Bank of New York Tax Litigation

On February 11, 2013 United States Tax Court Judge Diane L. Kroupa issued a tax court opinion in favor of Respondent (our client) in Bank of New York Mellon Corporation, as Successor in Interest to The Bank of New York Company, Inc., Petitioner v. Commissioner of Internal Revenue, Respondent. Petitioner had sought approximately $199 million in foreign tax credits in connection with a Structured Trust Advantage Repackaged Securities (‘STARS”) transaction for the combined years at issue (and approximately $700 million in other years). The Court held that petitioner is not entitled to the claimed foreign tax credits because the STARS transaction lacked economic substance. The Court also held that that petitioner is not entitled to deduct certain expenses incurred in furtherance of the STARS transaction for the same reason. David J. Ross of Compass Lexecon provided expert testimony on behalf of respondent concerning the economic effects of the STARS transaction. The respondent was represented by Jill A. Frisch, Curt M. Rubin, Anne O. Hintermeister, Matthew J. Avon, Justin L. Campolieta, and Michal A. Sienkiewicz. Mr. Ross was assisted by Kevin D. Hartt.