BDO Distressed Debt Investment Was Tax Shelter, Tax Court Says

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The U.S. Tax Court ruled the Internal Revenue Service properly disallowed multimillion dollar deductions claimed by companies created as part of a tax shelter scheme because the transactions giving rise to the claimed losses were disguised sales and lacked economic substance (Buyuk LLC v. Commissioner, T.C., No. 11051-10, T.C. Memo. 2013-253, 11/6/13).
Judge David Laro agreed Nov. 6 with the IRS's position that losses claimed by limited liability companies created as part of a “tax solution” product sold by BDO Seidman LLP and Gramercy Advisors LLC were tax shelters that “lacked any bona fide profit objective.”

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