Liberty Global $110 Million Tax Plan Fails Substance Test (1)

Liberty Global Inc.'s $110 million tax refund appeal failed after the Tenth Circuit affirmed a district court’s decision to disregard transactions that the federal government said were designed to evade tax.

The economic substance doctrine is applicable to Liberty Global’s restructure and fatal to its associated tax deduction claim because several of its underlying transactions weren’t economically meaningful outside of their intended tax benefits, Judge Michael R. Murphy of the US Court of Appeals for the Tenth Circuit said Tuesday.

The doctrine, codified under IRC Section 7701, allows a business to reap the tax benefits of a transaction ...