Compaq Computer Corp. v. Commissioner
United States Tax Court
In a prearranged transaction designed to eliminate typical market risks, P purchased and immediately resold American Depository Receipts (ADR's) of a foreign corporation on the floor of the NYSE.
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In a prearranged transaction designed to eliminate typical market risks, P purchased and immediately resold American Depository Receipts (ADR's) of a foreign corporation on the floor of the NYSE. As a result of the transaction, P was the shareholder of record of 10 million ADR's on the dividend record date and received a dividend of $ 22,545,800 less withheld foreign taxes of $ 3,381,870. P also recognized a $ 20,652,816 capital loss on the sale of the ADR's, which was offset against previously realized capital gains. The net cash-flow from the transaction, without regard to tax consequences,…
1Opinion of the Court
Cohen, Chief Judge:
The issues addressed in this opinion are whether petitioner’s purchase and resale of American Depository Receipts (ADR’s) in 1992 lacked economic substance and whether petitioner is liable for an accuracy-related penalty pursuant to section 6662(a). (In a separate opinion, Compaq Computer Corp. & Subs. v. Commissioner, T.C. Memo. 1999-220, we held that income relating to printed circuit assemblies should not be reallocated under section 482 to petitioner from its Singapore subsidiary for its 1991 and 1992 fiscal years. Petitioner has also filed a motion for summary judgment…
2Cases cited21 opinions
- Freytag v. CommissionerSupreme Court of the United States · 1991
- Frank Lyon Co. v. United StatesSupreme Court of the United States · 1978
- Carlos and Jacqueline Marcello v. Commissioner of Internal Revenue, Joseph, Jr. And Anastasia Marcello v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1967
- Freytag v. CommissionerUnited States Tax Court · 1987
- Marcello v. CommissionerUnited States Tax Court · 1964
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3Cited by32 opinions
- Compaq Computer Corporation & Subsidiaries v. CommissionerCourt of Appeals for the Fifth Circuit · 2001
- Alliant Energy Corp v. United StatesCourt of Appeals for the Eighth Circuit · 2001
- Gerdau MacSteel, Inc. & Affiliated Subsidiaries v. CommissionerUnited States Tax Court · 2012
- Bank of New York Mellon Corp. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 2015
- Salem Financial, Inc. Ex Rel. Branch Investments LLC v. United StatesCourt of Appeals for the Federal Circuit · 2015
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