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September 2010 |
Canal Corporation's Tax OdysseyCanal Corporation and Subsidiaries v. Commissioner1, a case recently decided by the U.S. Tax Court, provides some disturbing guidance in connection with the reliance on the opinion of a sophisticated tax advisor in an effort to avoid accuracy-related penalties under the Internal Revenue Code. FACTSCanal Corporation (formerly Chesapeake Corporation) is a Virginia company engaged in various segments of the paper industry, including the manufacturing of tissue through Wisconsin Tissue Mills, Inc. (WISCO), its largest subsidiary. In the mid 90's, Canal decided to change its focus and WISCO no longer was a good fit. Georgia Pacific (GP), which also was in the tissue business, wanted to buy WISCO but Canal was reluctant to sell it. Due to its low tax basis in the WISCO assets, Canal would have incurred a significant tax liability upon a sale.
ABOUT SCHIFF HARDIN LLPSchiff Hardin's tax attorneys handle all manner of federal, state and local tax controversies, at the audit and administrative appeals levels and in tax litigation, as well as advising clients in connection with disclosure and tax penalty mitigation. We also represent taxpayers in connection with actual or potential criminal tax investigations.Our tax attorneys also advise clients on the federal, state, local and foreign tax aspects of their business and investment activities including the structuring of complex business transactions, business combinations, financing transactions, joint ventures, private equity and investment funds. We also assist in the implementation of affirmative tax planning opportunities such as the award of equity-based compensation, tax-deferred exchanges and maximizing the use of foreign tax credits. We also counsel businesses in connection with FIN 48 tax disclosure issues. For more information, please contact Robert R. Pluth Jr. |