Supreme Court rules in tax shelter case Jaclyn Belczyk at 10:43 AM ET
[JURIST] The US Supreme Court [official website] ruled [opinion, PDF] Tuesday in United States v. Woods [SCOTUSblog backgrounder; JURIST report], a case concerning an offsetting-option tax shelter, marketed to high-income taxpayers in the 1990s. The court was asked to determine whether the penalty for tax underpayments attributable to valuation misstatements under 26 USC § 6662 of the Internal Revenue Code [texts] is applicable to an underpayment resulting from a basis-inflating transaction subsequently disregarded for lack of economic substance. Writing for the unanimous court, Justice Antonin Scalia concluded: "The District Court had jurisdiction in this partnership level proceeding to determine the applicability of the valuation-misstatement penalty, and the penalty is applicable to tax underpayments resulting from the partners’ participation in the COBRA tax shelter."
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