Saturday, January 5, 2008

State judge overrules Wal-Mart's use of REIT for tax deduction

A state judge ruled against Wal-Mart in a dispute over whether the company could deduct from its taxes rent it paid to a real estate investment trust in which Wal-Mart had a 99 percent ownership stake.

In a decision filed Jan. 4, Emergency Special Judge of Superior Court Clarence E. Horton Jr. wrote that Wal-Mart's structure had no "real economic substance" other than cutting taxes, The Wall Street Journal reported. Wal-Mart had sought a refund of $33.5 million in taxes, interest and penalties that it paid after state tax authorities determined it had underpaid its taxes.