Favorite Tax Strategies May No Longer Pass Muster

As part of the Health Care and Reconciliation Act of 2010 passed earlier this year, Congress codified the economic substance doctrine, a common law theory used in several court cases to deny tax benefits to taxpayers from transactions that do not result in a meaningful change in the economic position of the taxpayer, other than by reducing taxes. Unfortunately, in the process, Congress has created new ambiguities and added severe penalties that cast a shadow over many ordinary transactions in a manner that threatens to trap even the most well advised taxpayers. In a recent article published in Buyouts magazine, Isaac Grossman of Morrison Cohen LLP highlights the difficulties with the new legislation and offers insight into how the IRS might use the new provision. Click on the PDF link above to read the full article.