Cooley Litigators Reach Conclusion for Entergy with Supreme Court Decision

New York – May 28, 2013 – Cooley LLP announced today that it closed the final chapter in a multi-year tax litigation on behalf of client Entergy Corp. after the Supreme Court of the United States denied the IRS Commissioner's petition for certiorari, upholding a ruling that the Court of Appeals for the Fifth Circuit issued in favor of our client in 2012.

In Entergy Corporation v. Commissioner, and, similarly, in PPL Corporation v. Commissioner, at issue was whether the UK's windfall tax on privatized utilities was creditable against US income tax. Since both Entergy and PPL held stakes in privatized UK utility companies, they paid the UK windfall tax, and, consequently, claimed foreign tax credits on their respective US corporate tax returns. The IRS denied the foreign tax credits which drove the conflict to the U.S. Tax Court.

In both cases, the U.S. Tax Court ruled that the companies could credit the windfall tax. The government, however, appealed both decisions, and based on jurisdiction, the Entergy case was argued before the Court of Appeals for the Fifth Circuit while PPL's case was heard by the Court of Appeals for the Third Circuit. Even though the U.S. Tax Court had handed down identical decisions, the appellate court rulings were split. The Fifth Circuit affirmed the U.S. Tax Court's ruling in favor of Entergy, while the Third Circuit reversed the U.S. Tax Court's ruling and issued a decision in favor of the government. Cooley was counsel for Entergy in the appeal before the Fifth Circuit.

The split decisions led to a showdown at the Supreme Court of the United States, which heard arguments on the PPL case while the Entergy case was held in abeyance. On May 20, 2013, the Supreme Court, largely following Cooley's arguments on behalf of Entergy made at the Fifth Circuit and in the company's amicus curiae brief in support of PPL, unanimously ruled in favor of PPL. In keeping with its decision in PPL, the Court dismissed the Government's appeal of Entergy's win at the Fifth Circuit. 

The Cooley Tax team representing Entergy and providing consultation to PPL's counsel included partner Steve Gardner, of counsel John Steines and associate Ben Oklan

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Related Contacts
Stephen Gardner Senior Counsel, New York
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Tax