Omaha, Neb. (August 15, 2002) -- Berkshire Hathaway has sued the Internal Revenue Service over alleged errors made in denying $16.3 million in tax deductions.The lawsuit alleges the IRS made an "erroneous, wrongful and illegal" interpretation of the Tax Code, according to the Associated Press.
The deductions were denied because borrowed money was traced to purchases of stocks in a number of companies. A Tax Code provision reduces deductions if borrowed money is directly attributable to a dividend-paying investment.
Berkshire said the borrowed money was placed in a bank account containing funds from many sources, and that it was interchangeable with those funds and was used for thousands of transactions during those years. The account was used to provide Berkshire's chairman, Warren Buffet, with flexibility to make investments or acquisitions at any time, according to the lawsuit.
-- Electronic Accountant Newswire staff
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