Saturday, October 29, 2005
Micah A. Levy (Senior Attorney, Office of Chief Counsel, Treasury Department) has published The Limited and the Congressional Response: How Well Did Congress Do?, 109 Tax Notes 483 (Oct. 24, 2005), also available on the Tax Analysts web site as Doc 2005-20665, 2005 TNT 205-37. Here is the abstract:
This article examines the issues litigated in The Limited v. Commissioner, 286 F.3d 324 (6th Cir. 2002), a high-profile case in which the Sixth Circuit (reversing the Tax Court in no uncertain terms) allowed the taxpayer to avoid immediate taxation on $175 million of untaxed foreign income that it had repatriated through a series of related transactions among its various foreign and domestic subsidiaries. That result hinged on the Sixth Circuit's taxpayer-friendly interpretation of a narrow exception to the general rule of taxation for repatriated foreign earnings. Congress, unhappy with the outcome, sought to remedy the perceived abuse by amending the exception as part of historic tax legislation enacted in late 2004. This article concludes that Congress's "fix," while perhaps not optimal, adequately solves the immediate problem prospectively. For disputes governed by preamendment law, the Tax Court should stick to its guns.