Unfortunately U.S. top court rejects challenge to IRS denying foreign tax credits

The U.S. Supreme Court on Monday rejected bids by three companies to recoup hundreds of millions of dollars in foreign tax credits denied by the Internal Revenue Service as the tax agency tries to curb corporate abuse of such credits.

Unfortunately U.S. top court rejects challenge to IRS denying foreign tax credits ?m=02&d=20160307&t=2&i=1122997071&w=644&fh=&fw=&ll=&pl=&sq=&r=LYNXNPEC260TQ

Unfortunately U.S. top court rejects challenge to IRS denying foreign tax credits ?m=02&d=20160307&t=2&i=1122997071&w=644&fh=&fw=&ll=&pl=&sq=&r=LYNXNPEC260TQ

The high court left in place lower court rulings in favor of the U.S. government in cases involving American International Group Inc, Bank of New York Mellon Corp and BB&T Corp.

Foreign tax credits are intended to avoid having companies that conduct business abroad face double taxation. U.S. companies, which are taxed on their worldwide income, are permitted to claim a credit for taxes paid to foreign governments.

The IRS has called foreign tax credit abuse among its top compliance concerns for big companies. The concern centers on whether certain transactions made by companies had an actual legitimate business purpose or were orchestrated simply to reap improper tax credits.

Insurer AIG had sought $48.2 million in credits for 1997, following several cross-border transactions in which it borrowed $1.6 billion and reinvested it at higher rates, ostensibly to make a profit, according to court papers.

In a September 2015 ruling in the AIG and New York Mellon cases, the 2nd U.S. Circuit Court of Appeals said AIG's calculation of $168.8 million of pre-tax profit over the life of the transactions did not take into account various taxes paid and tax credits claimed. The appeals court also said a reasonable fact-finder could conclude that the transactions accomplished little.

Meanwhile, court papers showed that Bank of New York Mellon had sought $200 million of credits for 2001 and 2002 tied to a Barclays Plc product known as STARS, or "structured trust advantaged repackaged securities," in which it obtained a low-rate $1.5 billion loan whose proceeds it reinvested at higher rates.

http://www.reuters.com/article/us-usa-court-taxes-idUSKCN0W91MB

Unfortunately U.S. top court rejects challenge to IRS denying foreign tax credits

Unfortunately U.S. top court rejects challenge to IRS denying foreign tax credits

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