BNY Mellon to take $850 million profit charge in U.S. tax court defeat [Reuters]
BNY Mellon Corp (BK.N) said on Monday it will take an $850 million hit against first-quarter profit, a move that also will erode some of its capital after losing a high-stakes tax case to the U.S. Internal Revenue Service. The world's largest custody bank announced the hit against capital and earnings just hours after the U.S. Tax Court rejected BNY Mellon's bid to keep $900 million in tax benefits. The after-tax charge against profit is about $850 million, the bank said. The bank claimed a benefit that stemmed from a $1.5 billion loan from Barclays Plc (BARC.L), funding so cheap, in fact, that at one point Barclays actually paid BNY Mellon to take Barclays' money, according to court papers. The IRS challenged the benefit and won after the court ruled that the transactions lacked "economic substance," meaning they were done solely for tax purposes.
On Jan. 28, 2013, U.S. Tax Court Judge Kathleen Kerrigan decided Soni v. Commissioner. This case can be viewed as another in a surprisingly short line of taxpayer defeats involving listed transactions. See, for example, the 2010 case, McGehee Family Clinic, P.A., et al. v. Commissioner, involving a welfare benefit plan. However, in the Soni case, the fact that the IRS could have charged the taxpayers with harsher penalties may be helpful in other matters involving listed transactions. It may also forecast the IRS’s approach to the non-willful penalties in the Offshore Voluntary Disclosure Initiative; and help reassure the public that the IRS uses penalties to promote compliance, not raise revenue.
KPMG picks Sprong to succeed Fowler in Kansas City office [KCBJ]
Brad Sprong will be the new office managing partner for KPMG LLP in Kansas City, succeeding David Fowler on March 31, according to a letter sent to employees Thursday. Sprong has been a partner in KPMG’s Chicago office for the past two years but spent a majority of his career at KPMG in the Kansas City office. He is the National Diversified Industrial Tax leader and co-leader of the Tax Outsourcing Center of Excellence. He also plays a significant role on KPMG’s Tax Transformation and Outsourcing leadership team.
The parallels between rating agencies and the Big 4 aren't exactly subtle.
You'd Be Surprised at What's Tax Deductible [WSJ]
What's a more valuable tax deduction, a deadbeat boyfriend or a vicious guard dog? It depends on how big a deadbeat the boyfriend is.
UNL accounting student arrested on suspicion of 29 counts of theft [DN]
Rummaging through rec center lockers is so much easier than manipulating repurchase accounting.
Police: Body armored man stalked Emmaus woman with knives, gun, brass knuckles [TMC]
And a really creepy V-day card.
