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Abstract: 

The codification of the economic substance doctrine by the addition of Section 7701(o) to the Internal Revenue Code by the Health Care and Education Reconciliation Act of 2010, has produced a vigorous dialogue on how the doctrine applies at the federal level, and whether there should be an angel list. The codification invites an inquiry into the application of the economic substance doctrine by the states and the potential effect of the federal codification in state income tax matters. This article addresses recent application of the economic substance doctrine by states and suggests an approach to identification of transactions that should be respected at the state level.

Keywords: economic substance doctrine; IRC Section 7701(o); angel list of respected transactions; intangibles holding company strategy; REITs; RICs; state expense addback statutes; unambiguous state statues; improper double benefit; tax shelters

Affiliations:  1: McDermott Will & Emery.