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this intent. Consequently, we disregard Generale Bank’s and
CLIS’s purported contributions to SMP. Cf. Rice’s Toyota World,
Inc. v. Commissioner, 752 F.2d at 95 (holding that the Tax Court
correctly ignored labels applied by the taxpayers and determined
that a transaction was in substance a fee paid for tax benefits).
IV. Step Transaction Doctrine
Respondent contends that the step transaction doctrine
applies to disallow petitioner’s claimed losses. Whether this
contention is viewed as an alternative argument, or merely as a
particularization of respondent’s substance over form argument,
the results are identical: We disregard the banks’ purported
contributions to SMP. Nevertheless, for the sake of
completeness, and because the parties have briefed legal
precedents involving the step transaction doctrine, we address
the parties’ arguments in this regard.
A. Legal Principles
The step transaction doctrine embodies substance over form
principles; it treats a series of formally separate steps as a
single transaction if the steps are in substance integrated,
interdependent, and focused toward a particular result. Penrod
v. Commissioner, 88 T.C. 1415, 1428 (1987). “Where an
interrelated series of steps are taken pursuant to a plan to
achieve an intended result, the tax consequences are to be
determined not by viewing each step in isolation, but by
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