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Under the substance over form doctrine, although the form of
a transaction may literally comply with the provisions of the
Code, that form will not be given effect where it has no business
purpose and operates simply as a device to conceal the true
character of that transaction. See Gregory v. Helvering, 293
U.S. 465, 469-470 (1935). "To permit the true nature of a trans-
action to be disguised by mere formalisms, which exist solely to
alter tax liabilities, would seriously impair the effective
administration of the tax policies of Congress." Commissioner v.
Court Holding Co., 324 U.S. 331, 334 (1945). If, however, the
substance of a transaction accords with its form, that form will
be upheld and given effect for Federal tax purposes. See
Blueberry Land Co. v. Commissioner, 361 F.2d 93, 100-101 (5th
Cir. 1966), affg. 42 T.C. 1137 (1964).
The step transaction doctrine developed from the substance
over form doctrine. See Associated Wholesale Grocers, Inc. v.
United States, 927 F.2d 1517, 1521 (10th Cir. 1991). We have
considered step transaction principles on many occasions. Those
principles can be summarized by restating what we said about them
in Penrod v. Commissioner, 88 T.C. 1415, 1428-1430 (1987):
The step transaction doctrine is in effect another rule
of substance over form; it treats a series of formally
separate "steps" as a single transaction if such steps
are in substance integrated, interdependent, and fo-
cused toward a particular result. * * * There is no
universally accepted test as to when and how the step
transaction doctrine should be applied to a given set
of facts. Courts have applied three alternative tests
in deciding whether to invoke the step transaction
doctrine in a particular situation.
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