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June 08, 2010
Brattle Provides Testimony on Economic Substance and Business Purpose in Two Consolidated Tax Disputes

Dr. Larry Kolbe, a principal in The Brattle Group’s Cambridge, MA office, provided testimony on behalf of the Tax Division of the U.S. Department of Justice before the U.S. District Court for the District of Massachusetts that helped shape the outcome of a consolidated trial regarding two complex tax disputes, Fidelity International Currency Advisor A Fund, L.L.C. v. United States of America and Fidelity High Tech Advisor A Fund, L.L.C. v. United States of America. On May 17, 2010, the Court ruled in favor of the U.S. government and concluded, among other things, that both transactions lacked economic substance and that the transactions lacked non-tax business purposes. Over the 44-day trial in late 2008, Dr. Kolbe testified for three and a half days regarding the structure and financial underpinnings of the transactions and how to evaluate their economics. He opined on the transactions’ objective possibility of profit, the economic rationality of their stated non-tax business purposes, and various other aspects of the transactions. The Court’s Findings of Fact and Conclusions of Law, posted May 19, 2010, can be found at: http://pacer.mad.uscourts.gov/recentopinions.html.