Federal Claims Declines to Follow Tax Court Reasoning in BB&T Motion

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The U.S. Court of Federal Claims ruled that BB&T Corp. wasn't entitled to interest deductions on the loan component of a tax avoidance transaction, because the loan was necessary to the transaction and wasn't entered into with a reasonable possibility of making a profit (Salem Fin., Inc. v. United States, Fed. Cl., No. 1:10-cv-00192, 1/7/14).
The Jan. 7 ruling by Judge Thomas C. Wheeler was in response to BB&T's motion for reconsideration following the U.S. Tax Court decision in Bank of N.Y. Mellon Corp. v. Commissioner that the Bank of New York could deduct interest on its loan in a structured trust advantaged repackaged securities (STARS) transaction (185 DTR K-2, 9/24/13).
Wheeler previously held in a Sept. 20, 2012, decision that BB&T Corp. wasn't entitled to $659 million in deductions and credits generated by its participation in a STARS transaction, because the primary components of the transaction lacked economic substance (184 DTR K-2, 9/23/13).

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