Davis Polk partner Corey Goodman discussed the top federal tax cases to watch this year with Law360.

Corey highlighted Liberty Global v. U.S. as a significant case to monitor due to the district court’s broad interpretation of the economic substance doctrine, which is a common law principle codified by Congress under IRC Section 7701(o) to counter abusive tax transactions. Corey noted that the court provided a broad interpretation of Section 7701(o) in saying that the doctrine can be applied to any transaction that does not otherwise meet the statute’s two-prong test.

“That’s an extreme broadening of what everyone had thought of as parameters of the economic substance doctrine,” Corey explained. “That would rightly be a concern for taxpayers who, prior to now, thought they knew what the universe of transactions was to which the economic substance doctrine could apply.”

“Federal Tax Cases To Watch In 2024,” Law360 (January 1, 2024) (subscription required)

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