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Even if alternative explanations are available to account
for the results of a transaction, this Court will not disregard
the form of the transaction if it accounts for the transaction at
least as well as alternative recharacterizations.14 This is
particularly true in cases that deal with public companies. As
we stated in Esmark, Inc. & Affiliated Cos. v. Commissioner,
supra at 183: "Congress enacted a statute under which tax
consequences are dictated by form; to avoid those consequences,
respondent must demonstrate that the form chosen by petitioner
was a fiction that failed to reflect the substance of the
transaction." (Emphasis added.)
In all the cases cited to us where this Court adopted a
substance-over-form argument, a desire to gain a tax benefit,
through the use of meaningless steps or some other tax fiction,15
was present. Respondent can point to no such tax fiction or
14See Grove v. Commissioner, 490 F.2d 241 (2d Cir. 1973),
affg. T.C. Memo. 1972-98; Carrington v. Commissioner, 476 F.2d
704, 709 (5th Cir. 1973), affg. T.C. Memo. 1971-222.
15For an example of a transaction that was considered to be
a tax fiction by the Supreme Court, see Knetsch v. United States
364 U.S. 361 (1960). That case is authority for the proposition
that
the Commissioner * * * [may] disregard transactions
which are designed to manipulate the Tax Code so as to
create artificial tax deductions [benefits]. They do
not allow the Commissioner to disregard economic
transactions, * * * which result in actual, non tax-
related changes in economic position. [Northern Ind.
Pub. Serv. Co. & Subs. v. Commissioner, 115 F.3d 506,
512 (7th Cir. 1997), affg. 105 T.C. 341 (1995).]
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