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Con Ed Reversal Ends LILO/SILO Saga ' And Then Some
In January, the U.S. Court of Appeals for the Federal Circuit handed down its decision in Consolidated Edison Company of New York, Inc. v. United States, No. 2012-5040 (Fed. Cir. 2013), rev'g 90 Fed. Cl. 228 (2009). See LJN's Equipment Leasing Newsletter Sept. 2008, Oct. 2008 and Jan. 2010. The decision reverses the only lower court case that had decided a LILO or SILO transaction in favor of the taxpayer, and likely ends the decade-long litigation of these contentious leveraged lease cases. While the reversal was not unexpected in light of recent appellate cases disallowing LILO/SILO tax benefits, the decision has had the, perhaps, unintended effect of calling into question the use of lessee fixed-price purchase options in sale-leasebacks and other more conventional equipment leasing transactions.
In a typical LILO, the taxpayer, acting through a grantor trust, leases assets from a tax-exempt entity (e.g., a domestic municipal transit agency or a foreign entity not subject to U.S. income taxation) under a primary or ”head” lease. A SILO transaction is similar, except that the head lease term is deliberately structured to extend beyond the remaining useful life of the asset, so that it is treated as a sale for tax purposes. At closing, the taxpayer will make a significant payment to the lessee, either the purchase price for the property (in a SILO) or a partial prepayment of its head lease. The taxpayer then leases the property back to the tax-exempt entity under a net lease, where the lessee retains substantially all rights and responsibilities to use and maintain the property during the lease term.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs
A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Coverage Issues Stemming from Dry Cleaner Contamination Suits
In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.