TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, October 27, 2011

Madison: Breaking the Tax Law's Addiction to Economic Substance

Allen D. Madison (Wyoming), Rationalizing Tax Law by Breaking the Addiction to Economic Substance, 47 Idaho L. Rev. 441 (2011):

This article presents a critique of the economic substance doctrine and suggests an alternative. The economic substance doctrine under certain circumstances overrides the technical provisions of the Internal Revenue Code. Congress recently incorporated into the Code a version similar to the court-developed doctrine. Whether authorized by the court or authorized by statute, however, the doctrine makes our tax laws vague, uncertain, and fallacious. Therefore, the doctrine should be abandoned. A more appropriate tool for curbing questionable tax planning is the use of statutory risk requirements. This article provides some suggestions for developing such requirements. The article concludes that statutory risk requirements would help break the tax system’s addiction to economic substance and restore long overdue rationality.

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Good article. Thanks for posting it.

Posted by: AMTbuff | Oct 28, 2011 2:18:00 PM