- 29 -
the objective facts, notwithstanding the labels that
were attached to the payments for Israeli tax and
reporting purposes. * * *
They then cite United States v. Goodyear Tire & Rubber Co., 493
U.S. 132 (1989), and LDS, Inc. v. Commissioner, T.C. Memo. 1986-
293, as support for their position.
We conclude, however, that petitioners by this statement
essentially concede that the payment transactions were previously
presented with a “form” or “label” other than dividend
distribution. We further note that their reliance on the cited
cases to minimize the importance of this fact is misplaced.
United States v. Goodyear Tire & Rubber Co., supra, simply
decided that the statutory term “accumulated profits” should be
defined according to domestic tax principles and did not raise or
consider a taxpayer’s ability to disavow form. LDS, Inc. v.
Commissioner, supra, addressed whether transfers of property to a
corporation constituted debt or capital contributions and
explicitly confined willingness to look beyond “labels” to this
narrow context. The Court explained: “‘where the nature of a
taxpayer’s interest in a corporation is in issue, courts may look
beyond the form of the interest and investigate the substance of
the transaction. These situations present an exception to the
general proposition that a shareholder/taxpayer is bound by the
form of her transaction.’” Id. (quoting Selfe v. United States,
778 F.2d 769, 774 (11th Cir. 1985)). Similarly, “‘while a
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011