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Economic Substance Doctrine: How Codification Changes Decided Cases

48 Pages Posted: 18 Nov 2010 Last revised: 12 Jan 2011

Bret Wells

University of Houston Law Center

Date Written: November 18, 2010


Congress codified and clarified the economic substance doctrine by enacting new Section 7701(o). The article analyzes how new Section 7701(o) would have altered the results in previously decided cases if this provision had existed at the time of these previously decided cases were litigated. Through this analysis, the article attempts to predict how Section 7701(o) will impact the development of the federal tax common law and attempts to predict when and to what extent new Section 7701(o) will reduce the opportunity for taxpayers to capture unintended tax benefits.

Keywords: Judicial Responsibility, Economic Substance Doctrine, Tax Shelters, Statutory Interpretation, Purposivism, Textualism, Coltec, Gregory, Sham Transaction Doctrine, Substance Over Form Doctrine, Business Purpose, Tax Avoidance, Tax Practice

Suggested Citation

Wells, Bret, Economic Substance Doctrine: How Codification Changes Decided Cases (November 18, 2010). Florida Tax Review, Vol. 10, p. 411, 2010; U of Houston Law Center No. 2010-A-39. Available at SSRN:

Bret Wells (Contact Author)

University of Houston Law Center ( email )

4604 Calhoun Road
Houston, TX 77204-6060
United States

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