Eversheds Sutherland 11th Circuit Business Blog
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Reinvestment of Tax Shelter Proceeds Is Not a Valid “Business Purpose”

The Eleventh Circuit last week decided a tax case exploring the appropriate scope of factual review for the economic substance and business purpose doctrines. Curtis Investment Co. v. Commissioner, 2018 WL 6380325 (11th Cir. Dec. 6, 2018). These two doctrines allow courts and the IRS to make a substance-over-form review of suspected tax avoidance activities. In order to claim a tax...

Forfeited Deposit Not Capital Gain in Real Estate Deal

In a case of first impression, the Eleventh Circuit affirmed that a taxpayer could not treat as long-term capital gain its retention of a nonrefundable deposit after a would-be buyer defaulted on an agreement to purchase real property used in the taxpayer’s trade or business. CRI-Leslie, LLC v. Comm’r, 882 F.3d 1026 (11th Cir. 2018). Under the facts of the case, the taxpayer,...

YOU CAN’T HAVE YOUR CAKE AND EAT IT TOO: “MIDCO” TRANSACTION EXPOSES SELLERS TO TRANSFEREE LIABILITY

Consider the following situation: You’re a major stockholder in a corporation whose assets have appreciated in value, and you want to sell.  You would really like to structure the deal as a sale of stock in order to avoid capital gains tax on the corporation’s appreciated assets.  When you contact potential buyers, you find that they all want to structure the purchase as an...

The Eleventh Circuit Delves into the “Murky” Waters Surrounding the U.S. Virgin Islands

For many years, the IRS has been aggressively auditing taxpayers who have filed income tax returns with the U.S. Virgin Islands (USVI) Bureau of Internal Revenue (VIBIR), claiming a 90% tax credit under the USVI Economic Development Program (EDP).  The IRS has long believed that individuals are falsely claiming to be “bona fide” USVI residents to obtain the tax credit, and the IRS...