New IRS Internal Guidance on Codified Economic Substance Doctrine Offers Some Plusses for Taxpayers

摘要

New IRS internal guidance on economic substance doctrine, although non-binding, offers comfort to taxpayers whose investment transactions might trigger application of the doctrine. In addition to a "safe harbor" listing, LB&I-4-0711-015 raises the threshold for assessing penalties, requires careful internal IRS deliberation before application of the doctrine, and institutes a "heads-up" notice to taxpayers-plus a chance to dispute application before the fact.