Question

True or false: The economic substance doctrine allows the IRS to collapse a series of intermediate transactions into a single transaction to determine the tax consequences of the arrangement in its entirety.

Answer 1

The economic substance doctrine allows the IRS to collapse a series of intermediate transactions into a single transaction to determine the tax consequences of the arrangement in its entirety.

Step-by-step explanation:

True. The economic substance doctrine allows the IRS to collapse a series of intermediate transactions into a single transaction to determine the tax consequences of the arrangement in its entirety. This doctrine disregards the form and focuses on the substance of the transaction to prevent taxpayers from using artificial structures solely for tax purposes.