Santander Holding USA is a financial-services company that used a tax strategy called Structured Trust Advantaged Repackaged Securities (STARS) to generate more than $400 million in foreign tax credits. The scheme was developed and promoted to several U.S. banks by Barclays Bank PLC, a U.K. financial-services company, and the accounting firm KPMG, LLC. The Internal Revenue Service (IRS) ultimately concluded that the STARS transaction was a sham, and that the economic-substance doctrine therefore prohibited petitioner from claiming the foreign tax credits. The STARS-scheme was designed to transform the foreign tax credit into economic profit, at the expense of the U.S. Treasury. STARS involved an arrangement whereby the U.S. taxpayer paid tax to the United Kingdom, claimed a foreign tax credit for that U.K. tax, and simultaneously recouped a substantial portion of its U.K. tax. Instead of the typical one-to-one correlation of credits claimed to taxes paid, the taxpayer thus received one dollar in U.S. tax credits for substantially less than one dollar in foreign taxes paid. The STARS shelter was complex, but in  general terms worked as follows: The U.S. taxpayer diverted income from U.S. assets (such as loans to U.S. borrowers) into and out of a wholly owned Delaware trust that had a nominal U.K. trustee. Circulation of the income through the trust was purely a paper transaction, and no income was put at risk or deployed in any productive activities. Because the trustee was a U.K. resident, however, circulation of the income through the trust caused the income to become subject to U.K. tax, even though the assets and income never left the United States or the U.S. taxpayer’s control. The taxpayer would pay the trust’s U.K. tax and claim corresponding foreign tax credits on its U.S. return. STARS, however, incorporated a mechanism that allowed the taxpayer to recoup a substantial portion of the U.K. tax, while retaining the full amount of the U.S. foreign tax credits. Barclays, the entity that marketed STARS, acquired at the outset a formal interest in the Delaware trust. Under U.K. law, that formal interest allowed Barclays to claim certain U.K. tax benefits, ultimately permitting Barclays to recover almost the full amount (in this case, 85%) of the taxes that the taxpayer had paid. As part of the STARS strategy, Barclays agreed to return a significant percentage of that amount to the U.S. taxpayer, while keeping the rest as its fee. As a result, the U.S. taxpayer would receive an effective refund (through Barclays) of approximately 50% of its U.K. taxes, while claiming a foreign tax credit on its U.S. tax return as if it had paid 100% of those taxes. That benefit was achieved without putting any money at economic risk and without engaging in any productive business activities. The STARS strategy had an unlimited capacity to generate additional foreign tax credits, bounded only by the amount of income that a taxpayer could cycle through the trust petitioner employed the transaction to generate more than $400 million in foreign tax credits during the 2003-2007 tax years. The question before the Supreme Court was whether the economic substance of a transaction for which a taxpayer claims foreign tax credits on its federal tax return depends in part on whether the transaction was profitable after all foreign taxes were paid. Like other provisions of the Internal Revenue Code, foreign tax credits are subject to the “economic substance” doctrine under that longstanding common-law principle, which was codified by Congress in 2010. According to the doctrine a transaction are not allowable if the transaction does not have economic substance or lacks a business purpose. The doctrine reflects the principle that Congress does not intend for sham transactions to produce tax benefits, even if the transactions would otherwise trigger tax benefits under the pertinent statutory and regulatory provisions. The Court denies the petition for a writ of certiorari ...