Ed Froelich is Of Counsel in the Washington, D.C., office of Morrison & Foerster, and is a member of the Tax Practice Group. He counsels clients in all aspects of the administrative phase of federal tax controversies. Mr. Froelich is also an accomplished tax litigator.

Mr. Froelich was previously a trial attorney for the Tax Division of the Department of Justice, Court of Federal Claims Section. During his four years at the Department, he gained extensive experience defending a variety of corporate and individual tax refund cases, settling a number of such cases, and litigating others to favorable results. While in private practice, in addition to handling tax litigation matters, Mr. Froelich has represented corporations, partnerships, and individuals in the administrative stages of a federal tax controversy.

His more recent significant controversy matters involve issues in the following areas:

• Income tax accounting
• International tax
• Listed transactions
• Stock option employment taxes
• Penalties
• Disclosure litigation

Mr. Froelich has handled a variety of income tax accounting issues including change of accounting method issues under Section 453, corresponding issues under Section 481, and economic performance issues under Section 461. Recently, Mr. Froelich brought to a good settlement to a dispute involving what the IRS characterized as a double-deduction transaction under Section 351, and a dispute involving a contested liability trust where IRS Appeals recognized a significant litigation risk relating to the economic performance rules.

On an international level, Mr. Froelich has handled several tax controversies. In one matter, which involved swap losses incurred by an overseas bank, the issue turned on the specific language in Code Section 864(c), which relates to deemed effectively-connected income. Mr. Froelich has also advised a public company regarding foreign tax credit redetermination events under Section 905(c), with respect to the United Kingdom and Canadian tax treaties. He recently advised an apparel company regarding exposure to tax and penalties for failure to withhold under Section 1442 on payments of license fees to a European licensor. He is currently advising two insurance companies on the impact of the proposed revocation of an election under Section 953(d) (allowing for domestic status of a foreign insurance company), with the potential result of deemed Section 367 transfers of assets and tax on built-in gain.

In addition, Mr. Froelich has substantial experience handling matters involving several of the listed transactions, including, identified by way of Notice, 99-59 (BOSS), 2000-44 (son of BOSS), 2001-17 (liability management subsidiaries), 2001-45 (basis shift), and 2002-50 (foreign currency straddle/tiered partnerships). His experience in this area also includes framing arguments to rebut the IRS’s ever-present economic substance and step transaction attacks, issues arising under the registration, disclosure, maintenance rules, as well as related penalties.

With respect to stock option tax treatment, Mr. Froelich has advised several clients in the wake of the backdated options scandal, including two public companies on the pertinent federal and state rules regarding withholding and related penalties.

Mr. Froelich clerked for Judge John P. Wiese of the United States Court of Federal Claims. He is a member of both the District of Columbia and Maryland bars, and is currently Chair of the Federal Bar Association Section on Taxation. He is also active in the D.C. tax bar. In 1999, Mr. Froelich earned his LL.M. in Taxation at the Georgetown University Law Center, graduating with distinction.

Mr. Froelich is the co-author of BNA Accounting Policy & Practice Portfolio, No. 5511, and The Section 7525 Tax Practitioner-Taxpayer Privilege and Related Issues. He also devotes substantial time to following developments in privilege and work product issues as they affect tax controversies. He has participated as a panelist in FBA, TEI, ABA section meetings, and internal client programs on topics such as privilege, work product, FIN 48, and low-income taxpayer litigation issues.

Representative Litigation Matters

• Anonymous v. Commissioner, U.S. Tax Court Docket No. 4068-08 (pending disclosure litigation).
• Ammex, Inc. v. United States, 90 A.F.T.R.2d (RIA) 7330 (E.D. Mich. 2002) (exclusion of retail sales of gasoline and diesel fuel from duty-free classification).
• Robinson v. United States, 52 Fed. Cl. 725 (2002) (ripeness of employer's claim for refund resulting from a Code Section 83(h) deduction when no final determination had been made as to the value of restricted stock included in the employee's gross income).
• Ammex, Inc. v. United States, 52 Fed. Cl. 303 (2002) (standing of taxpayer to sue for a refund of gasoline excise taxes).
• Lockheed Martin Corp. v. United States, 49 Fed. Cl. 241 (2001) (inclusion of payments to various subcontractors as a qualified research expense for in-house research expenses for supplies pursuant to Code Section 41).
• Sullivan v. United States, 85 A.F.T.R.2d (RIA) 1446 (Fed. Cl. 2000) (claim for refund of taxes based on a revised disability rating from the Veteran's Administration).
• Estate of Swanson, 85 A.F.T.R.2d (RIA) 1196 (Fed. Cl. 2000) (whether checks written shortly prior to the decendent's death were inter vivos gifts and thus not includable in her estate).
• Lockheed Martin Corp. v. United States, 82 A.F.T.R.2d (RIA) 7141 (Fed. Cl. 1998) (entitlement to qualified research expenditure tax credits under Code Section 41 with respect to research expenses incurred in the performance of government contracts).
• Binks v. United States, 82 A.F.T.R.2d (RIA) 7134 (Fed. Cl. 1998) (recovery of litigation fees under Code Section 7430).
• De Alto v. United States, 81 A.F.T.R.2d 2021 (Fed. Cl. 1998) (whether taxpayer was a "responsible person" under Code Section 6672 with respect to his employer's failure to pay over withholding taxes).
• Speers v. United States, 38 Fed. Cl. 197 (1997) (claim for allegedly overpaid interest on delinquent employment taxes).