Publication
Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
United States | Publication | August 2024
Case | Court | Primary Issue(s) | Status/Result | Lawyer(s) |
---|---|---|---|---|
Rowan Companies, LLC v. United States | Southern District of Texas | Whether IRS must pay refund approved by Joint Committee on Taxation | Pending |
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Ensco International Inc. v. United States | Southern District of Texas | Whether IRS must pay refund agreed to during IRS examination as part of Compliance Assurance Process | Pending | |
Suo Bin Chen and Yan Jiang v. Commissioner | Tax Court | Collection due process rights, underlying tax liability, and penalties | Pending | Robert C. Morris
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Polycom, LLC v. United States | Court of Federal Claims | Entitlement to alternative minimum tax refundable credit | Government. conceded | |
Diamond Offshore Drilling, Inc. v. United States | Southern District of Texas | Entitlement to foreign tax credit and statute of limitation issues | Settled | |
Roseta v. Commissioner | Tax Court | Whether the taxpayer received a taxable distribution | Government conceded | Robert C. Morris |
Noble Drilling Corporation v. United States |
Southern District of Texas | Entitlement to foreign tax credit for foreign taxes paid to Mexico and other foreign jurisdictions | Settled | |
HP Inc. v. United States | Court of Federal Claims | Overpayment interest | Government conceded | |
Delek US Holdings, Inc. v. United States of America 32 F. 4th 495 (6th Cir. 2022) |
Sixth Circuit Court of Appeals | Income tax treatment of Section 6426 alcohol and biodiesel mixture credits | Judgment affirmed | Robert C. Morris |
JSB Montana, Inc. v. Commissioner and 12 related cases | Tax Court | Whether IRS Appeals could consider consolidated or “test case” settlement of related Collection Due Process cases | Pending | |
Delek US Holdings, Inc. v. United States of America 127 AFTR 2d 2021-641 (M.D. Tenn. 2021) |
Middle District of Tennessee | Income tax treatment of Section 6426 alcohol and biodiesel mixture credits | Judgment for government | Robert C. Morris |
Lorance & Thompson, A Professional Corporation v. Commissioner | Tax Court | Excise taxes and failure-to-file and failure-to-pay penalties with respect to a terminated defined benefit pension plan | Government conceded two of three years; settled third year | |
Baker Hughes Incorporated v. United States of America 943 F.3d 255 (5th Cir. 2019) |
Fifth Circuit Court of Appeals | Whether payment to a foreign subsidiary qualifies for either a bad debt deduction or ordinary and necessary business expense | Judgment affirmed | |
United States v. Rao Desu | District of New Jersey | Conspiracy of tax evasion for cash skim from two independently owned pharmacies. | Judgment for government | Mayling C. Blanco |
The Diversified Group Incorporated, et al. v. Commissioner | Tax Court | In Collection Due Process cases, whether taxpayers may dispute liability for penalties under pre-2004 section 6707; penalty approval under section 6751(b) | Pending | |
Estate of Abraham Damast, Deceased, Gary Damast, Adrienne D. Wilson, Executors and Donald A. Damast, Administrator CTA v. Commissioner | Tax Court | Estate and gift taxes in connection with sale of receivables from split dollar life insurance transactions; accuracy-related penalties | Settled | |
Jacques E. Bouchez and Cristina C. Bouchez v. United States | Southern District of Texas | Whether revisions to ending inventory and cost of goods sold were an unauthorized accounting method change | Government conceded legal issue; settled calculation issues | |
Individual who was the co-owner of a pharmacy and was the target of a federal criminal tax grand jury investigation | U.S. Attorney’s Office for the District of New Jersey | Tax evasion resulting from multi-year cash skim from pharmacy business | Declination of charges | Mayling C. Blanco |
Nickowski v. Commissioner | Tax Court | Whether amounts received by the taxpayer were taxable as divided income | Settled | |
1 Your Front Desk Service, Inc. v. Commissioner | Tax Court | Whether the IRS could increase the amount of sales reported by the company, plus miscellaneous other issues | Settled | |
The Diversified Group Incorporated and James Haber v. United States 841 F.3d 975 (Fed. Cir. 2016) |
Federal Circuit Court of Appeals | Whether pre-2004 section 6707 penalties are divisible taxes and thus subject to Court of Federal Claims’ jurisdiction | Judgment affirmed | |
