US Tax lawsare basedon severalimportantdoctrines.

• The assignment of income doctrine- states that income mustbe taxedto the entity that renders the service or owns the capitalwith respect towhich the incomeis paid.
• The economic substance doctrine- holds that a transaction thatchanges the taxpayer'seconomicsituation only for the tax savings from the transaction canbe disregardedby the IRS.
• The business purposedoctrine-a transaction should not beeffectiveor allowed for tax purposes unless it has a business purpose other than tax avoidance.
• The step transaction doctrine- allows the IRS to collapse a series of intermediate transactions into a single transaction to determine the tax consequences of the arrangement in its entirety.

To perform professional tax planning, we adhere to several maxims. First, we need to analyze the variables that determine the tax consequences of a transaction. Then we apply one or more of the following tax planning maxim strategies that reduce tax and enhance cash flows:

• Generate income in a lower tax rate entity- tax costs decrease.
• Defer taxes- shift income to a future year when rates are lower or move expenses forward to the current year when tax rates are higherorthey can decrease income.
• Generate income in a lower tax jurisdiction- tax costs decreasewhen incomeis taxedat a lower tax rate.
• Change the character of the revenue- tax costs decreasewhen incomeis taxedat a preferential rate because of its character.

Questions:

Conduct tax research to find a relevant tax court (or Appeals Court or US Supreme Court) case with your choice

Summarize the tax casewith

(1) The Maxim was applied to reduce the tax,

(2) The doctrine the court referenced to deny the tax strategy and the Internal Revenue Code sections cited,

(3) What are your thoughts on what the taxpayer was trying to do?

(4) What are some IRC sections referenced in the case?Internal Revenue Code Sections