IRS: Notice 2014-58 Additional Guidance Under the Codified Economic Substance Doctrine and Related PenaltiesBy Robert Robillard - 11 November 2014
This blogpost originally appeared on rbrt.ca.
Notice 2014-58 Additional Guidance Under the Codified Economic Substance Doctrine and Related Penalties was recently released.
It is available here.
The economic substance doctrine can find its way into transfer pricing transactions when avoidance is brought up by the IRS.
From the notice:
“The economic substance doctrine is a judicial doctrine that was codified in section 7701(o) by section 1409 of the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111–152. Section 7701(o)(5)(A) defines “economic substance doctrine” as the common-law doctrine that disallows tax benefits under subtitle A of the Internal Revenue Code if the transaction that produces those benefits lacks economic substance or a business purpose. Under section 7701(o)(1), a transaction has economic substance if: (1) the transaction changes in a meaningful way (apart from Federal income tax effects) the taxpayer’s economic position; and (2) the taxpayer has a substantial purpose (apart from Federal income tax effects) for entering into such transaction.”
Also available in pdf format here.
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