Reframing Economic Substance‪.‬

I.INTRODUCTION Under the economic substance doctrine as codified in section 7701(o), legislatively unintended tax benefits may be dissallowed if a transaction lacks a substantial business purpose or fails to accomplish a meaningful change in the taxpayer's economic position.(1) In a recent article on framing the "transaction" in economic substance cases, David Hariton makes three interrelated points.(2) First, he observes that even though the judicial outcome may depend largely on how the relevant transaction is framed, few courts have explicitly focused on the framing issue. Second, he proposes that courts should presumptively frame the underlying transaction broadly by focusing on the entirety of the taxpayer's undertaking, rather than disaggregating particular tax-motivated steps or structures. Finally, he believes that the principal target of the economic substance doctrine should be "tax shelters" whose defining hallmark is that they are "extraneous to the taxpayer's business rather than merely an aspect of it." (3)