WSJ: AIG Uses Bailout Funds to Sue IRS for $329m Tax Refund

Wall Street Journal: AIG's Tax Dispute With U.S. Has Twist of Irony, by Jesse Drucker:

American International Group Inc. is in a battle with the Internal Revenue Service over $329 million in back taxes and penalties in part stemming from the company's use of a type of transaction the IRS has called "abusive," securities filings show.

The tax dispute puts AIG -- recipient of a $150 billion federal bailout -- in the peculiar position of effectively using government funding to fight the U.S. government.

The clash dates from before the bailout: The company disclosed in a securities filing this week that it filed a "claim for refund" with the IRS. The dispute was first disclosed in May. ...

The company says the IRS is asserting $329 million in back taxes and penalties, a portion of which related to "the disallowance of foreign tax credits associated with cross-border financing transactions."