Tax Profit
- Court of Federal Claims Holds for Government in BB&T STARS Transaction
- Tax Court Allows Interest Deduction for Loan Connected with STARS Transaction
- Supreme Court Hears Oral Arguments in United States v. Woods
- Swiss Bank Frey Ceases
- Excerpt from: District Court Upholds STARS Transaction Ruling Payment Is Included in Pre-Tax Profit:
On October 17, 2013, Judge George A. O’Toole of the US District Court of Massachusetts issued an opinion holding that a structured trust advantaged repackaged securities (“STARS”) transaction entered into by Sovereign Bancorp, Inc. (now known as Santander Holdings USA, Inc.) (“Sovereign”) was not a sham, but rather had objective economic substance as a result of a payment Sovereign received from the counterparty which was included in Sovereign’s pre-tax profit. 3 The opinion was consistent with the remarks of the district court judge in a September 25, 2013 pretrial conference when ruling that Sovereign’s motion for partial summary judgment would be granted. The ruling marks a significant taxpayer victory in the so-called “foreign tax credit generator” cases.
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