« The curse of Karl | Home | Falling oil prices »

October 10, 2005

Taxing

The Senate Judiciary Committee might want to question Miers about this little gem (via TaxProf Blog and Tax Analysts):

While she was in charge during the late 1990s, Supreme Court nominee Harriet Miers’s law firm provided investors with questionable legal opinions for an abusive tax shelter, typically generating a $50,000 fee, according to a Senate report.
A February 2005 report from the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations (Doc 2005-2795, 2005 TNT 28-28) details the role of Miers’s firm, Dallas-based Locke, Liddell & Sapp, in transactions involving a tax shelter known as contingent deferred swap (CDS). The report says Locke, working in concert with accounting firm Ernst & Young, provided clients with a legal opinion assuring them that the transaction “should” be upheld in court if challenged by the IRS.
The report, however, describes widely diverging opinions from Locke’s opinion on the transaction, including some from lawyers within E&Y. In an e-mail to E&Y, one client’s lawyer denounced CDS as “a classic ‘sham’ tax shelter.”
“The transaction apparently has little, or any, economic significance outside the tremendous tax breaks promised to the investors and is apparently highly tax motivated, as opposed to being a bona fide transaction that people would invest in regardless of the tax breaks,” the lawyer wrote. The lawyer said the Locke opinion relied on dated and irrelevant case law and did not address the relevant facts of the transaction.

Posted by Stephen at 12:07 AM in Legal issues | Permalink | TrackBack (0)

Trackback Pings

TrackBack URL for this entry:
http://www.disinterestedparty.com/cgi-bin/mt/mt-t.cgi/564