- 31 - expense would have offset each other on their Federal income tax returns. Generally, we treat stipulations as conclusive admissions by the parties, and we do not permit a party to change or contradict a stipulation, except in extraordinary circumstances. Rule 91(e); Jasionowski v. Commissioner, 66 T.C. 312, 318 (1976). We find no extraordinary circumstances present in the instant case to cause us to disregard the parties' stipulation concerning the form of the transactions in issue. Substance, however, is not established by mere proof of form. Wichita Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1164 (1946), affd. 162 F.2d 513 (10th Cir. 1947). The Government is not bound by the form chosen and may recharacterize the nature of the transaction according to its substance while overlooking the form selected by the taxpayer. Don E. Williams Co. v. Commissioner, 429 U.S. 569, 579-580 (1977); Higgins v. Smith, 308 U.S. 473, 477 (1940). Although the parties stipulated the form of the transactions in issue (i.e., that petitioners purchased assets from SSI and then later conveyed those same assets to SPC-SC and SPC-FL), respondent did not stipulate that the form of the transaction matched its substance. Accordingly, we conclude that respondent's stipulation does not prevent respondent from arguing that the substance of the transaction prevails over its form. Many of the stipulated facts evince petitioners' failure to respect the form of the transactions they advocate.Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Next
Last modified: May 25, 2011