Winn-Dixie Stores, Inc. and Subsidiaries - Page 55




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          produced positive earnings and cash-flow.  Indeed, petitioner's             
          internal records show that petitioner viewed the 1993 COLI plan             
          as an "Expense Reduction Opportunity", that would produce                   
          estimated savings of $300 million.44  The only "expense" that was           
          reduced by the COLI plan was petitioner's income tax liability.             
               Even if we were to accept Mr. McCook's testimony that he               
          intended to use tax savings to fund Winn-Flex, that would not               
          cause the COLI plan to have economic substance.45  If this were             
          sufficient to breathe substance into a transaction whose only               
          purpose was to reduce taxes, every sham tax-shelter device might            
          succeed.  Petitioner's benefit from the COLI plan was dependent             
          on the projected interest and fee deductions that would offset              
          income from petitioner's normal operations.  The possibility that           
          such tax benefits could have been used as a general source of               
          funds for petitioner's Winn-Flex obligations (or any other                  
          business purpose) does not alter the fact that the COLI plan                


               44When Mr. McCook was asked how the $300 million was                   
          derived, he testified that he thought that it was the total of              
          the "After-tax Savings" figures listed in the Jan. 27, 1993,                
          projections.  These Jan. 27, 1993, projections are contained in             
          appendix A, Profit and Loss Statement.  The after-tax earnings              
          referred to by Mr. McCook are in column J.  The total after-tax             
          earnings for the policy years 1993 through 2007 are slightly more           
          than $300 million.  The total projected after-tax earnings for              
          the years 1993 through 2052 are more than $2 billion.                       
               45We note that none of these tax savings were earmarked for            
          funding Winn-Flex.  They were simply projected to reduce                    
          petitioner's tax liabilities and thereby increase petitioner's              
          after-tax profits by more than $2 billion over 60 years.                    




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