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Abstract: 

In a recent Chief Counsel Memorandum, the IRS employed a detailed analysis and several judicial doctrines (including the step-transaction and substance-over-form doctrines) to disallow a taxpayer’s attempt to deduct 100 percent of the dividends it received from a regulated investment company after purposefully routing those investments abroad via a controlled foreign corporation. The memorandum is noteworthy in that it demonstrates the Service’s position regarding highly structured transactions undertaken with a principal purpose of generating a dividends-received deduction—a position at odds with numerous earlier private letter rulings.

Keywords: CCA 201320014; substance-over-form doctrine; step-transaction doctrine; dividends-received deduction; controlled foreign corporation; regulated investment company

Affiliations:  1: Bilzin Sumberg; 2: Bilzin Sumberg.