Mark Allison Responds to Altria's Battle With the IRS
San Francisco Chronicle
Excerpt taken from article.
Altria Group Inc. says its battle with the Internal Revenue Service over tax deals with Oglethorpe Power Corp. and the Metropolitan Transit Authority in New York will result in a $630 million charge against its 2011 earnings.
These deals, stretching back to 1996, were set up to lower Altria's tax bill. The company would purchase an ownership stake in public utilities, lease the assets back to the utility and claim millions of dollars in deductions -- without operational control changing hands. If the court rules against it, Altria could end up owing the IRS about $2 billion for deductions claimed from 1996 to 2011.
Mark Allison, an attorney at Caplin & Drysdale in New York, said companies like Altria have a tough time arguing that such transactions aren't tax shelters because they involve companies that operate far outside their core businesses. He noted the one case that the IRS has lost focused on a deal Consolidated Edison Inc., a power company, made with another utility company.
"It strengthened" Consolidated Edison's "argument that they did the transaction to increase the diversification of their assets," Allison said. "That's different than a company doing one of these transactions on a hard asset where they don't have the experience and skill set." Click here to read the full article.