Case: 17-60833      Document: 00514900927         Page: 1    Date Filed: 04/03/2019




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                         United States Court of Appeals
                                                                                  Fifth Circuit

                                      No. 17-60833                              FILED
                                                                             April 3, 2019
                                                                           Lyle W. Cayce
KEITH A. TUCKER; LAURA B. TUCKER,                                               Clerk

              Petitioners - Appellants

v.

COMMISSIONER OF INTERNAL REVENUE,

              Respondent - Appellee




                           Appeal from the Decision of the
                              United States Tax Court
                                T.C. No. 12307-04


Before HIGGINBOTHAM, GRAVES, and WILLETT, Circuit Judges.
PER CURIAM:*
       Taxpayers Keith Tucker and Laura Tucker, husband and wife, claimed
a $39,188,666 loss deduction for the 2000 tax year resulting from Mr. Tucker’s
execution of a “customized solution” to mitigate the Taxpayers’ income tax.
The customized solution (the “FX Transaction”) involved highly-complex,
interrelated foreign currency option investment transactions, which complied




       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                      No. 17-60833
with a literal reading of the Tax Code 1 and generated millions in paper gains
and losses. The Commissioner of Internal Revenue (“Commissioner”) issued
Taxpayers a notice of deficiency, disallowing the entire loss deduction and
determining a $15,518,704 deficiency and a $6,206,488 penalty. Taxpayers
challenged the deficiency and penalty in tax court. After a trial, the tax court
upheld the deficiency, finding that Taxpayers were not entitled to their claimed
deduction because the underlying transaction creating the deduction lacked
economic substance.         However, the tax court did not uphold the penalty.
Taxpayers now appeal the tax court’s decision on the deficiency. In this appeal,
we consider: (1) whether it was appropriate for the tax court to apply the
economic substance doctrine to the FX Transaction, and (2) whether the tax
court applied the economic substance doctrine correctly. 2 After careful review
of the record and hearing oral argument, we find that the economic substance
doctrine was applicable to the FX Transaction, and the tax court applied the
doctrine properly as set forth by circuit precedent. Accordingly, we AFFIRM
the tax court’s order and decision.
                                   BACKGROUND
       Mr. Tucker’s transactions at issue on this appeal involved several highly-
complex, interrelated foreign currency option investment transactions.
Because the tax court provided a robust overview of the facts demonstrating
the complexity of the tax scheme, only facts that are relevant to the disposition
of this appeal follow. 3




       1 All “Tax Code,” “Code,” or “Section” references are to the Internal Revenue Code of
1986, as amended and in effect in 2000. All “Treasury Regulation” references are to the
Treasury Regulations, as amended and in effect in 2000.
       2 The Commissioner does not appeal the Tax Court’s decision on the penalty.
       3 The facts are gleaned from the tax court’s factual findings, which we do not find to

