BANK OF NEW YORK MELLON CORP, Petitioner v. COMMISSIONER of INTERNAL REVENUE, Respondent

140 T.C. 15

United States Tax Court.

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No. 26683–09.

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Feb. 11, 2013.

Synopsis

Background: Corporate taxpayer petitioned for redetermination of income tax deficiency arising from disregard of taxpayer’s engagement, with its subsidiaries as an affiliated group, in a Structured Trust Advantaged Repackaged Securities (STARS) transaction, as well as disallowance of corresponding foreign tax credits and expense deductions.

Holdings: The Tax Court, Kroupa, J., held that, in a matter of first impression:

[1] STARS transaction was proper focus of economic substance inquiry;

[2] transaction lacked objective economic substance;

[3] transaction lacked subjective economic substance […]