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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.
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