Nicholas Metcalf Comments on Second Circuit's Reversal of Substance-Over-Form Doctrine Case in Tax Notes

"Second Circuit Piles on Reversals of Tax Court's DISC Holding"

Tax Notes


Nicholas Metcalf commented on the Second Circuit's reversal of the 2012 Summa Holdings Inc. v. Commissioner decision, which was the third reversal of a 2012 Tax Court decision that the Internal Revenue Service (IRS) could apply the substance-over-form doctrine to recharacterize transactions between a Domestic International Sales Corporation (DISC) and Roth IRAs. The ruling follows decisions made previously by the First Circuit and the Sixth Circuit. The reversal by the Second Circuit, while not a surprise, provided "additional fodder for taxpayers to make textual arguments when challenging the antiabuse doctrines," Metcalf said, adding that given the "unique fact pattern" presented by the three cases, "it will be interesting how the cases are cited."