Tom Zehnle Discusses Sale-Leaseback Tenant Improvements Transaction Case Victory in Tax Analysts

"Practitioners Parse Promoters' Wins in Sale-Leaseback Tenant Improvements Transaction"
Tax Analysts
02.12.13Tom Zehnle comments on the recent acquittal and a finding of not guilty for two defendants on charges of conspiracy to defraud the IRS under 18 U.S.C. section 371 - known as a Klein conspiracy - and with corruptly endeavoring to obstruct and impede the administration of the tax law under section 7212(a). The charges stemmed from the defendants' role in the marketing and implementation of sale-leaseback of tenant improvements strategy (SLOTS) transactions.

Zehnle said sale-leasebacks are common in the business world. "You could lease the shell [of the retail space]," he said, and then pay millions to build them out. "That's what made it unique, and no doubt, that's what caught [the government's] attention."

"This wasn't a case where taxes just vanished," Zehnle said, adding that the taxpayers "essentially accelerated their tax deductions." Those corporate taxpayers also had a business purpose, because when they sold the assets, they got a cash infusion that could be used to expand the business. Those points had to be carefully made to the jurors, he said, and he highlighted the importance of carefully selecting jurors in complex shelter cases.
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