James Haber v. United States 823 F.3d 746 (2d Cir. 2016) |
Second Circuit Court of Appeals | Validity of IRS summons issued while a Justice Department referral was in effect; whether summons was in aid of collection | Judgment affirmed | |
BRC Operating Company v. Commissioner of Internal Revenue | Tax Court | Validity of Treasury Regulations extending the economic performance requirement to cost of goods sold; accuracy-related penalties and penalty approval under section 6751(b); whether taxpayer may claim deduction for accrued expenditures | Trial pending on deduction issues; IRS conceded penalty issue as part of settlement | |
Bluescape Resources Company v. Commissioner of Internal Revenue | Tax Court | (1) Validity of Treasury Regulations extending the economic performance requirement to cost of goods sold, (2) worthlessness deductions for leases; (3) availability of mark-to-market method of accounting; (4) accuracy-related penalties, (5) penalty approval under section 6751(b); and (6) whether taxpayer may claim deduction for accrued expenditures | Trial pending on deduction issues; settled worthlessness, mark-to-market, and penalty issues | |
Baker Hughes Incorporated v. United States of America 121 AFTR 2d 2018-2113 (S.D. Tex. 2018) |
Southern District of Texas | Whether payment to a foreign subsidiary qualifies for either a bad debt deduction or ordinary and necessary business expense | Judgment for government | |
ADAMS Challenge (UK) Limited v. Commissioner of Internal Revenue 154 T.C. No. 3 (2020) |
Tax Court | Whether a foreign company (1) has income connected with a U.S. trade or business or permanent establishment, and (2) is entitled to deductions and credits under a Tax Treaty; validity of Treasury Regulations requiring foreign corporations to file a tax return by a date certain to claim deductions | Judgment for government | Robert C. Morris |
Barbara B. Allbritton, Individually and as Co-Executor of the Estate of Joe L. Allbritton, Deceased v. United States of America | Southern District of Texas | Constructive property distributions of artwork and antiques from a closely-held corporation; rental value for use of corporate properties. | Settled | |
Citizen of Panama who was the owner of an international cattle transport business and was the target of a federal criminal tax and money laundering grand jury investigation | U.S. Attorney’s Office for the Southern District of Florida | International money laundering scheme and filing false corporate and individual returns relating to receipt of funds | Declination of charges | Mayling C. Blanco |
Anthony W. Wang & Lulu C. Wang v. Commissioner | Tax Court | Whether sales of automobiles were subject to collectible capital gains rate | Government conceded | |
Bruce L. Downey & Deborah H. Downey v. Commissioner | Tax Court | Valuation of LLC interests which were sold to trusts for purposes of determining gift tax liability and/or accuracy-related penalties | Settled | |
Perpetual Corporation, Inc. v. United States of America | Southern District of Texas | Gain from the purported distribution of artwork to a shareholder, and/or the expiration of the statute of limitations for assessment | Government conceded | |
Humboldt Shelby Holding Corporation and Subsidiaries v. Commissioner 606 F. App’x 20 (2d Cir. 2015) |
Second Circuit Court of Appeals | Correct legal standard in analyzing the economic substance doctrine | Judgment affirmed |
Jasper G. Taylor III Richard L. Hunn |
James Haber v. United States 115 A.F.T.R. 2d 2015-2221 (S.D.N.Y. 2015) |
Southern District of New York | Validity of IRS summons issued while a Justice Department referral was in effect; whether summons was in aid of collection | Judgment for government; taxpayer appealed | |
ADAMS Offshore Services, Ltd. v. Commissioner of Internal Revenue | Tax Court | Whether a foreign company (1) has income connected with a U.S. trade or business or permanent establishment, and; (2) timely filed its Tax Court petition outside of the general 150-day filing period | Judgment for taxpayer on timely filing issue; Government conceded the U.S. trade or business / permanent establishment issues | Robert C. Morris |
Kathy S. Hodge v. Commissioner of Internal Revenue | Tax Court | Economic development credits, residency issues, and/or penalties | Settled residency issue; government conceded penalty issue as part of settlement | Robert C. Morris |
Jim C. Hodge v. Commissioner of Internal Revenue | Tax Court | Economic development credits, residency issues, and/or penalties | Settled residency issue; government conceded penalty issue as part of settlement | Robert C. Morris |
