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Don't tell anybody, but...

October 19, 2009

...the Federal Circuit Court of Appeals on October 9 apparently upheld the taxpayer victory in the Fisher demutualization case, without comment.

It seems to be a secret. I can't find it in Tax Analysts, and the Thompson/RIA Citator shows nothing.

Very strange. Not long ago a panel of the Federal Circuit went rogue and threatened to hollow out the income tax before thinking better of it. Now they get a closely watched case affecting every policyholder of a mutual insurance company that has gone public, and they can't rouse themselves to an opinion.

The case allows taxpayers to offset premiums paid on mutual insurance policies against the proceeds of stock sold in a demutualization transaction. It will be interesting to see how the IRS and Congress address the case, now that they have lost on appeal in a court with nationwide jurisdiction. It remains unclear whether you get your entire premium as basis, or the IPO price, or some other number (limited by your premiums paid, presumably). It will also be interesting to see how far creative tax advisors will take the Fisher "open transaction" approach in other areas.

Prior Tax Update Coverage: IRS LOSES DEMUTUALIZATION ARGUMENT IN COURT OF CLAIMS

(Hat tip: Frank Carroll)

Tags: Demutualizaton.Fisher.