Merrill Settles IRS Dispute Over Shelter
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Merrill Lynch & Co. agreed to make a “substantial payment” to settle a dispute with the Internal Revenue Service over a corporate tax shelter the firm promoted in 1989 and 1990.
“We decided it was in the best interest of all parties to resolve the matter,” a Merrill Lynch spokesman said. The spokesman said the payment isn’t “material” to the company. Neither he nor the IRS would divulge the amount.
Under the settlement, Merrill Lynch didn’t admit or deny that it was required to register the shelter with the IRS.
The Merrill Lynch shelter was designed to exploit IRS rules governing partnerships that the firm told its clients would generate artificial capital losses to offset real capital gains.
Court rulings rejecting a Colgate-Palmolive partnership marked a landmark IRS victory against the shelter. American Home Products Corp., Allied Signal and other companies have lost similar cases in court or settled with the IRS.
Merrill Lynch shares fell $1.43 to close at $52.67 on the NYSE.
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