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Although my approach to the case at hand employs a step-
transaction analysis, which is a variant of substance over form,
I do not use that analysis to conclude anything about fair market
value. Instead, I use it to identify the property whose transfer
is subject to tax. Step-transaction analysis has often been used
in transfer tax cases to identify the transferor or the property
transferred.
The step-transaction doctrine is a judicially created
concept that treats a series of formally separate “steps” as a
single transaction if those steps are “in substance integrated,
interdependent and focused toward a particular end result.”
Penrod v. Commissioner, 88 T.C. 1415, 1428 (1987). The most far-
reaching version of the step-transaction doctrine, the end-result
test, applies if it appears that a series of formally separate
steps are really prearranged parts of a single transaction that
are intended from the outset to reach the ultimate result. See
Penrod v. Commissioner, 88 T.C. at 1429, 1430 (citing Helvering
v. Alabama Asphaltic Limestone Co., 315 U.S. 179 (1942); South
Bay Corp. v. Commissioner, 345 F.2d 698 (2d Cir. 1965); Morgan
Manufacturing Co. v. Commissioner, 124 F.2d 602 (4th Cir. 1941);
1(...continued)
1255 (7th Cir. 1988), the magic marker the Guligs used to paint
the mustache on the Mona Lisa was filled with disappearing ink.
However, the discussion in the text is presented as an
alternative to a factual sham analysis.
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