It has been over a year since we reported on the contest between the IRS and corporate taxpayers over the tax treatment of equipment leasing transactions with tax-exempt lessees known as LILOs and SILOs.
Taxpayer Victory in Con Edison LILO Shocks IRS
In <i>Consolidated Edison Company v. United States</i>, the taxpayer's tax treatment of a LILO transaction was upheld by the court, and all tax benefits claimed by the taxpayer were sustained. Naturally, some muckraking columnists hurried to criticize the Con Edison decision, expressing disappointment that the court actually applied historic leasing case law to a well-developed factual record. Despite their whining, the case demonstrates that the IRS (and the muckrakers) was wrong to treat all LILO and SILO transactions as though they were some prepackaged tax-shelter commodity. Each case turns on its facts, and the taxpayer wins in a properly chosen and argued case.
By
Philip H. SpectorThis premium content is locked for LawJournalNewsletters subscribers only
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