Tax Shelters or Efficient Tax Planning? a Theory of the Firm Perspective on the Economic Substance Doctrine

35 Pages Posted: 31 May 2013 Last revised: 4 Jun 2013

See all articles by T. Christopher Borek

T. Christopher Borek

Analysis Group, Inc.

Angelo Frattarelli

United States Department of Justice

Oliver Hart

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

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Date Written: May 2013

Abstract

Courts have articulated a number of legal tests to distinguish corporate transactions that have a legitimate business or economic purpose from those carried out largely, if not solely, for favorable tax treatment. We outline an approach to analyzing the economic substance of corporate transactions based on the property rights theory of the firm, and describe its application in two recent tax cases.

Suggested Citation

Borek, T. Christopher and Frattarelli, Angelo and Hart, Oliver D., Tax Shelters or Efficient Tax Planning? a Theory of the Firm Perspective on the Economic Substance Doctrine (May 2013). NBER Working Paper No. w19081, Available at SSRN: https://ssrn.com/abstract=2272517

T. Christopher Borek (Contact Author)

Analysis Group, Inc. ( email )

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Angelo Frattarelli

United States Department of Justice ( email )

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Oliver D. Hart

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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European Corporate Governance Institute (ECGI) ( email )

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