Steven A. Carr v. Commissioner | Tax Court | Taxability of disbursements received in connection with estate administration | Government conceded | |
The Diversified Group Incorporated and James Haber v. United States 123 Fed. Cl. 442 (2015) |
Court of Federal Claims | Whether pre-2004 section 6707 penalties are divisible taxes and thus subject to Court of Federal Claims’ jurisdiction | Judgment for government; case appealed | |
Robert L. Allbritton and Elena H. Allbritton v. Commissioner of Internal Revenue | Tax Court | Fair rental value of property | Settled | |
Benjamin and Sharon Soleimani v. Commissioner | Tax Court | Appropriateness of tax losses due arising from the expropriation of property by Iranian government. | Pending | Mayling C. Blanco |
James Haber, Transferee v. Commissioner | Tax Court | Transferee liability and alter ego or agent | Settled | |
Gerdau Macsteel Inc. and Affiliated Subsidiaries v. Commissioner | Fifth Circuit Court of Appeals | Whether corporate restructuring transactions involving assumption of contingent liabilities resulted in capital losses; accuracy-related penalties | Settled |
Jasper G. Taylor III Richard L. Hunn |
Estate of Harold N. Carr, Deceased, Steven Addison Carr, Independent Executor, v. Commissioner of Internal Revenue | Tax Court | Valuation of oil and gas producing properties | Settled | Robert C. Morris |
Crescent Holdings LLC, Arthur W. & Joleen H. Fields, A Partner Other Than the Tax Matters Partner v. Commissioner 141 T.C. 477 (2013) |
Tax Court | Whether an individual should be treated as a partner for purposes of allocating partnership items (represented tax matters partner) | Split decision | |
MT Avenue Investor Partners, MJT Park Investors, Inc., Tax Matters Partner v. Commissioner et al. | Tax Court | Whether taxpayers are liable for accuracy-related penalties with respect to partnership transactions involving swaps and options | Settled | |
Merck & Co,. Inc. v. United States 652 F.3d 475 (3d Cir.2011) |
Third Circuit Court of Appeals | Whether (1) a transaction can be recharacterized as a loan under the economic substance doctrine, step-transaction doctrine, or substance over form doctrine, and (2) the IRS had impermissibly discriminated against a taxpayer by denying it equal treatment with another taxpayer | Judgment affirmed | |
YRC Regional Transportation Inc. and Subsidiaries f.k.a. USF Corporation & Subsidiaries v. Commissioner | Tax Court | Worthless stock or debt deduction with respect to stock of a subsidiary | Settled | |
United American Housing & Education Foundation v. United States of America | District of Columbia | Declaratory judgment action regarding whether IRS could retroactively revoke the tax-exempt status of an entity | Settled | Robert C. Morris |
Valero Energy Corp. v. United States 569 F.3d 626 (7th Cir. 2009) |
Seventh Circuit Court of Appeals | Tax shelter exception to section 7525 tax practitioner privilege | Judgment affirmed | |
Carol Whalen v. Commissioner | Fifth Circuit Court of Appeals | Whether IRS erred in failing to credit taxpayer with federal income tax withholding for amount that was remitted to IRS during tax year at issue | Settled | |
Eugene Campbell 2004 Revocable Trust, James H. Jasper, Trustee, Charles E. Campbell II Trust, James H. Jasper, Trustee, et al. v. Commissioner | Tax Court | Whether IRS erred in determining that upon the death of decedent direct skips occurred when assets were distributed, resulting in additional GST tax | Settled | |
Estate of Charles E. Campbell, Deceased, Judy Stark Campbell, Independent Executrix v. Commissioner | Tax Court | Valuation of interests in limited partnerships and limited liability companies | Settled | |
The Markell Company, Inc. v. Commissioner T.C. Memo. 2014-86 |
Tax Court | Whether option transactions, corporate transactions, and partnership transactions lacked economic substance; accuracy-related penalties | Judgment for government | |
Vance Finance and Holding Corporation and Subsidiaries v. Commissioner | Tax Court | Whether option transactions, corporate transactions, and partnership transactions lacked economic substance; accuracy-related penalties | Case dismissed on taxpayers’ motion | |
Valero Energy Corp. v. United States 2007 U.S. Dist. LEXIS 81526 (N.D. Ill. Aug. 23, 2007) 2008 U.S. Dist. LEXIS 105609 (N.D. Ill. Aug. 26, 2008) |
Northern District of Illinois | IRS summons; section 7525 tax practitioner privilege and tax shelter exception | Split decision | |
Shell Petroleum Inc. v. United States 2008 U.S. Dist. LEXIS 51180 (S.D. Tex. July 3, 2008) |
