Attorney-at-Law

Economic Substance Codified–And All That Jazz

In Uncategorized on 01/26/2011 at 07:38

Seated in the “rabble” section at the New York State Bar Association Tax Section luncheon yesterday (1/25) and trying to assimilate yet another helping of the Hilton’s rubber chicken (Chick Fil-A, where art thou?), we awaited IRS Chief Counsel William J. Wilkins’ pronouncement on how IRS would deal with the penalties associated with the statutory embodiment of economic substance in the Code.

Chief Counsel’s office will study the matter and proceed cautiously. I await further enlightenment.

I do commend Chief Counsel’s caution, however. Whether the enactment merely codifies existing law, or boldly goes where no one has gone before, remains for the Courts to unravel. Whether one can determine whether the lion will bite, otherwise than by sticking one’s arm in the lion’s mouth, remains to be seen (I fervently hope in S.E.C.–Someone Else’s Case). But for a litigator to suppress the “off with his head!” approach, to which litigators are born, not made, takes real statesmanship.

Well done, sir.

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