U.S. Court Upholds IRS Application of Principal Purpose Test for Discretionary Treaty Benefits

On 14 August 2017, the U.S. District Court for the District of Columbia found in favor of the IRS in a summary judgment concerning whether the IRS was justified in not granting discretionary benefits under the Swiss-U.S. tax treaty. The case involved Swiss-domiciled Starr International Company, Inc. (Starr), once the largest shareholder of American International Group (AIG). Starr was originally based in Bermuda and relocated to Ireland before relocating to Switzerland. In 2007, Starr petitio…