The U.S. Tax Court has ruled against the tax shelters promoted by a Chicago attorney.

The Tax Court was the second court to rule against the tax shelters created by John Rogers, who was formerly a tax partner at the law firm Seyfarth Shaw LLP in Chicago, according to the TaxProf blog. The government refers to them as Distressed Asset Trust/Distressed Asset Debt transactions, according to Bloomberg.com.

The tax shelters used millions of dollars in purported losses from distressed Brazilian debt used to offset taxpayers’ taxable income through transactions with a company in the British Virgin Islands.

The Justice Department has also filed suit against Rogers to stop him from promoting the tax shelters, saying they have produced over $370 million in improper tax deductions for over 100 clients. The IRS has begun pursuing Distressed Asset Debt, also known as DAD, tax shelters after cracking down on so-called Son-of-BOSS (short for Bond and Option Sales Strategy), transactions.

“It seems only fitting that after devoting countless hours in the last decade to adjudicating Son-of-BOSS transactions, we have now progressed to deciding the fate of DAD deals,” wrote Judge Robert A. Wherry in the the Tax Court ruling last Thursday. “And true to the poet’s sentiment that ‘The Child is father of the Man,’ the DAD deal seems to be considerably more attenuated in its scope, and far less brazen in its reach, than the Son-of-BOSS transaction.”

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