The business purpose test requires that a transaction, to be respected, must have a business purpose separate and apart from any associated tax advantages. The business purpose test may be viewed as having two elements that, if satisfied, should prevent government scrutiny and adjustment of a transaction under the doctrine: (1) the acquisition ...

(ii) The taxpayer has a substantial business purpose for entering into such transaction (apart from its income tax effects). The genesis of the “economic substance doctrine” is a common law doctrine that disallowed the tax benefits associated with a transaction if the transaction was deemed to lack economic substance or a business purpose. a.

The business purpose test requires that a transaction, to be respected, must have a business purpose separate and apart from any associated tax advantages. The business purpose test may be viewed as having two elements that, if satisfied, should prevent government scrutiny and adjustment of a transaction under the doctrine.

The business purpose test requires that a transaction, to be respected, must have a business purpose separate and apart from any associated tax advantages. The business purpose test may be viewed as having two elements that, if satisfied, should prevent government scrutiny and adjustment of a transaction under the doctrine.

For example, allocations of income and loss from limited partnerships, no matter what the business purpose of the partnership, are generally considered passive in nature. Any excess passive loss not deductible in the current year is suspended and can be carried forward indefinitely into future years and can be deducted if there are net profits ...

However, where a business engages in a series of related transactions that appear to be designed and executed as part of a unitary plan to achieve an intended result, the plan may be viewed in the aggregate regardless of whether the effect of doing so increases or decreases the combined tax effect.

Generally, when an RFC is present, the auditor will assess the entities to determine whether it is being used for legitimate business purposes or fraudulently to conceal income or improperly defer reporting of income. Thus, the first area of inquiry is into the economic purpose for and use of the RFC. Valid economic reasons can include:

However, the main thrust of an audit is often concerned with whether the RFC has both an economic purpose and a business purpose; merely having a business purpose alone is not sufficient. If the use of the RFC and its deductions are disallowed, a significant tax liability is extremely likely. Frequent Interview Pitfalls

Outside of our 4 hour initial consultation option, we do not charge travel time or travel expenses when traveling to one of our Satellite offices, or surrounding business districts, where it is necessary to meet personally with taxing authority personnel, make court appearances, or any in person meeting deemed necessary for the effective ...

Regs. §1.269-3(c)(1). Moreover, a prohibited purpose is also deemed to exist (b) when a subsidiary with large net operating loss from business X operations ends up acquiring a profitable business Y from its Parent (and the Subsidiary files separately from Parent); and the Parent would not have attained to losses had the subsidiary been liquidated.