Salem Financial, Inc. v. United States

U.S. Supreme Court

Question(s) Presented

1. Whether, as the Federal Circuit and the Second Circuit have held in conflict with the Fifth and Eighth Circuits, it is proper to evaluate the economic substance of a cross-border transaction based on neither its pre-tax nor post-tax viability, but instead based on a hybrid approach that considers the foreign taxes that must be paid without considering the U.S. tax credits that are presumptively available.

2. Whether, and to what extent, the “economic substance” doctrine can be used as a means for disregarding longstanding and well-developed foreign tax credit rules with which the taxpayer has fully complied, as opposed to a means to address questions that arise in the application of specific statutory and regulatory provisions.

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