Member access

4-Traders Homepage  >  Shares  >  London Stock Exchange  >  Barclays PLC    BARC   GB0031348658

BARCLAYS PLC (BARC)

168
Delayed Quote. Delayed London Stock Exchange - 03/30 06:23:26 am
246.215 GBp   +0.80%
06:18aDJU.K.'s Biggest Banks Undergo Stress Test
06:14a Complaints against UK banks dip 7 percent as insurance scandal fa..
06:06a Oil prices drop on possible Iran deal, dollar
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector news 

BNY Mellon, IRS spar over $900 million tax benefit

05/17/2012 | 06:09pm US/Eastern

Bank of New York Mellon Corp (>> The Bank of New York Mellon Corporation) faced off against the U.S. government on Thursday in closing arguments over a $900 million tax benefit that the Internal Revenue Service called "tax abuse."

Bank of New York Mellon Corp (>> The Bank of New York Mellon Corporation) faced off against the U.S. government on Thursday in closing arguments over a $900 million tax benefit that the Internal Revenue Service called "tax abuse."

The case is the first to go to trial since the IRS accused some banks of generating artificial foreign tax credits through loans with London-based Barclays Plc (>> Barclays PLC).

The tax benefit stems from a $1.5 billion loan to BNY Mellon from Barclays Plc (>> Barclays PLC), which also helped several other U.S. banks generate billions in foreign tax credits. Barclays has not been accused of any wrongdoing.

Bank of New York's financing agreement "is just tax abuse tacked onto a pricey loan," Jill Frisch, attorney for the IRS, told U.S. Tax Court Judge Diane Kroupa.

The banks in question used foreign tax credits, which are given to U.S. companies to prevent them from being double-taxed by two countries for the same income. The banks call it a legal funding strategy; the government calls them sham tax shelters.

"No business willingly subjects its profits to double taxation on the same income," Bernard J. Williams, an attorney for Bank of New York, argued.

The bank has said that it may have to change its reserve for uncertain tax events by a net amount of up to $850 million depending on the outcome of the case, according to regulatory filings.

Each of the banks that got loans from Barclays say it advanced their core business. The banks paid below-market interest rates on the money, which was then subject to a series of complicated transactions.

Beside BNY Mellon, other U.S. banks that have borrowed from Barclays over the past decade include BB&T Corp (>> BB&T Corporation), and Wells Fargo & Co (>> Wells Fargo & Company).

A decision in the BNY Mellon case is not expected for several months.

(Additional reporting by Tim McLaughlin; Editing by Kevin Drawbaugh and Tim Dobbyn)

By Kim Dixon

React to this article
Latest news on BARCLAYS PLC
06:18aDJU.K.'s Biggest Banks Undergo Stress Test
06:14a Complaints against UK banks dip 7 percent as insurance scandal fades
06:06a Oil prices drop on possible Iran deal, dollar
05:57a Oil prices drop on possible Iran deal, dollar
05:33a Bank of England to put banks through global slump scenario in new tests
05:13a BARCLAYS : Scotland powers ahead with creation of fast-growth firms
03/29 Western banks axed 59,000 jobs last year, more cuts to come in Europe
03/29 BARCLAYS : keeps Philippine growth target despite political risks
03/29 BARCLAYS : Consensus emerges on growth drivers
03/29 BARCLAYS : Tweet a payment with Barclays' Pingit mobile app
Advertisement
Chart
Duration : Period :
Barclays PLC Technical Analysis Chart | BARC | GB0031348658 | 4-Traders
Income Statement Evolution
More Financials
Dynamic quotes  
ON
| OFF