Guarding Against State Sham Transaction or Economic Substance Doctrines
Kendall Houghton and Matthew Hedstrom were featured presenters during this webinar program sponsored by Bloomberg BNA. The recent congressional hearings regarding Apple’s tax planning strategies highlighted some of the methods that companies are using to reduce their federal tax burden. Last year, a story in the New York Times focused on the company’s strategy for avoiding taxes in California and several other states.
Of course, devising plans to avoid taxes is as old as taxes themselves. The states have adopted various methods for combating corporate tax planning strategies that they deem to be abusive. Among the weapons in many states’ arsenals is the economic substance or sham transaction doctrine, which allows them to ignore or re-characterize certain transactions.
However, it is often unclear to taxpayers which type of corporate reorganizations or other transactions will fall prey to the sham transaction doctrine. The lack of certainty in this area can cast a cloud over legitimate planning techniques. The following topics were covered during the program.
- federal and state common law doctrines that limit taxpayers ability to reduce or avoid taxes
- specific components of the economic purpose and business substance doctrine
- "substance over form” doctrine
- federal codification of the economic substance doctrine
- state codification of the economic substance doctrine
- application of the state economic substance doctrine in various state tax cases
- best practices for avoiding or withstanding scrutiny under the economic substance doctrine
July 23, 2013
12:30 p.m.–2:00 p.m.
