2nd Circ. Sides With IRS In GE Tax Shelter Case

Law360, New York (January 24, 2012, 9:19 PM EST) -- The Second Circuit on Tuesday ruled that the Internal Revenue Service could penalize a General Electric Capital Corp. unit for underpaying its taxes by allocating virtually all of its taxable income to two tax-exempt Dutch foreign banks.

In an opinion reversing a Connecticut federal court's ruling for the second time, the Second Circuit said GECC unit TIFD III-E Inc.'s Dutch bank partners ING Bank NV and Rabo Merchant Bank NV did not qualify as capital partners under IRS code.

The banks' interest was “overwhelmingly in the...
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