Law Commons^™

Of Form And Substance: Tax-Free Incorporations And Other Transactions Under Section 351, Ronald H. Jensen

Elisabeth Haub School of Law Faculty Publications

This article presents three principal theses: First, the courts and the Internal Revenue Service have misapplied the substance over form doctrine to the binding obligation cases under section 351 and in the process have created a hodgepodge of hopelessly irreconcilable and frequently wrong decisions. Part II of this article illustrates the inconsistencies and contradictions found in current law. Part III diagnoses the reason for this malaise: the unthinking, mechanical and therefore erroneous application of the step transaction doctrine. Part IV then develops the true function of the doctrine: to assure that clearly defined statutory purposes are not frustrated by plans …