Final answer:
The IRS may 'telescope' or 'collapse' several transactions into one when significant tax savings are involved, disregarding the separate steps and assessing taxes based on the true economic substance of the arrangement.
Step-by-step explanation:
The subject of this question is Business and it is at a High School level.
When a series of transactions results in significant tax savings, the IRS may attempt to apply the concept of substance over form by 'telescoping' or 'collapsing' several transactions into one. This means that the IRS may disregard the separate steps of the transactions and treat them as a single transaction with the objective of determining the true substance of the arrangement rather than solely relying on its legal form.
For example, if a taxpayer engages in a series of complex transactions that artificially reduce their taxable income, the IRS could collapse those transactions and assess taxes based on the true economic substance of the arrangement.