The legal efforts by BB&T (NYSE: BBT ) to recoup as much as $688 million in taxes paid in conjunction with the disallowance of tax credits for certain deals beginning in 2002 were not successful, according to an announcement yesterday from BB&T.
The court's contention, which came from federal judge Thomas Wheeler, related to transactions BB&T made with Barclays. Wheeler said the deals between BB&T and Barclays amounted to "an economically meaningless tax shelter" and that the IRS was within its rights to rescind tax benefits gained from the transactions. BB&T, according to its statement, paid the tax assessment in its entirety in 2010.
As a result of the negative ruling, BB&T said it will take a one-time charge of approximately $250 million this quarter. The $250 million after-tax charge, "[c]ombined with previously recorded tax reserves, fully addresses our liability for the financing transaction," BB&T Chairman and CEO Kelly King said.
King added that even with the $250 million one-time charge, "we expect to remain profitable for the quarter."