- 7 - fraud, duress, etc.” Id. at 775 (the Danielson Rule). In reaching its conclusion, the court cited several factors, including “whipsaw” problems the Government would encounter if taxpayers could unilaterally disavow the form of their transactions for Federal tax purposes. The U.S. Court of Appeals for the Sixth Circuit, the circuit to which this case is appealable, has generally adopted the Danielson Rule. See Schatten v. United States, 746 F.2d 319 (6th Cir. 1984). Not all circuits have adopted the Danielson Rule in cases where taxpayers from the outset have taken tax reporting positions consistent with their view of the substance of the transaction. But it is generally accepted that taxpayers may not execute a transaction in one form, file returns consistent with that form, and then argue for an alternative tax treatment after their returns are audited. See, e.g., Little v. Commissioner, T.C. Memo. 1993-281 (concluding that taxpayers “are entitled to attack the form of their transaction only when their tax reporting and other actions have shown an honest and consistent respect for what they argue is the substance of the transaction.”). In Estate of Durkin v. Commissioner, 99 T.C. 561 (1992), supplementing T.C. Memo. 1992-325, we considered and rejected an attempt by a taxpayer to disavow the form of, and previous tax reporting relating to, a transaction. The taxpayer in that case engaged in two simultaneous transactions with an unrelatedPage: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011