Reforming the Non-Disavowal Doctrine

49 Pages Posted: 26 Oct 2015 Last revised: 25 Jan 2016

See all articles by Emily Cauble

Emily Cauble

DePaul University - College of Law

Date Written: October 25, 2015


One well established feature of tax law is that, oftentimes, substance prevails over form. In other words, the substance of a transaction will determine the transaction’s tax consequences. For instance, tax consequences will not depend solely on the label that a taxpayer assigns to a given transaction. Instead, the IRS can examine the transaction’s economic features to more accurately characterize it for tax purposes.

Also deeply entrenched in tax law is the notion that, frequently, the IRS experiences more success than taxpayers when invoking the notion that substance prevails over form. In other words, when substance matters, the IRS can freely assert that a transaction should be taxed based on its true substance rather than the form selected by the taxpayer. A taxpayer, by contrast, is less likely to succeed when making the same assertion. The resistance to taxpayers’ attempts to invoke the substance-over-form doctrine is known as the "Non-Disavowal Doctrine."

Although the Non-Disavowal Doctrine’s existence is widely acknowledged, the purposes of the doctrine have not been adequately theorized. This is perhaps not surprising given that court decisions invoking the Non-Disavowal Doctrine have been described as muddled and inconsistent. Courts and existing literature have offered various explanations for the doctrine, but the explanations that have been offered are not fully developed. This Article will examine potential rationales in detail. Providing a detailed analysis of the theory underlying the Non-Disavowal Doctrine serves two useful purposes. First, it helps to explain some of the factors upon which courts rely that might otherwise seem irrelevant. Second, it provides guidance for how and when courts should apply the doctrine to better serve its goals.

Keywords: Non-Disavowal Doctrine, Substance over Form

Suggested Citation

Cauble, Emily, Reforming the Non-Disavowal Doctrine (October 25, 2015). Virginia Tax Review, Forthcoming, Available at SSRN: or

Emily Cauble (Contact Author)

DePaul University - College of Law ( email )

25 E. Jackson Blvd.
Chicago, IL Cook County 60604-2287
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics