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Division of Local Services attorney James Crowley has written a very clear and compelling story on a complicated tax case for the latest edition of City and Town , the free DLS publication emailed biweekly to thousands of local officials across the Commonwealth.

Aptly titled "That's Nobody's Business: Sham Corporation Denied Personal Property Tax Exemption," Crowley surgically dissects an Appeals Court decision issued last year that upheld an Appellate Tax Board denial of a property tax exemption to a leasing corporation.

The court ruled that the leasing corporation, MASSPCSO, formed by the wireless telecommunications company Sprint Spectrum, L.P., was a sham because it did not engage in business and was created solely for the purpose of avoiding taxes.

Sprint formed the sham leasing company as a way to transfer taxable equipment to a subsidiary (MASSPCSO) and then lease back the equipment for use in Massachusetts as a way of avoiding local personal property taxes. The local assessors didn't buy the scheme, and neither did the courts.

As Crowley noted, "the Appeals Court observed that MASSPCSO had no employees; failed to keep separate bank accounts; did not independently make investments; did no business with other parties except where it was incidental to leasing equipment to the parent; did not lease property to third parties; could not act independently; did not purchase equipment or be responsible for debt incurred in conjunction with said purchases."

In other words, a classic sham transaction.

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