Hewlett-Packard lost out to the Internal Revenue Service in a case involving over $190 million in tax refunds that HP has claimed from a foreign tax credit generator.

The case involved a sophisticated tax strategy designed by AIG Financial Products in 1996 and funded by the Netherlands-based bank ABN-Amro, according to Reuters. AIG created an entity called Foppingadreef in the Netherlands in which HP invested. The Palo Alto, Calif.-based computer maker claimed capital loss deductions and over $178 million in indirect tax foreign tax credits as a result of the investment and sued the IRS for nearly $200 million in tax refunds in 2009.

But Judge Joseph Goeke ruled Monday that HP was not entitled to more than $15.5 million in capital losses after it sold back its shares in Foppingadreef in 2004 to ABN-Amro.

“We hold that petitioner’s investment in FOP is more appropriately characterized as debt for federal income tax purposes and that petitioner is not entitled to deduct a capital loss for the sale of his interest in FOP,” he wrote.


Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access