Southern District of Texas | Whether the IRS could deny losses on the grounds that a related transaction lacked a business purpose and economic substance | Judgment for taxpayer | |
HBS Investments, LLC, Humboldt Corporation, A Partner Other Than the Tax Matters Partner v. Commissioner | Tax Court | Validity of notice of final partnership administrative adjustment | Case dismissed for lack of jurisdiction on unopposed motion | |
Humboldt Shelby Holding Corporation and Subsidiaries v. Commissioner T.C. Memo. 2014-47 |
Tax Court | Whether option transactions and partnership transactions lacked economic substance; accuracy-related penalties | Judgment for government | |
Schering-Plough Corp. v. United States 2007 WL 4264542 (D. N.J. Dec. 3, 2007) 651 F. Supp. 2d 219 (D. N.J. 2009) |
District of New Jersey | Whether (1) a transaction can be recharacterized as a loan under the economic substance doctrine, step-transaction doctrine, or substance over form doctrine, and (2) the IRS had impermissibly discriminated against a taxpayer by denying it equal treatment with another taxpayer | Judgment for government | |
Ironbridge Corp. And Subsidiaries f.k.a. Pitt-Des Moines, Inc., et al. v. Commissioner | Tax Court | Whether option transactions, corporate transactions, and partnership transactions lacked economic substance; accuracy-related penalties | Case dismissed on taxpayers’ motion | |
Carol Whalen v. Commissioner T.C. Memo. 2009-37 |
Tax Court | Whether IRS erred in failing to credit taxpayer with federal income tax withholding for amount that was remitted to IRS during tax year at issue | Judgment for government; case settled on appeal | |
Iron Investments 2002 LLC, Ironbridge Corp., A Partner Other Than the Tax Matters Partner v. Commissioner | Tax Court | Validity of notice of final partnership administrative adjustment | Case dismissed for lack of jurisdiction on unopposed motion | |
MC Investments 2002 LLC, Markell Corporation, A Partner Other Than the Tax Matters Partner v. Commissioner | Tax Court | Validity of notice of final partnership administrative adjustment | Case dismissed for lack of jurisdiction on unopposed motion | |
VCO Investments LLC, Vance Finance and Holding Corp., A Partner Other Than the Tax Matters Partner v. Commissioner | Tax Court | Validity of notice of final partnership administrative adjustment | Case dismissed for lack of jurisdiction on unopposed motion | |
New Capital Fire, Inc. v. Commissioner | Tax Court | Whether corporate transactions failed to qualify as an F reorganization, resulting in step-up in basis for successor corporation | Pending | |
Estate of Judith J. Leftwich Calder, Deceased, Howard C. Calder, Personal Representative v. Commissioner | Tax Court | Estate tax marital deduction for qualified terminal interest property | Settled | |
John H. & Katherine E. Powers v. Commissioner | Tax Court | Disallowance of professional fees as related to transactions lacking economic substance, flow-through losses for lack of substantiation; accuracy-related penalties | Settled | |
Rebecca L. LeBlanc v. Commissioner | Tax Court | Disallowance of professional fees as related to transactions lacking economic substance; accuracy-related penalties | Settled | |
Lewis Nicholas Powers v. Commissioner | Tax Court | Disallowance of professional fees as related to transactions lacking economic substance; accuracy-related penalties | Settled | |
La Git 88 Trust, Kenneth A. Keeling, Trustee v. Commissioner | Tax Court | Disallowance of professional fees as related to transactions lacking economic substance; accuracy-related penalties | Settled | |
AFFCO Investments 2001, L.L.C., AFFCO L.L.C., Tax Matters Partner v. United States | Eastern District of Louisiana | Whether partnership and option transactions lacked economic substance; accuracy-related penalties | Settled | |
Starlike Properties, Inc. v. Commissioner | Tax Court | Whether option transactions lacked economic substance; accuracy-related penalties | Settled | |
Igor M. & Jeanne M. Olenicoff v. Commissioner | Tax Court | Whether taxpayers had unreported income; civil fraud penalties | Settled | |
HE Sargent, Inc. v. United States | Court of Federal Claims | Whether taxpayer owed employment taxes with respect to vehicle rental payments that it made to its employees for use of their vehicles | Settled | |
William B. & Anne H. Russell v. Commissioner | Tax Court | Valuation of shares of stock for gift tax purposes | Settled | |
