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Foreign Tax Credit; I.R.C. § 7701(o); Economic Substance Doctrine; Structuring; Foreign Tax Credit Regime; Tax Abuse; Circuit Split; Bank of New York Mellon Corp. v. Commissioner
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Full-Text Articles in Law
Putting The Substance Back Into The Economic Substance Doctrine, Nicholas Giordano
Putting The Substance Back Into The Economic Substance Doctrine, Nicholas Giordano
Brooklyn Journal of Corporate, Financial & Commercial Law
The foreign tax credit, which saves U.S. taxpayers from paying both foreign and domestic income taxes on the same income, is critical to facilitating global commerce. However, as savvy taxpayers discover increasingly complicated ways to abuse the foreign tax credit regime through the structuring of business transactions, courts have become increasingly skeptical of the validity of those transactions. Using the economic substance doctrine, a common law doctrine codified in 2010 at I.R.C. § 7701(o), courts will disallow tax benefits stemming from a transaction that is not profitable absent its tax benefits, and which the taxpayer had no incentive to undertake …