- 61 -
Commissioner, 157 F.3d 231 (3d Cir. 1998), affg. in part and
revg. in part on another ground T.C. Memo. 1997-115; Lerman v.
Commissioner, 939 F.2d 44, 53-54 (3d Cir. 1991), affg. Fox v.
Commissioner, T.C. Memo. 1988-570; Casebeer v. Commissioner, 909
F.2d 1360, 1363 (9th Cir. 1990), affg. in part and revg. in part
on another ground Larsen v. Commissioner, 89 T.C. 1229 (1987).
The objective and subjective prongs of the inquiry are related
factors both of which form the analysis of whether the
transaction had sufficient substance apart from its tax
consequences. See ACM Partnership v. Commissioner, supra at 247;
Casebeer v. Commissioner, supra at 1363.
In making our determination as to whether a transaction has
substance, we will first look to whether the taxpayer had a
business purpose for engaging in the transaction other than tax
avoidance. See Frank Lyon Co. v. United States, 435 U.S. 561,
583-584 (1978); Kirchman v. Commissioner, supra at 1492; Bail
Bonds by Marvin Nelson, Inc. v. Commissioner, 820 F.2d 1543, 1549
(9th Cir. 1987), affg. T.C. Memo. 1986-23. The determination of
whether the taxpayer had a legitimate business purpose in
entering into the transaction involves a subjective analysis of
29(...continued)
occurred, we limit our inquiry to the question of whether their
substance corresponds to their form.
Page: Previous 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 NextLast modified: May 25, 2011