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A U.S. appeal court ruled today that Wells Fargo & Co (NYSE:WFC) claimed a $115 million tax deduction it was not entitled to in the 2002 tax year. The deduction was Wells Fargo's attempted use of "sale-in, lease out" transactions, which occur when a tax-exempt entity sells an asset to a taxpayer and then leases it back. The "SILO" deals can offer the taxpaying entity participating in the transaction a variety of tax benefits. But the U.S. Court of Appeals for the Federal Circuit ruled that 26 SILO transactions the company entered into between 1997 and 2002 were "purely circular transactions" that were "abusive tax shelters." The appeals court said a trial judge in the case permissibly found that the claimed tax deductions are for depreciation on property Wells Fargo never expected to own or operate, interest on debt that existed only on a balance sheet, and write-offs for the costs of transactions that amounted to nothing more than tax deduction arbitrage.