Providing Legal Options In Substance Over Form Tax Matters

The doctrine of substance over form was created over time by the courts. In essence, the law makes it necessary to have a relationship between a tax benefit, such as a tax deduction, deferral or a beneficial characterization of income, and an objective that relates to a business purpose or a profit motive. When tax motivation outweighs a business purpose, criminal tax liability may come into play.

Boston area tax attorney Theodore Craft has more than 40 years of experience handling tax law matters throughout Massachusetts. This experience brings credibility to his client's cases, which he handles efficiently and effectively, ensuring that the client is kept up to date throughout the proceedings.

Determining A Business Purpose Or Profit Motive

When a taxpayer's motivation is unrelated to a business or profit motive, the court may decide that the "form" of the taxpayer's efforts do not reflect the "substance" of the issue at hand. If the court reaches this determination, then the intended tax benefits will be denied. That is why it is important to have a true economic purpose in a tax undertaking beyond an attempt to receive tax benefits.

If a taxpayer is motivated by tax avoidance, then this motive will not enter into the analysis if the undertaking has an economic reality as far as a business purpose and a true expectation of profits is concerned. A taxpayer has a right to attempt to decrease his or her taxes under the confines of the law. However, the law does not allow taxpayers to set up artificial devices and arrangements of form in an effort to conceal their true nature, which is solely to derive some type of tax benefit.

Attorney Craft has extensive experience handling a wide range of criminal tax defense and prosecutions, including matters involving substance over form. He is committed to helping everyone he represents to avoid the harsh consequences that come along with tax violation allegations.

Contact Theodore L. Craft, Esq., LLM, Attorney At Law & Tax Counsel

If have been accused of criminal tax activity or have had tax benefits denied, get legal help as soon as possible. Contact a tax law lawyer online or call 888-TAX-RISK to schedule an initial consultation to discuss your situation.