Where the substance of a transaction differs from its form, the tax liabilities of the participants must be determined in accordance with the substance of the transaction.1 Under this “substance-over-form” doctrine and related principles, the purported conducting of a business within a joint venture or partnership arrangement does not compel the Internal Revenue Service to give effect to the arrangement or to the taxpayers’ allocations of income thereunder.
The continued vitality of the substance-over-form doctrine and the tax authorities’ ability to challenge the existence of a partnership for tax purposes is reflected in the Tax Court’s recent decision in WB Acquisition Inc. v. Commissioner. 2
Facts
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