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Argued October 2, 2001

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: Through an elaborate scheme involving partnerships with a foreign bank operating in a tax-free jurisdiction, a diversified U.S. company generated over $190 million worth of tax losses while incurring an actual loss of only $5 million. The Tax Court found that because certain of the partnerships’ transactions lacked economic substance, they created no gains or losses for federal tax purposes. At the same time, the Tax Court declined to address the government’s alternative contention that both partnerships were shams for federal tax purposes. The partnerships, together with the company, now appeal, and the government crossappeals. We vacate and remand to the Tax Court for reconsideration in light of our recent decision in ASA Investerings Partnership v. Commissioner, 201 F.3d 505 (D.C. Cir. 2000), where we invalidated what appears to be a similar–perhaps even identical–tax shelter on the grounds that the entire partnership, not merely the specific transactions at issue, was a sham for federal tax purposes.

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