Substance-over-form doctrine treats prearranged tax-avoidance steps collectively for fiscal assessment, reflecting economic reality. Judicial approach treats prearranged, multi-step tax avoidance schemes by assessing the aggregate fiscal effect-comparing the position after the final step with that before the first-and taxes according to the substantive economic outcome rather than isolated formal steps. Courts may also lift the corporate veil in exceptional cases where a company is used to circumvent tax obligations, applying an economic-reality test so that informal arrangements cannot defeat tax assessment.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Judicial approach treats prearranged, multi-step tax avoidance schemes by assessing the aggregate fiscal effect-comparing the position after the final step with that before the first-and taxes according to the substantive economic outcome rather than isolated formal steps. Courts may also lift the corporate veil in exceptional cases where a company is used to circumvent tax obligations, applying an economic-reality test so that informal arrangements cannot defeat tax assessment.
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