The Court of Federal Claims refused to reconsider its decision in Salem Financial that BB&T was not entitled to claim $74,551,947.40 in deductions for interest expenses on its STARS loan.1 In September, the Tax Court granted a similar motion in the Bank of New York case and subsequently issued an opinion permitting Bank of New York to deduct interest on its STARS loan. Bank of New York Mellon Corp. v. Commissioner, T.C. Memo. 2013-225 (Sep. 23, 2013). On the basis of its holding that the STARS loan was separate from the STARS trust, the Tax Court analyzed the loan separately from the trust and determined that Bank of New York was entitled to interest deductions because the loan was a bona fide loan. The Court of Federal Claims rejected the other argument that BB&T raised in the motion for reconsideration: the Loan was commercially viable on its own because it did not play a role as a technical matter in the claim for foreign tax credits. The court dismissed this argument because it was not raised earlier.
Footnote
1 Salem Financial Inc. v. United States, No. 1:10-cv-00192 (Fed. Cl. Jan. 6, 2014).
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