Case: Lower Court Misapplied Step Transaction Doctrine in Refund Claim, Case Remanded for Determination Under Correct Standard (Fed. Cir.)

The Federal Claims Court misapplied the step transaction doctrine when it examined and ultimately denied the taxpayer’s refund claim, the Federal Circuit Court held, vacating the Federal Claims Court’s judgment and remanding the case for a determination under the correct legal standard. The taxpayer engaged in several financing transactions that included steps in different years. The transactions ultimately resulted in a loss for the taxpayer, but the IRS disallowed the loss, arguing that the step transaction doctrine precluded the taxpayer from claiming the loss. The Federal Claims Court, however, improperly conflated the analysis of the step transaction doctrine with the ...