Tiger Bay Limited Partnership, IPS Avon Park Corporation, A Partner Other Than the Tax Matters Partner v. Commissioner | Tax Court | Whether taxpayers’ sale of power purchase agreements constituted a termination, thus ineligible for capital gains treatment; whether consent to extend period of limitations was valid | Settled | |
United States v. Jayne Taylor | Ninth Circuit Court of Appeals | Whether IRS summonses were overbroad, vague, and petitions to enforce brought in bad faith | Settled | |
United States v. Jayne Taylor | Central District of California | Whether IRS summonses were overbroad, vague, and petitions to enforce brought in bad faith | Judgment for government; settled on appeal | |
Shell Petroleum, Inc. v. United States 319 F.3d 1334 (Fed. Cir. 2003) |
Federal Circuit Court of Appeals | Whether hydrocarbons constituted tar sands for purposes of tax credit for nonconventional fuels under section 29 | Judgment affirmed | Charles W. Hall |
Olen Residential Realty Corp., (f.k.a. The Olen Company) and Subsidiaries, et al. v. Commissioner | Tax Court | Disallowance of interest expense and treatment of bank deposits as income to taxpayers based on allegation that third party was foreign related party; accuracy-related penalties | Settled | |
Gerdau Macsteel Inc. and Affiliated Subsidiaries v. Commissioner 139 T.C. 67 (2012) |
Tax Court | Whether corporate restructuring transactions involving assumption of contingent liabilities resulted in capital losses; accuracy-related penalties | Judgment for government on tax issue, split decision on penalties; case settled on appeal | |
The Diversified Group Incorporated and Subsidiaries, et al. v. Commissioner | Tax Court | Whether equipment rental expenses from sale-leaseback transactions were deductible as business expenses; whether the transactions lacked economic substance | Settled | |
Browning-Ferris Industries, Inc. v. United States 233 F. Supp. 2d 1223 (D. Ariz. 2002) |
District of Arizona | Whether settlement converted investment tax credit into nonpartnership item | Judgment for taxpayer | Stephen A. Kuntz |
Riggs National Corp. v. Commissioner 295 F.3d 16 (D.C. Cir. 2002) |
District of Columbia Circuit Court of Appeals | Foreign tax credit for foreign withholding taxes related to Brazilian loans | Judgment for taxpayer | Charles W. Hall |
Prudential Overall Supply v. Commissioner T.C. Memo. 2002-103 |
Tax Court | Whether the IRS abused its discretion in imposing a change of accounting method requiring taxpayer to capitalize and depreciate industrial laundry items | Judgment for taxpayer | |
Succession of Helis v. United States 88 A.F.T.R. 2d 2001-5199 (Fed. Cl. 2001) 52 Fed. Cl. 745 (2002) 56 Fed. Cl. 544 (2003) |
Court of Federal Claims | Valuation of oil and gas partnership interest; administrative expense deductions for excess interest and executor and attorneys’ fees | Judgment for taxpayer on all issues except excess interest deduction | |
Estate of Ruth Baker, Deceased, Mary E. Knowles, f.k.a. Mary Elizabeth Baker, Co-Executrix and Cody Dutton, Co-Executor v. Commissioner | Tax Court | Discounts for interests in family limited partnership in estate tax case | Settled | |
Laborers’ International Union of North America v. Commissioner T.C. Memo. 2001-171 |
Tax Court | Unrelated business taxable income; statute of limitations | Judgment for taxpayer | |
Shell Petroleum, Inc. v. United States 50 Fed. Cl. 524 (2001) |
Court of Federal Claims | Whether hydrocarbons constituted tar sands for purposes of tax credit for nonconventional fuels under section 29 | Judgment for government | Charles W. Hall |
Estate of Hubbard v. Commissioner | Tax Court | Estate tax valuation of satellite television assets | Settled | Charles W. Hall |
Union Texas International Corp. v. Commissioner 110 T.C. 321 (1998) |
Tax Court | Windfall profits tax: whether taxpayer was independent producer for purposes of limitations on percentage depletion; net interest limitations on calculation of tax | Split decision | |
Shell Petroleum, Inc. v. United States 996 F. Supp. 361 (D. Del. 1997) |
District of Delaware | Whether hydrocarbons constituted tar sands for purposes of tax credit for nonconventional fuels under section 29 | Judgment for government | Charles W. Hall |
Coca-Cola Co. v. Commissioner 106 T.C. 1 (1996) |
Tax Court | Computation of combined taxable income for purposes of credit under section 936 for operations in a U.S. possession | Judgment for taxpayer | Charles W. Hall |
TRT Holdings, Inc. v. Commissioner | Tax Court | Whether transaction qualified as tax free reorganization | Settled |
Publication
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
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