OPINION LETTERS OFFER SCANT SHELTER FROM TAX SHELTER PENALTIES.

Discusses the "Long Term Capital Holdings" case where the U.S. Internal Revenue Service won a dramatic and very significant victory in its war against abusive corporate tax shelters. Facts of the case; Finding of Judge Janet Arterton of the U.S. District Court for the District of Connecticut has found that the corporate tax shelter at issue in the case lacked the requisite economic substance; Arterton's imposition of the 40% gross valuation misstatement penalty despite the fact that the taxpayers had obtained favorable opinion letters from two prominent law firms; Court's holding that the opinion letters did not protect the taxpayers from penalties; Lessons provided to tax professional who issue such opinion letters and the taxpayers who rely on them.