U.S. Supreme Court

Case Status


Docket Number


Cert. Denied


Questions Presented

1. Whether, under OId Colony Trust v. Comrwissioner, 279 U.S. 716 (1929), a court evaluating the economic substance of a cross-border transaction should treat foreign taxes as a transaction expense that reduces the transaction's pre-tax profitability, as the Second and Federal Circuits have held, or as a tax, as the Fifth and Eighth Circuits have held.

2. Whether, under Old Colony Trust v. Commissioner, 279 U.S. 716 (1929), payments a taxpayer receives from an independent counterparty that reflect favorable tax consequences the counterparty expects from the transaction constitute income to be included in pre-tax profitability for purposes of assessing the transaction's economic substance, as the Fifth, Eighth, and Federal Circuits have held, or "tax effects" that must be disregarded, as the Second Circuit has held.

Case Updates

Cert. denied

March 07, 2016

U.S. Chamber urges Supreme Court to review use of economic substance doctrine to override foreign tax credits

December 03, 2015

In its brief, the U.S. Chamber and the Cato Institute urged the Supreme Court to review a Second Circuit decision that affirmed a tax court’s ruling that the “economic substance doctrine” allowed it to deny foreign tax credits claimed by taxpayers on certain international loan products called Structured Trust Advantaged Repackaged Securities (“STARS”).

The joint brief argues that the Second Circuit’s novel and expansive application of the doctrine exacerbates a circuit split and defeats the Foreign Tax Credit’s purpose of avoiding double taxation. The brief also explains that the decision undermines predictability of the tax code and imposes unwarranted costs on business and the economy.

Scott P. Martin of Gibson, Dunn & Crutcher LLP served as counsel for the amici.

Case Documents