The US Federal Court of Appeals for the Sixth Circuit has disallowed a deduction for a loss from a transaction that was lacking in economic substance (Mark L. Kerman and Lucy M. Kerman v. Commissioner of Internal Revenue, No. 11-1822, 8 April 2013). The case involved a US taxpayer who entered into a complex series of transactions, referred to as the Custom Adjustable Rate Debt Structure (CARDS) transaction. The CARDS transaction centred on a "high basis, low value" foreign currency loan designed to generate a tax benefit by creating an artificial tax loss to offset real taxable income. The CARDS...