Practice Areas & Industries: Pepper Hamilton LLP

Practice Group Overview

Pepper Hamilton LLP's tax practice group assists clients with proactive tax planning, including mergers and acquisitions, dispositions, public offerings, reorganizations, restructurings, liquidations and structured finance vehicles. Our tax lawyers are integrally involved in the structure and formation of partnerships, and have significant experience in private equity funds, hedge funds, mezzanine funds and their investments. The tax practice also encompasses significant international matters, such as inbound and outbound acquisitions and dispositions, foreign tax credit planning and cross-border finance work.

Services Available

We represent many private foundations and public charities, advising structuring to avoid unrelated business taxable income and self-dealing and excess business holdings situations. The firm also advises real estate developers, special purpose bankruptcy-remote vehicles, secured and unsecured creditors' committees and corporations in bankruptcy, and partnerships on all tax issues.

We have a significant subspecialty in Pennsylvania and Philadelphia tax litigation, and structuring corporate relationships to minimize state tax burdens and planning for the disposition of corporate assets.

The practice includes tax controversy work that ranges from large case controversies to single-issue controversies. We handle matters at the ruling request, audit and appeals levels as well as in the courts.

Our tax lawyers have:

Public Corporations

• structured a two-step, tax-free merger of two public companies to limit tax exposure to target company
• structured and implemented an international consolidation of a business and resulting public offering
• provided special tax counsel for public offering of $200 million in limited partnership interests
• counseled a major public company in restructuring certain of its U.S., Canadian and European subsidiaries to position the group for eventual sale in public markets
• provided tax counsel to a U.S. bank being acquired by a non-U.S. bank in a tax-free reorganization
• issued opinions on the tax consequences of acquisitions and dispositions, domestically and internationally
• counseled in the acquisition of a subsidiary of a publicly held corporation in a § 338(h)(10) acquisition.

Non-Public Businesses

• restructured related portfolio companies to provide for basis recovery and partial exit by private equity fund
• structured the sale for $500 million of a closely held S corporation in a § 338(h)(10) election
• created structure for private equity fund to invest in pass-through portfolio companies
• converted general partnership family business to limited partnership for purposes of wealth transfer to younger generation.

Partnerships and RICs

• structured and drafted partnership agreements for investment funds, venture funds, leveraged buyout funds, hedge funds and small business investment companies
• provided tax counsel in the acquisition and consolidation of several RICs under one adviser
• provided tax advice to investors and partnerships regarding structuring and implementing carried interests associated with formation and/or performance of underlying investments
• provided tax advice to, and structure and formation of, blind pool investment partnerships and investment partnerships utilizing carried interests and subaccounting for separate investment measurement of returns and flips.

Foreign-Related Taxation

• structured U.S. and non-U.S. acquisitions by foreign-owned U.S. companies to minimize global taxation, with significant emphasis on foreign tax credit planning
• structured $200 million buyout fund for European institutional investors
• structured investments by U.S. persons in developing countries
• represented a major U.S. corporation in the tax planning for the license or distribution of computer software rights worldwide
• counseled a closely held corporation on permanent establishment issues for foreign activities
• structured investments by U.S. persons in European countries, utilizing the tax treaty network.

Tax-Exempt Entities

• represented a private trust company in its commercial activities and in its capacity as trustee of nationally recognized charitable trusts
• advised corporate-created private foundations regarding the establishment of a scholarship program for employees' children
• advised the national governing body for a U.S. Olympic sport about its organizational structure and other tax issues.

Tax Controversies

• handled Third Circuit litigation involving substantial Internal Revenue Service 100 percent penalty claim, raising issues of first impression on the propriety of the IRS' method of assessment
• managed to a "no change" the appeal of IRS denial of partnership debt financed distribution treatment of $50 million
• managing the appeal of IRS denial of deduction for rebate in the form of warrants ($23 million). At TAM stage
• managing the appeals/settlements of high net worth tax shelter cases
• managing a refund claim (in excess of $10 million) for a fraudulent investment
• managed to a "no change" the appeal of an IRS assessment of excise tax
• managed transfer pricing audit and appeal for a Swiss company
• managed audit and appeal of determination that loans were made to S corporation, not shareholders
• managed audit and appeal of determination of proper depreciation conventions for real estate developer
• managed audit and appeal of determination of proper net operating losses for company
• managed audit and appeal regarding proper accounting methods and treatment of syndication fees for oil and gas syndicators
• currently handling more than 200 state and local tax appeal cases for a variety of clients.

Financing Transactions

• represented the investment adviser to an offshore investment company issuing several series of collateralized bonds to domestic and foreign investors
• provided tax counsel for an international investment master feeder organization, including advising on impact of U.S. investments by non-U.S. participant
• provided tax counsel for private placement of $92 million in discount bonds
• represented issuers in complex securitizations of debt obligations
• represented insurance issuer before the IRS in successful remediation of non-complying financial product
• counseled a public transportation company on the tax consequences of various public offerings of straight and hybrid debt instruments
• counseled investors in a public tender offer in complex reorganization.

Bankruptcy Tax Issues

• structured a designated settlement fund for tort claimants for a company emerging from bankruptcy under Chapter 11
• prepared a tax opinion concerning complex bankruptcy tax issues associated with the preservation of a $350 million net operating loss
• advised creditors' committees in one of the nation's largest bankruptcies on net operating loss and debt exchange issues as well as on positioning the debtor company for future operations.