Daily Tax Update - May 14, 2015: Federal Circuit Rules Portion of STARS Transaction Lacked Economic Substance

Federal Circuit Rules Portion of STARS Transaction Lacked Economic Substance:  In Salem Fin., Inc. v. United States, Fed. Cir., No. 14-05027, the U.S. Court of Appeals for the Federal Circuit upheld the Court of Federal Claims in determining that the trust component of the STARS transaction lacked economic substance thereby prohibiting the claim for foreign tax credits.  However, the court reversed the trial court and held that the loan portion of the transaction had economic substance, thus allowing for interest deductions for the interest paid on the loan.  The court also upheld the imposition of accuracy-related penalties, but remanded for a redetermination of the amount of penalties.

OECD Releases Comments on BEPS Draft on Improving the Analysis of BEPS:  The OECD released public comments on the discussion draft for the BEPS plan relating to improving the analysis of BEPS.  The discussion draft, originally released on April 16, provides an initial assessment of the available data, questions about the data needed for analysis of BEPS and BEPS countermeasures, and an overview of the available economic analyses for the scale and impact of BEPS and BEPS countermeasures.