be clearly erroneous, see Estate of Duncan v. Comm’r of Internal Revenue, 

, 197
(5th Cir. 2018), and the parties’ stipulation of facts.
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                                 No. 17-60833
      In 2000, Mr. Tucker, a certified public accountant with a juris doctor,
was the Chief Executive Officer of Waddell & Reed Financial, Inc. (“WR”), a
national mutual fund and financial services company. As a senior company
executive, Mr. Tucker received tax advice and company-sponsored personal
financial planning services through WR’s Financial Planning Program from
KPMG. When WR stock appreciated, KPMG anticipated that Mr. Tucker
would exercise his WR stock options and experience a significant income
increase.   In August 2000, as KPMG anticipated, Mr. Tucker exercised
1,896,167 WR stock options, for which WR withheld approximately $11.4
million in federal income tax.
      Sometime in 2000, KPMG advisors and Mr. Tucker discussed ways to
diversify Mr. Tucker’s investments and ways for Mr. Tucker to “mitigate his
income tax” from exercising his stock options. In mid-December 2000, after
failed attempts to enter into two separate tax benefit transactions, KPMG
recommended, and Mr. Tucker accepted, the FX Transaction.                KPMG
characterized the FX Transaction as a “customized” tax solution to mitigate
Mr. Tucker’s 2000 income tax. The FX Transaction required Mr. Tucker to
invest in foreign currency options in a series of transactions to take advantage
of the Tax Code and to produce millions in paper gains and losses. Mr. Tucker
was aware that the IRS might disallow a loss deduction from the transaction.
I.    FX Transaction
      The FX Transaction involved three new entities and two separate
components of offsetting foreign currency options to produce the $39,188,666
tax deduction at issue in this case.
      A.    Relevant Entities
      In late December 2000, Mr. Tucker organized three new entities, Sligo
(2000), LLC (“Sligo LLC”), Sligo (2000) Company, Inc. (“Sligo”), and Epsolon,
Ltd, to execute the FX Transaction. Sligo LLC was a Delaware limited liability
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                                   No. 17-60833
company and Mr. Tucker was its sole member. Sligo was an S Corporation
incorporated under Delaware law, and Mr. Tucker wholly-owned the company.
Sligo was a U.S. shareholder of Epsolon, an Irish shelf company, and Sligo
owned 99% of the shelf company from December 18, 2000 to December 31,
2000. Sligo’s 99% ownership of Epsolon resulted in Epsolon initially being
classified as a controlled foreign corporation (“CFC”) 4 for federal tax purposes.
Effective December 27, 2000, however, Epsolon elected partnership
classification and was no longer considered a CFC.
      Mr. Tucker contributed $2,024,700 in cash to Sligo, and Sligo contributed
$1,514,700 to Epsolon.
      B.     Epsolon Loss Component
      Mr. Tucker generated approximately $39 million in claimed tax loss
through Epsolon by artfully constructing his investments to comply with a
mechanical reading of the Code. As the tax court explained:
             Epsolon executed the loss component in four steps:
             (1) Epsolon acquired various offsetting foreign
             currency digital option spread positions (spread
             positions); (2) it disposed of the gain legs of the spread
             positions while Epsolon was a CFC; (3) it made a
             ‘check-the-box’ election to become a partnership for
             U.S. tax purposes; and (4) it disposed of the loss legs of
             the spread positions.

Tucker v. Comm’r of Internal Revenue, 

, 

, at *13 (T.C. 2017).
      On December 20, 2000, Epsolon, while a CFC, purchased from and sold
to Lehman Brothers eight foreign euro currency options tied to the U.S. Dollar,
where each set of options created a spread. The total premium for the options



      4A CFC is any foreign corporation of which more than 50% of the vote or value is
owned by U.S. shareholders.
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Epsolon purchased was $156,041,001, and the total premium for the options
that Epsolon sold was $157,500,000. The net premium payable to Epsolon for
the options was $1,458,999. The potential return on the investment was based
on the volatility of the USD/euro exchange rate. Mr. Tucker understood that
the options had a 40% chance of profitability.
        On December 21, 2000, the euro appreciated against the dollar, and
Epsolon realized a net gain of $51,260,455 after disposing of four of its euro
options. As a CFC, Epsolon’s $51 million gain was not subject to federal income
tax. See Sec. 881 & Sec. 882(a)(1). Epsolon then purchased from and sold to
Lehman Brothers foreign deutschemark (“dem”) options using most of the
proceeds from the disposition of the euro options.
        On December 27, 2000, Epsolon’s status as a CFC effectively ended
with its “check-the-box” election 5 for partnership classification. With Epsolon’s
entity classification change to partnership, Epsolon was treated as liquidating
and distributing its assets and liabilities to Sligo. Under the “Section 367
election,” 6 Epsolon’s $51 million gain as a CFC did not carry over to the
partnership.     Under the “30-day rule,” 7 Sligo was not required to report
Epsolon’s gain as taxable income because Epsolon was a CFC for only nine
days.
        On December 28, 2000, Epsolon, as a partnership, disposed of some of
its dem and euro options, which resulted in a net loss of $39,584,511. Epsolon’s
loss flowed through to Sligo. Sligo, as 99% owner of Epsolon, claimed a 99%




        5A “check-the-box” election “allows taxpayers to choose whether an entity will be
characterized as a corporation for tax purposes.” See Treas. Reg. § 301.7701-3(g)(1)(ii).
       6 The Section 367 election “allowed taxpayers to elect to include in income either the

CFC’s [earnings and profits] amount or the amount of gain realized in the liquidation.” See
Treas. Reg. § 1.367(b)-3T(b)(4)(i)(A).
       7 Under the “30-day rule” a CFC’s income is “taxable to a U.S. shareholder only if the

