Codification of the Economic Substance Doctrine

Journal of Taxation of Investments, p. 87, Winter 2011

Case Legal Studies Research Paper No. 2011-19

Posted: 2 Sep 2011 Last revised: 5 Sep 2011

See all articles by Erik M. Jensen

Erik M. Jensen

Case Western Reserve University School of Law

Date Written: September 1, 2011

Abstract

In March 2010, Congress codified a version of the economic substance doctrine, together with a stringent strict-liability penalty that applies if noncompliance with the doctrine leads to an underpayment of tax. This article provides guidance to investors and their advisors about the significance of the doctrine, discussing, among other things, the effects of codification, interpretive issues arising from the statutory language, and the lack of guidance about the transactions to which the doctrine applies. The article concludes that codification is something that everyone must pay attention to, but that many of the concerns raised by commentators about its scope have been overstated.

Keywords: economic substance doctrine, strict liability, taxation, statutory interpretation, investment

JEL Classification: K34

Suggested Citation

Jensen, Erik M., Codification of the Economic Substance Doctrine (September 1, 2011). Journal of Taxation of Investments, p. 87, Winter 2011; Case Legal Studies Research Paper No. 2011-19. Available at SSRN: https://ssrn.com/abstract=1920965

Erik M. Jensen (Contact Author)

Case Western Reserve University School of Law ( email )

11075 East Boulevard
Cleveland, OH 44106-7148
United States
216-368-3613 (Phone)
216-368-2086 (Fax)

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