Thursday, August 30, 2007

Judge denies IRS request for Textron work papers

A federal judge in Rhode Island ruled yesterday that the Internal Revenue Service didn't have a right to tax-accrual work papers belonging to aerospace and defense contractor Textron Inc., the Wall Street Journal reported.

The case involves a "sale in, lease out" (SILO) deal Textron made in 2001. In 2004, Congress outlawed future so-called SILOs. The following year, the IRS said it would begin presuming that past SILO transactions violated tax laws.

U.S. District Court Judge Ernest C. Torres wrote that the papers were protected by "work product" privilege, as "the work papers were prepared 'because of' anticipated litigation with the IRS."