Transactions challenged as abusive tax shelters are typically complex, opaque, and multi-faceted. They frequently incorporate elements such as special purpose entities, cross-border transactions, asset transfers, financing structures, recapitalizations, and options or other derivatives. Over the last ten years, our experts have dissected transactions involving more than a billion dollars of additional tax liabilities. We have played a key role in several precedent-setting cases brought by the Department of Justice, Tax Division. These cases have challenged business purpose, pre-tax profit potential, step transactions, and reasonable intent for the purpose of assessing penalties. Justifications offered have included risk management, hedging, advantageous financing, regulatory compliance and oversight, as well as various industry-specific considerations. We field a team of experts including top-tier academics with the credentials to fit each individual case.
Substantive analysis required to evaluate these transactions is undeniably complex, but that is just the first hurdle. Once the transaction mechanics and their economic ramifications are understood, the challenge remains to explain all of this so that it can best be understood by a judge or jury. Our testifiers are expert not just in their particular domains—finance, accounting, economics, risk management and insurance—but also in the art of communication. We assist them with intuitive graphics that illuminate and reinforce their testimony. Where permitted by the Court, we also develop animated tutorials to explain these exceptionally complicated transactions.