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benefits, unintended by Congress, by means of transactions that
serve no economic purpose other than tax savings. Yosha v.
Commissioner, 861 F.2d 494, 498-499 (7th Cir. 1988), affg.
Glass v. Commissioner, 87 T.C. 1087 (1986); see also Estate of
Thomas v. Commissioner, 84 T.C. 412, 432-433 (1985), and the
cases cited therein.
Our conclusion is supported by well-settled judicial
jurisprudence. In the seminal case of Gregory v. Helvering,
293 U.S. 465, 469 (1935), the Court recognized an individual's
right to decrease her taxes in any way permitted by law. As held
by the Court, however, this right is not absolute. The Court
held that a reorganization that met the literal requirements of
the Code would not be respected for Federal income tax purposes
because "what was done, apart from the tax motive, was [not] the
thing which the statute intended". The Court stressed that the
transaction had "no business or corporate purpose", but was "a
mere device which put on the form of a corporate reorganization
as a disguise for concealing its real character". Id.
In the 60 years since the U.S. Supreme Court first expounded
this doctrine of "business purpose", the doctrine's application
has proved a perennial challenge to the courts to set boundaries
between acceptable tax planning and abuse, while taking into
account the importance of maintaining public confidence in the
integrity of the tax system. In Knetsch v. United States,
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