Judge Allows Tax Shelter Suit Against Law Firm to Proceed

A federal judge has allowed an aggrieved tax shelter client to pursue a fraud lawsuit against Deutsche Bank AG and the law firm of Sidley Austin Brown & Wood.

While the courts have thrown out similar suits against Sidley Austin and others, U.S. District Court Judge Shira A. Scheindlin has ruled that a Virginia telecommunications executive can pursue his lawsuit, although not in New York, the Wall Street Journal reported. Scheindlin said the allegations of malpractice, breach of contract and breach of fiduciary duty could be refiled in Virginia. She threw out the suit's racketeering allegations.

The law firm Jenkens & Gilchrist is also a defendant in the suit filed by William Seippel. He claims Deutsche Bank and Jenkens & Gilchrist sold him the Cobra tax strategy in 2003 knowing the Internal Revenue Service would reject it. In fact, the IRS has declared the shelter improper.

Seippel paid Jenkens & Gilchrist $338,880 and Sidley Austin $21,180 for what he thought were independent opinion letters on the tax shelter, called Currency Options Bring Reward Alternatives. The lawsuit says the letters were not independent because the lawyers worked with an accounting firm to structure the tax shelter.

Sidley, Deutsche Bank and Jenkens & Gilchrist declined comment, the newspaper reported.

You may like these other stories...

By Cathy Stopyra and Todd SimmensUnderpayment interest, refund interest, and penalties charged to businesses are just a few of the considerations the IRS calculates when determining taxation for a given company. Though...
FASB mulling a revamped income statementDavid M. Katz of CFO wrote on Tuesday that the Financial Accounting Standards Board (FASB) is in the early stages of researching whether to launch a project aimed at improving and...
Renaissance avoided more than $6 billion tax, report saysThe Senate Permanent Subcommittee on Investigations said on Monday that a Renaissance Technologies LLC hedge fund’s investors probably avoided more than $6...

Upcoming CPE Webinars

Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.
Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.