U.S. shareholder owned the CFC for 30 or more days in a taxable year.”
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                                 No. 17-60833
share of Epsolon’s loss of $39,188,666. Sligo’s reported share of the loss passed
through to Mr. Tucker. See 26 U.S.C. § 704(d)(1) (limiting share of partnership
loss to adjusted basis of partner’s interest).         Taxpayers reported the
$39,188,666 loss as a deduction on their 2000 tax form.
        C.   Sligo LLC Basis Component
        Taxpayers have conceded the manipulation of the Sligo Basis
Component, in which Mr. Tucker inflated his basis in Sligo. However, they
argue that they are entitled to a basis in Sligo of $2,024,700, which is what Mr.
Tucker purportedly made to Sligo in cash contributions.
        On December 21, 2000, Sligo LLC purchased from and sold to Lehman
Brothers Japanese yen currency options tied to the U.S. dollar. While the
premium for the purchased yen option was $51 million, the premium for the
sold yen option was $50,490,000, making the net premium from Sligo LLC to
Lehman Brothers $510,000.
        On December 26, 2000, Mr. Tucker transferred his 100% ownership
interest in Sligo LLC to Sligo. Mr. Tucker claimed a $53 million basis in Sligo,
calculated as the $51 million premium paid for the yen option plus $2,024,700
in purported cash contributions, without accounting for the premium received
for the yen options. The increased basis would permit Mr. Tucker to take full
advantage of the Epsolon loss for tax purposes.
II.     Taxpayers’ 2000 Tax Return
        On March 26, 2001, Taxpayers filed a joint tax return for the 2000 tax
year.    Taxpayers reported $44,187,744 in wages and salaries, including
$41,034,873 in gain from Mr. Tucker’s WR stock options, and Taxpayers
reported the $39,188,666 Epsolon loss as a deduction.        Taxpayers reported
another $13 million in passthrough loss from Sligo on their 2001 tax return.
In total, Taxpayers reported over $52 million in loss for 2000 and 2001. On
April 15, 2004, the Commissioner issued Taxpayers a notice of deficiency,
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                                  No. 17-60833
disallowing the entire loss deduction and determining a $15,518,704 deficiency
and a $6,206,488 accuracy-related penalty.
III.    The Tax Court’s Decision
        In tax court, Taxpayers challenged the Commissioner’s disallowance and
argued, inter alia, that Taxpayers were permitted to deduct the Epsolon loss
to the extent of Mr. Tucker’s basis in Sligo. The Commissioner argued, inter
alia, that the transactions underlying the claimed loss lacked economic
substance. The tax court agreed with the Commissioner, applied the economic
substance doctrine to Mr. Tucker’s transaction, and upheld the Commissioner’s
disallowance.
        This appeal followed.
               JURISDICTION AND STANDARD OF REVIEW
        We have jurisdiction to review the tax court’s final decision under 26
U.S.C. § 7482(a)(1).
        We review the facts used to determine whether a transaction lacks
economic substance for clear error, and we review the ultimate determination
of whether a transaction lacks economic substance de novo. See Estate of

; Nevada Partners Fund, L.L.C. ex rel. Sapphire II,
Inc. v. U.S. ex rel. I.R.S., 

, 610 (5th Cir. 2013), vacated on other
grounds by 

(2014).
                                 DISCUSSION
I.      Economic Substance Doctrine
        “The economic substance doctrine allows courts to enforce the legislative
purpose of the Code by preventing taxpayers from reaping tax benefits from
transactions lacking in economic reality.” Klamath Strategic Inv. Fund ex rel.
St. Croix Ventures v. United States, 

, 543 (5th Cir. 2009). While
“taxpayers have the right to decrease or avoid taxes by legally permissible


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                                 No. 17-60833
means,” “transactions which do not vary control or change the flow of economic
benefits are to be dismissed from consideration.” 

      The doctrine has emerged from the Supreme Court’s decision in Gregory
v. Helvering, 

(1935). The Court reviewed a taxpayer’s series of
transactions to determine “whether what was done, apart from the tax motive,
was the thing which the statute intended.” 

The Court found that
the transactions fell outside the Code’s plain intent, even though the
transactions were technically consistent with the Code. 

      In Southgate, this court applied the economic substance doctrine to
determine the tax consequences of three interrelated transactions, noting that
“a transaction’s tax consequences depend on its substance, not its form.”
Southgate Master Fund, L.L.C. ex rel. Montgomery Capital Advisors, LLC v.
United States, 

, 478–79 (5th Cir. 2011). The court noted that the
economic substance doctrine, “empower[s] the federal courts to disregard the
claimed tax benefits of a transaction—even a transaction that formally
complies with the black-letter provisions of the Code and its implementing
regulations—if the taxpayer cannot establish that ‘what was done, apart from
the tax motive, was the thing which the statute intended.’” 

