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Committee on Taxation.

Committee on Taxation (COT)

Staff Liaison: Mark Prysock

COT will file comments on a Senate legislative proposal to codify the judicially created "economic substance" doctrine. The proposal will likely provide that a transaction has economic substance (and thus satisfies the economic substance doctrine) only if the taxpayer establishes that: 1) the transaction changes in a meaningful way (apart from federal, foreign, state and/or local income tax consequences) the taxpayer's economic position; 2) the taxpayer has a substantial non-tax purpose for entering into such transaction; and 3) the transaction is a reasonable means of accomplishing such purpose.

COT has actively opposed recent Congressional attempts to codify the doctrine, successfully arguing that the proposed legislative language is extremely broad and could result in the denial of tax benefits for legitimate business transactions.
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Publication:Financial Executive
Date:Jul 1, 2007
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