Putting the Cart Before the Horse: Determining Economic Substance Independent of the Language of the Code‪.‬

I. INTRODUCTION Contrast the following two descriptions of how one court approaches the application of the economic substance doctrine. First description: "Only after we conclude that a transaction has economic substance will we consider the transaction's tax consequences under the Code." (1) Second description: "First, we address whether Palm Canyon's tax treatment of the ... [offsetting option transactions] fits within the literal meaning of the Code, as interpreted by caselaw at the time. Second, we examine whether the ... [transactions] should be disregarded under the economic substance doctrine." (2)