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LILOs and SILOs: The Final Chapter?
In what may be the final chapter in the years of litigation over tax-exempt entity leasing transactions, the Circuit Court of Appeals affirmed the Federal Claims Court's decision disallowing Wells Fargo's deductions from SILO transactions. Wells Fargo & Company v. United States, Fed. Cir. 2010-5108 (April 15, 2011). For your recollection, in a sale-in, lease-out (“SILO”) transaction the tax-exempt entity sells an asset it owns to the taxpayer. The taxpayer leases the asset back to the tax-exempt entity for a term less than the asset's remaining useful life. The lease is a net lease, meaning that the tax-exempt entity is responsible for all expenses normally associated with ownership of the asset. (In lieu of a sale, the tax-exempt entity may retain legal title to the asset and sell the property (for tax purposes) via a head lease for a term extending beyond the remaining useful life of the asset.)
The taxpayer funds the asset purchase price in part with its own funds and in part with a nonrecourse loan. The lessee places 95% of the proceeds in two cash collateral accounts, one for the taxpayer's equity portion and one for the debt portion. Each account generates investment income and sufficient cash to fund the lessee's rent payment obligations, which fund the lessor's debt service on the debt. The payment obligations are economically “defeased” ' dedicated funds are set aside for the purpose of paying the obligations.
New York's Latest Cybersecurity Commitment
On Aug. 9, 2023, Gov. Kathy Hochul introduced New York's inaugural comprehensive cybersecurity strategy. In sum, the plan aims to update government networks, bolster county-level digital defenses, and regulate critical infrastructure.
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office
A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.
Bit Parts
Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights
How AI Has Affected PR
When we consider how the use of AI affects legal PR and communications, we have to look at it as an industrywide global phenomenon. A recent online conference provided an overview of the latest AI trends in public relations, and specifically, the impact of AI on communications. Here are some of the key points and takeaways from several of the speakers, who provided current best practices, tips, concerns and case studies.