54
IV. Conclusion
Professors Bittker and Lokken, in their treatise on Federal
income, gift, and estate taxation, address the principle that
substance must govern over form in taxation. Bittker & Lokken,
Federal Taxation of Income, Estates and Gifts, par. 4.3.3, at 4-
33, (2d ed. 1989). They begin their discussion by noting that
the substance-over-form principle has been referred to as “the
cornerstone of sound taxation” (quoting Estate of Weinert v.
Commissioner, 294 F.2d 750, 755 (5th Cir. 1961), revg. and
remanding 31 T.C. 918 (1959)). Id. In the course of their
discussion, they state (without citation of authority, but none
is needed): “If a transaction is consummated in a form that
fairly reflects its substance, it ordinarily passes muster
despite the conscious pursuit of tax benefits; in this case, the
choice of form resembles an election provided by statute.” Id.
at 4-38. They caution, however:
A rogue offshoot of the substance-over-form doctrine
suggests that when a taxpayer selects one of several forms
that have identical practical consequences in the real world,
the government can disregard the chosen form and tax the
transaction as though the most costly of the alternatives had
been employed. * * * [Id. at 4-41.]
They continue: “On close inspection, the most-costly-alternative
theory turns out to be a drastic extension, rather than a mere
restatement, of the substance-over-form doctrine.” Id. at 4-42.
The majority has not invoked much of the substance-over-form
jurisprudence. It has, however, looked for the “realities of the
Page: Previous 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 NextLast modified: May 25, 2011