McDermott Secures Complete US Tax Court Victory for Fortune 200 Client


WASHINGTON, DCMcDermott Will & Emery LLP secured a complete victory in the United States Tax Court on behalf of Illinois Tool Works Inc. The decision, released on August 6, 2018, followed an eight-day trial in July 2016 and multiple briefings.

The case involved a common strategy to distribute cash to the United States from foreign subsidiaries. A key issue was whether a loan from a subsidiary to its parent company was a nontaxable return of capital, as reported by Illinois Tool Works, or a dividend, as contended by the Internal Revenue Service (IRS). The IRS challenged the tax treatment of the transaction and determined that Illinois Tool Works was liable for a significant amount of income tax deficiency. The Court resolved all issues in Illinois Tool Works’ favor.

“We are proud to have represented Illinois Tool Works and to have achieved this highly favorable outcome,” said Caroline Ngo, lead counsel in the case and co-leader of McDermott’s International Tax Affinity Group.

In addition to Ngo, the McDermott team included Justin Jesse and Christy Vouri-Misso, with assistance from Michael Wilder,David Noren,Kevin Spencer and Michael Rodgers.

The case is Illinois Tool Works Inc. & Subsidiaries, v. Commissioner of Internal Revenue and the full opinion is available here.



About McDermott

McDermott Will & Emery is a premier international law firm with a diversified business practice. Numbering more than 1,000 lawyers, we have offices in Boston, Brussels, Chicago, Dallas, Düsseldorf, Frankfurt, Houston, London, Los Angeles, Miami, Milan, Munich, New York, Orange County, Paris, San Francisco, Seoul, Silicon Valley and Washington, DC. Further extending our reach into Asia, we have a strategic alliance with MWE China Law Offices in Shanghai.

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