Altria Group, Tax Shelter Claim, New York 2024

A federal jury in New York has rejected the $24 million tax refund claim filed by Altria Group Inc. relating to its investment in lease-in, lease-out (LILO), and sale-in, lease-out (SILO) tax shelters, the US government announced today.

The verdict follows a three-week trial in the Southern District of New York before U.S. District Judge Richard J. Holwell. The evidence at trial showed that Altria made purported investments in four properties: a power plant in Georgia, a power plant in Florida, a Dutch wastewater treatment facility and a New York Metropolitan Transportation Authority rail yard in Queens.

Altria claimed ownership of the properties, which were owned by tax-indifferent entities (i.e., entities that do not generally pay federal taxes), for the purpose of taking the tax deductions which those entities could not However, the jury found that Altria never acquired the benefits and burdens of ownership and that the transactions lacked economic substance.

The jury accordingly rejected Altria’s $24 million refund claim. The US government has reported that hundreds of LILO and SILO transactions were entered into by taxpayers in the late 1990s, and that billions of dollars may be at stake in disputes over these transactions. The government has prevailed in all four cases, including this one, where such tax shelters have been challenged.

“This victory for the United States should serve as another warning to taxpayers not to engage in abusive tax shelter transactions and that the government will continue to shut these transactions down,” said John Dicicco, Acting Assistant Attorney General of the Tax Division.

Altria Group, Tax Shelter Claim, New York 2024 – $24 million tax refund claim rejected by federal jury. Defendant/Respondent: Altria Group Inc. Exact criminal charges: Abuse of Tax Shelter Transactions. City and state: New York. Exact date with month/day/year: Not specified. Sentence or outcome: $24 million tax refund claim rejected. Dollar amounts: $24 million.

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