U.S. Supreme Court rejects Dow over $1 billion tax deduction claim | Reuters

By Lawrence Hurley

WASHINGTON The U.S. Supreme Court on Monday declined to hear Dow Chemical Co's bid to revive its claim to more than $1 billion in tax deductions based on partnerships the company entered into that lower courts said were created primarily to avoid tax liability and had no legitimate business purpose.The justices left in place two rulings by the New Orleans-based 5th U.S. Circuit Court of Appeals in favor of the U.S. government over the two partnerships that ran from 1993 to 2003.The lower courts agreed with the Internal Revenue Service that Dow did not deserve the tax benefits, and also imposed a 20 percent penalty for negligence and substantial understatement of taxes.

The case involved the partnerships Chemtech I and Chemtech II, which ran respectively from 1993 to 1997, and 1998 to 2003.

Chemtech I was a type of tax shelter marketed by Goldman Sachs Group Inc to large companies under the name SLIPs, which stood for Special Limited Investment Partnerships, while Chemtech II was created by the King & Spalding law firm. The law firm helped implement both.The appeals court said in its first 2014 ruling that Chemtech I allowed deductions for royalty costs tied to the use of 73 Dow patents, while Chemtech II allowed deductions tied to the depreciation of a $715 million chemical plant that had a tax basis of just $18.5 million. In a subsequent 2016 decision, the appeals court upheld penalties imposed by the district court.

(Reporting by Lawrence Hurley; Additional reporting by Jonathan Stempel; Editing by Will Dunham)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date: Jan 10, 2017 00:45 AM

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