In Uncategorized on 07/02/2018 at 16:30

Or, No Love for Chenery

It’s the end of the Custom Adjustable Rate Debt Structure (CARDS), which I’ve blogged extensively over the years. Judge Nega cites all the cases I’ve blogged and more.

See my blogposts “House of CARDS,” 3/8/11, “Not in the CARDS,” 12/6/16; and “CARDS? It’s For the Birds,” 8/2/17.

At the end of the day, there’s neither economic substance nor a non-tax business purpose to this marriage of offshore debt to onshore gain. But neither was there in any of the other CARDS cases.

The only reason I blog this case is that the protagonists are the founders of the CARDS deal, and the original principals of Chenery Associates, Inc., Roy E. Hahn and Linda G. Montgomery, 2018 T. C. Memo. 100, filed 7/2/18.

You can read for yourselves the wheeling and dealing, but it’s of a piece with those I’ve heretofore dissected. I’ll only close the books with Judge Nega’s envoi: “On the record before us, we find that petitioners’ CARDS transaction did not have any practical economic effects beyond the creation of tax benefits and therefore lacks economic substance.  On that record, we further find that the loss deductions arising from the CARDS transaction are disallowed.” 2018 T. C. Memo. 100, at p. 24.

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