Third Circuit Upholds One Deduction Tax Court Ruling

By on June 30, 2017

In Duquesne Light Holdings, Inc. v. Commissioner, 3d Cir., No. 14-01743 (June 29, 2017), the US Court of Appeals for the Third Circuit upheld a Tax Court decision that disallowed a second deduction for the same economic loss claimed by a consolidated group with respect to stock of a member. The court concluded that the “loss duplication” regulations for member stock in effect at the time of the transaction were sufficiently clear to disallow the second deduction. Although the result is not surprising, the case is noteworthy because it extensively discusses the Ilfeld doctrine (double deductions cannot be claimed for the same economic loss in the absence of clear authorization under the language of the Code or regulations), and implies that the doctrine may be limited to consolidated return issues.

Michael J. Wilder
Michael J. Wilder focuses his practice on corporate and international tax issues. He has extensive experience in structuring corporate mergers and dispositions, spin-offs, liquidations, cross-border transfers and financing instruments, as well as in the areas of consolidated returns, bankruptcy and insolvency tax matters. Michael represents clients in seeking private letter rulings from the Internal Revenue Service (IRS) and in handling audit and appeals matters. Michael is the leader of McDermott’s Corporate Tax Practice. Read Michael Wilder's full bio.

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