(quoting

).
      The tax court applied the economic substance doctrine to the FX
Transaction and determined that the transaction lacked economic substance.
Taxpayers raise two issues on appeal. First, Taxpayers argue that the tax
court erred in applying the economic substance doctrine. Second, Taxpayers
argue, if the economic substance doctrine is applicable, the tax court did not
apply the doctrine properly. We find no error in the tax court’s decision.




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                                  No. 17-60833
II.     The Economic Substance Doctrine is Applicable to the FX
        Transaction

        The tax court applied the economic substance doctrine to the FX
Transaction because Taxpayers “offered nothing to indicate that Congress
intended to provide the tax benefits they seek through the formal application
of the Code and the regulations without conforming to economic reality.”
Tucker, 

, at *17. Looking in isolation at each tax rule used
to implement the FX Transaction and heavily relying on extra-circuit
precedent, Taxpayers argue that the economic substance doctrine is
inapplicable because the transaction complied with a literal reading of the
Code.
        The Supreme Court and this court have applied the economic substance
doctrine to transactions that technically complied with tax laws. In Gregory,
the Court looked beyond the form of the transaction to consider its economic
substance. 

. Despite the taxpayer’s literal compliance with the
Code, the Court concluded that:
              [t]he whole undertaking, though conducted according
              to the terms of [the statute], was in fact an elaborate
              and devious form of conveyance masquerading as a
              corporate reorganization, and nothing else. The . . .
              transaction upon its face lies outside the plain intent
              of the statute. To hold otherwise would be to exalt
              artifice above reality and to deprive the statutory
              provision in question of all serious purpose.

   In Nevada Partners, the taxpayers implemented a multi-step
investment strategy that was technically consistent with the 

. This court applied the economic substance doctrine in that case, which
also involved a complex foreign currency transaction. 

        In this matter, while the FX Transaction was consistent with the Code’s
language, it looked like “[t]he whole undertaking . . . was in fact an elaborate
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                                       No. 17-60833
and devious” path to avoid tax consequences. 

. As the
tax court noted, the following resulted in the Taxpayers’ $39 million tax loss
deduction:
                     (1) Epsolon realized an aggregate gain of
                     $51,260,455 in 2000 when it disposed of four
                     euro options on December 21, 2000.

                     (2) Epsolon did not recognize the $51,260,455
                     gain for U.S. tax purposes because (i) Epsolon
                     was a foreign corporation not subject to tax
                     under section 881 or 882 8 at the time of the gain
                     and (ii) Sligo was not required to include its
                     share of Epsolon’s gain under section 951
                     because Epsolon was a CFC for less than 30 days
                     when it elected partnership status.

                     (3) Epsolon and Sligo were not required to
                     recognize gain or loss when Epsolon elected
                     partnership status because Epsolon made an
                     election that allowed it to recognize gain equal
                     to Sligo’s basis in its Epsolon stock and Sligo had
                     a zero basis in its Epsolon stock. See sec.
                     l.367(b)-3T(b)(4)(i)(A), Temporary Income Tax
                     Regs., 65 Fed. Reg. 3588 (Jan. 24, 2000).

                     (4) After Epsolon became a U.S. partnership, it
                     disposed of an additional four foreign currency
                     options for a net loss of $38,483,893 and
                     transaction costs of $1,100,618 in 2000 for a
                     total loss of $39,584,511.

                     (5) Sligo was required to take into account its
                     distributive share of Epsolon’s net loss, which
                     passed through to Mr. Tucker, as Sligo’s S


       8 Sec. 881 imposes a tax of 30% on foreign corporations on amounts of
“fixed or determinable annual or periodical gains” income from sources within
the United States. Sec. 882(a)(l) taxes foreign corporations on income
“effectively connected with the conduct of a trade or business within the United
States.”
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                                No. 17-60833
                corporation shareholder, and the loss was
                deductible    under    section    165(a)    and
                characterized as ordinary under section 988.
Tucker, 

, at *12.
      It was appropriate for the tax court to apply the economic substance
doctrine to the transaction to determine whether “what was done, apart from
the tax motive, was the thing which the statute intended.” 

