A federal court in Texas has rejected a tax shelter once sold by KPMG, in a significant win that continues to lay the legal foundation for the government’s case against 16 former employees of the accounting firm and two outside advisors.
Last week’s decision is the first civil ruling on the legitimacy of the Blips tax shelter -- which stands for a bond-linked issue premium structure. The judge in the case found that Blips was not a real investment; that its loans were fake and that it had no economic substance or genuine business purpose. That language echoes the Internal Revenue Service’s definitions of a bogus tax shelter. Similar arguments have been made in New York, by prosecutors pursuing both Deutsche Bank and the KPMG defendents.
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