JoA: Appeals Court Overturns Taxpayer Win in Tax Shelter Case

Most people wouldn’t root for the IRS in a court case, but I’m glad to see this decision. How long before we see “Grandson of BOSS” tax shelter schemes?

The U.S. Court of Appeals for the Tenth Circuit has held that a taxpayer’s investment in a “Son of BOSS” tax shelter lacked economic substance and therefore did not generate deductible losses. This holding reverses a rare taxpayer win on the issue of Son of BOSS tax shelters in which a district court had allowed the taxpayer to deduct losses from the investment. The taxpayer invested in a so-called Son of Boss shelter called the Deerhurst Program by acquiring a combination of long and short foreign currency options and contributing them to a short-lived partnership. Upon liquidating the partnership, the taxpayer claimed a tax loss of more than $60 million, offsetting $60 million of income for the tax year, and he reported owing no federal taxes for the year. After amending his return, the taxpayer ended up claiming a $24 million refund for the tax year…