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Capitalization Issues in Mergers & Acquisitions (Santa Fe v. Comm.)

November 2009

Arnie Sidman spoke to the Houston and Tulsa TEI Chapters in November about the Santa Fe Pacific Gold Co. etal. v. Commissioner decision, which is being viewed as a national corporate tax precedent with implications likely to last for decades.  The opinion will impact nearly all corporate tax audits and will become a blueprint for analyzing and diffusing the most frequent IRS argument:  are termination fees in hostile takeovers deductible or can they be capitalized?  The Santa Fe case presents the most rational and significant setback for INDOPCO, Inc. v. Commissioner, 503 U.S. 79 (1992), the most frequent argument raised by the IRS in corporate audits.