(quoting 

). Accordingly, the tax court did not
err in applying the economic substance doctrine to the FX Transaction.
      Taxpayers rely heavily on Summa Holdings, Inc. v. Comm’r of Internal
Revenue, 

(6th Cir. 2017), to support their position that the tax
court erred in applying the economic substance doctrine to the FX Transaction.
In Summa Holdings, the Sixth Circuit reviewed the tax court’s decision
denying relief to a family who sought to lower their taxes by using a domestic
international sales corporation (“DISC”) “to transfer money from their family-
owned company to their sons’ Roth Individual Retirement Accounts.” Summa

. The court did not apply the economic substance
doctrine to the transactions because it was “not a case where the taxpayers
followed a devious path to a certain result in order to avoid the tax
consequences of the straight 

(quotation marks and
citation omitted).   The Sixth Circuit found the doctrine was inapplicable
because none of the transactions “was a labeling-game sham or defied economic
reality,” and the tax provisions used were designed for tax-reduction purposes.

  The court concluded that “[a]lthough the distinction between
transactions that obscure economic reality and Code-compliant, tax-
advantaged transactions may be difficult to identify in some cases, the
transactions in [Summa Holdings] are clearly on the legitimate side of the
line.” 

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                                   No. 17-60833
         That clarity is simply not present in Mr. Tucker’s transactions. The tax
court concluded that Congress “neither contemplated nor intended to
encourage this type of mechanical manipulation of the rules” that permits Mr.
Tucker to avoid recognizing a $51 million gain. Tucker, 

, at
*16. The tax court found that Mr. Tucker’s manipulation of the rules was
contrary to Congress’ intent. See 

S. Rept. No. 87-1881 (1962),
1962-3 C.B. 707, 785, subpart F, which includes the 30-day rule, was “designed
to end tax deferral on ‘tax haven’ operations by U.S. controlled corporations”);

the preamble to the regulation which promulgated the check-the-
box election and finding that Mr. Tucker’s use of the partnership election “to
ignore economic reality and to separate Epsolon’s gains from its losses” was
inconsistent with legislative intent). The tax court concluded that Mr. Tucker’s
calculated manipulation of the tax code “assured that [he] would have the loss
he needed to offset his WR stock option income without the need to recognize
the offsetting gain on the options.” 

line between disregarding a too-clever-by-half accounting
trick and nullifying a Code-supported tax-minimizing transaction can be
elusive,” 

, the line is clear here. Accordingly, even
under Summa Holdings, it was appropriate for the tax court to apply the
economic substance doctrine to determine whether the transactions “defied
economic reality.” 

III.     The FX Transaction Lacks Economic Substance
         The tax court applied the economic substance doctrine to the FX
Transaction and concluded that the transaction lacked economic substance.
Taxpayers argue that “even if the Tax Court was correct in its decision to apply
the economic substance doctrine . . . the Tax Court erred in the manner in
which it applied that doctrine.” Specifically, the tax court erred in disregarding


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                                 No. 17-60833
the fact that the transactions had a 40% chance to earn profit and concluding
that Mr. Tucker had no non-tax purpose.
      When applying the economic substance doctrine, this court will respect
“a genuine multiple-party transaction with economic substance which is
compelled or encouraged by business or regulatory realities, is imbued with
tax-independent considerations, and is not shaped solely by tax-avoidance
features.” Frank Lyon Co. v. United States, 

, 583–84 (1978). “In
other words, the transaction must exhibit [1] objective economic reality, [2] a
subjectively genuine business purpose, and [3] some motivation other than tax
avoidance.” 

. “While ‘these factors are phrased in
the conjunctive, meaning that the absence of any one of them will render the
transaction void for tax purposes,’ there is near-total overlap between the
latter two factors.” 

568 F.3d at 544). Prongs two and
three may be read as one prong because “[t]o say that a transaction is shaped
totally by tax-avoidance features is, in essence, to say that the transaction is
imbued solely with tax-dependent considerations.” 

n.40.
Accordingly, the economic substance doctrine effectively has two prongs: an
objective economic prong and a subjective business purpose prong. See 

      “A notice of deficiency issued by the IRS is ‘generally given a
presumption of correctness, which operates to place on the taxpayer the burden
of producing evidence showing that the Commissioner’s determination is
incorrect.’” Nevada 

(quoting Sealy Power, Ltd. v.
Comm’r, 

, 387 (5th Cir. 1995)). “[W]hen the taxpayer claims a
deduction, it is the taxpayer who bears the burden of proving that the
transaction has economic substance.” Coltec Indus., Inc. v. United States, 

, 1355 (Fed. Cir. 2006).


