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In the U.S. a court would probably ignore the formality of the transactions you describe and simply look at the outcome. The outcome is that the reviewer has en
by bdowling 7y ago
In the U.S. a court would probably ignore the formality of the transactions you describe and simply look at the outcome. The outcome is that the reviewer has ended up with the property at no out-of-pocket cost, and would thus be considered income.
See also Gregory v. Helvering (U.S. 1935) for the quintessential example of this principle. https://en.wikipedia.org/wiki/Gregory_v._Helvering https://en.wikipedia.org/wiki/Gregory_v._Helvering
- hnick 7y agoYou're probably right. We often have the legal idea of "arm's length" meaning a transaction that is coincidental or purposeful will be treated differently. I find this interesting in your link: "if a transaction has no substantial business purpose other than the avoidance or reduction of Federal tax, the tax law will not regard the transaction" I don't see how that doesn't apply to all the shuffling we see from big corps these days, licensing things they own to companies they own just to shift profits. Though that's another tangent.