Tax Blog

Two weeks ago, the Fifth Circuit summarily rejected a taxpayer request for an en banc rehearing in Southgate Master Fund LLC v. United States.  The appellate court had previously concluded that the taxpayer was not entitled to a claimed capital loss from a transaction involving the acquisition of distressed debt via a partnership because the partnership was a “sham” that should be disregarded for federal tax purposes.  The taxpayer's petition for rehearing, along with two amicus briefs, raised the specter that the Fifth Circuit's opinion would require taxpayers to have a non-tax ...