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                                 No. 17-60833
      The tax court concluded that the FX Transaction failed both prongs of
the economic substance doctrine.       Taxpayers argue that the tax court
“misapplied each prong of the analysis.” Because we conclude that the FX
Transaction fails the objective economic prong, we affirm the tax court’s
decision.
      In the first prong of the economic substance analysis, we must determine
whether the FX Transaction lacks objective economic reality. 

–45. “[T]ransactions lack objective economic reality if they ‘do not
vary, control, or change the flow of economic benefits.’” 

(citation and alteration omitted). “This is an objective inquiry into whether
the transaction either caused real dollars to meaningfully change hands or
created a realistic possibility that they would do so.” 

“[The] inquiry must be ‘conducted from the vantage point of the taxpayer at
the time the transactions occurred, rather than with the benefit of hindsight.’”

v. Comm’r, 

, 1096 (6th Cir. 1991)).
      Taxpayers argue that the tax court erred in disregarding the profit
potential of the FX Transaction. They argue that the FX Transaction “created
the realistic probability that real dollars would change hands” because Mr.
Tucker had a 40% chance to generate a net profit of $487,707 for the
investments. The tax court found that the FX Transaction defied objective
economic reality because the “$487,707 potential profit is de minimis as
compared to the expected $20 million tax benefit” and the “$52.9 million in tax
losses over two years,” including the $39 million at issue. Tucker, 

, at *20. We agree.
      “A transaction has economic substance and will be recognized for tax
purposes if the transaction offers a reasonable opportunity for economic profit,
that is, profit exclusive of tax benefits.” Portland Golf Club v. Comm’r, 

, 169 n.19 (1990) (quoting Gefen v. Comm’r, 

, 1490 (1986));
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                                  No. 17-60833
see 

& n.43.          In Nevada Partners, this court
concluded that the district court did not err in determining that the taxpayers
“failed to meet their burden of proving that the transactions giving rise to the
$18 million tax loss in question had economic 

. The
court found that the record objectively demonstrated that the series of
transactions were not designed to make a profit. 

In fact, the
transactions “serve[d] no other purpose than to provide the structure through
which [the taxpayer] could enjoy the $18 million reduction to his personal 2001
tax burden.” 

The court also found that the series of transactions
lacked profit motive where the transactions were designed to ensure “a
relatively insignificant range [of profit] in comparison with the $18 million tax
benefit . . . .” 

The court concluded that the profit “was a ‘relative
pittance’ that did ‘not appreciably affect [the] beneficial interest[.]’” 

(quoting Knetsch v. United States, 

, 366 (1960)).
      Considering the parties’ expert report, the tax court found that there was
a low likelihood, between 16% and 40%, that the FX Transaction would be
profitable because the options were “egregiously” mispriced against Mr.
Tucker. The tax court concluded that:
           [T]he Epsolon loss component was not designed to
           make a profit, but rather arranged to produce a $52.9
           million artificial loss. The scheme involved separating
           the gains from the losses by allocating the gains to
           Epsolon while it was a CFC, checking the box to
           become a partnership, subsequently recognizing the
           losses, and creating a tiered passthrough-entity
           structure through which to claim the artificial losses.
           No element of the Epsolon loss and Sligo LLC basis
           components had economic substance; each was
           orchestrated to serve no other purpose than to provide
           the structure through which [Taxpayers] could reduce
           their 2000 and 2001 tax burden.
Tucker, 

, at *23.

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                                      No. 17-60833
          Looking at the FX Transaction as a whole, 9 we agree with the tax court
and conclude that the transaction failed the objective economic prong because
there was no reasonable possibility of profit and there was no actual economic
effect.       Because “the absence of any one of [the prongs] will render the
transaction void for tax purposes,” we need not determine whether the FX
Transaction passes the subjective business purpose prong. 

.
                                        CONCLUSION
       For the foregoing reasons, we AFFIRM the tax court’s decision.




         See Salty Brine I, Ltd. v. United States, 

, 495 (5th Cir. 2014) (stating
          9

that “a court must look at the transaction as a whole to determine the economic substance”).

                                             16