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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.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
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.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.