Altria insisted the arrangement produced an “absurd” result, taxing a minority shareholder with no decision-making power. But Judge Lauck countered that Congress deliberately expanded the reach of Subpart F to prevent U.S. corporations from indefinitely deferring taxes on foreign income.
Broader Legal Context
The decision also leaned on the U.S. Supreme Court’s Moore v. United States ruling, which upheld the TCJA’s mandatory repatriation tax, rejecting arguments that taxing unrealized income violates the Constitution.
Altria’s broader lawsuit sought $106 million in refunds, alleging overpaid transition taxes and miscalculated credits. Monday’s ruling, however, granted judgment for the government on one major count, marking a costly setback for the Marlboro-maker.
Representation and Next Steps
Altria is represented by Hunton Andrews Kurth LLP and Skadden, Arps, Slate, Meagher & Flom LLP, while the U.S. government is defended by the Justice Department’s Tax Division and the U.S. Attorney’s Office for the Eastern District of Virginia.
