In the Marketplace

The U.S. Supreme Court has denied Textron's petition for writ of certiorari in Textron Inc. v. United States, U.S., No. 09-750, (cert. denied 5/24/10). The controversial en banc decision by the U.S. Court of Appeals for the First Circuit, as analyzed in the November 2009 issue of this newsletter, held that a corporate taxpayer could not shield from disclosure so-called “tax accrual workpapers.” These documents, typically prepared by in-house tax attorneys, set out in detail sensitive areas of tax liability. In this case, the IRS had sought the tax accrual workpapers as part of an investigation into Textron's alleged use of an illegal “sale-in, lease-out” transaction. The sharply divided First Circuit (3-2) concluded that provisions of the federal securities law, in conjunction with prevailing accounting and auditing standards, made the creation of the tax accrual workpapers inevitable. Because the spreadsheets sought by the IRS were not the kind of documents attorneys typically prepared when faced with the prospect or the reality of litigation, they were not entitled to work product protection.

The Alta Group has launched a practice focused on helping the $600 billion equipment finance industry cope with the upcoming changes to the lease accounting rules. Headed by Shawn Halladay, an Alta principal, the division will focus on accounting compliance and implementation. To date, there has not been much information released on the new rules, which are being proposed by both the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board, but it is clear that equipment leasing companies will need to adjust their current business and accounting practices. Alta's new division will help clients understand the new lease accounting rules, design customer strategies, develop appropriate business processes, maximize revenue recognition, and assess and implement needed system changes.

Foley & Lardner LLP has named Ralph P. Dudziak as a partner in the Finance & Financial Institutions Practice Group and the Energy Industry Team in the firm's Chicago office. Dudziak brings extensive experience in a wide array of transactional work, with a focus on lease financing. He advises clients on domestic and cross-border lease and leasehold financings, single investor lease financings, leveraged leases, synthetic leases, and operating leases. In addition, Dudziak has worked extensively in complex equipment-based finance, including aircraft and rolling stock financings, power generation and transmission equipment financings, and manufacturing equipment financings. Prior to joining Foley, Dudziak was a partner at DLA Piper.

The U.S. Supreme Court has denied Textron's petition for writ of certiorari in Textron Inc. v. United States, U.S., No. 09-750, (cert. denied 5/24/10). The controversial en banc decision by the U.S. Court of Appeals for the First Circuit, as analyzed in the November 2009 issue of this newsletter, held that a corporate taxpayer could not shield from disclosure so-called “tax accrual workpapers.” These documents, typically prepared by in-house tax attorneys, set out in detail sensitive areas of tax liability. In this case, the IRS had sought the tax accrual workpapers as part of an investigation into Textron's alleged use of an illegal “sale-in, lease-out” transaction. The sharply divided First Circuit (3-2) concluded that provisions of the federal securities law, in conjunction with prevailing accounting and auditing standards, made the creation of the tax accrual workpapers inevitable. Because the spreadsheets sought by the IRS were not the kind of documents attorneys typically prepared when faced with the prospect or the reality of litigation, they were not entitled to work product protection.

The Alta Group has launched a practice focused on helping the $600 billion equipment finance industry cope with the upcoming changes to the lease accounting rules. Headed by Shawn Halladay, an Alta principal, the division will focus on accounting compliance and implementation. To date, there has not been much information released on the new rules, which are being proposed by both the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board, but it is clear that equipment leasing companies will need to adjust their current business and accounting practices. Alta's new division will help clients understand the new lease accounting rules, design customer strategies, develop appropriate business processes, maximize revenue recognition, and assess and implement needed system changes.

Foley & Lardner LLP has named Ralph P. Dudziak as a partner in the Finance & Financial Institutions Practice Group and the Energy Industry Team in the firm's Chicago office. Dudziak brings extensive experience in a wide array of transactional work, with a focus on lease financing. He advises clients on domestic and cross-border lease and leasehold financings, single investor lease financings, leveraged leases, synthetic leases, and operating leases. In addition, Dudziak has worked extensively in complex equipment-based finance, including aircraft and rolling stock financings, power generation and transmission equipment financings, and manufacturing equipment financings. Prior to joining Foley, Dudziak was a partner at DLA Piper.