Retired Courses

Tax-Free Acquisitions: Codification of the Economic Substance Doctrine


The economic substance doctrine is hardly new, but now that it has been codified into law, there are a plethora of questions about how it will affect corporate transactions. With the help of an IRS official, a panel of corporate tax attorneys discuss the specifics of the new statute, its legislative history, and how its implementation may affect tax-free acquisitions, considering several hypotheticals along the way.


I. The Statute
        A. Statute Overview
        B. Legislative History
        C. The Test
        D. Penalty
        E. Jurisdictional Differences
        F. Effects on IRS Practice
        G. Interpreting and Administering the Law
        H. Revenue
II. Hypothetical 1
        A. Recognizing a Built-In Loss
        B. Was It a Real Investment?
        C. Meaningful Change in Position
III. Hypothetical 2
        A. Incorporation Under § 351
        B. Analyzing the Transaction
        C. Busted Transaction
IV. Hypothetical 3
        A. Check-and-Sell Transaction

Content Provided

The Penn State Dickinson School of Law

Founded in 1834 by Judge John Reed, The Dickinson School of Law is the oldest law school in Pennsylvania and the fifth oldest in the nation. Throughout its history, the law school has trained distinguished graduates who have gone on to become leaders of the bar, of the judiciary, of government, and of business. These alumni include the first secretary of the U.S. Department of Homeland Security, five governors, three U.S. senators, and more than 100 federal, state and county judges and countless prominent lawyers and civic leaders. In 2000, the law school merged with Penn State, one of the country’s premier research universities, and stepped into a new era of legal excellence.

Penn State Dickinson School of Law Center for the Study of Mergers and Acquisitions

The center, headed by Samuel C. Thompson Jr., former director of the UCLA Center for the Study of Mergers and Acquisitions, examines corporate, securities, tax, antitrust, and other legal and economic issues that arise in mergers and acquisitions. An important part of the center’s mission is to sponsor continuing legal education programs addressing these issues.

The Association of the Bar of the City of New York

The years following the Civil War were tumultuous ones for New York City, offering many opportunities to the dishonest. Unsavory politicians and errant members of the bench and bar were among those who took advantage of those troubled times. In December 1869, a letter was circulated among some of the city’s lawyers addressing those improprieties. It called for the creation of a new bar association to “sustain the profession in its proper position in the community, and thereby enable it ... to promote the interests of the public ....” More than 200 lawyers responded by signing a declaration of organization and in 1870 The Association of the Bar of the City of New York was born. The young organization quickly made its presence felt. Among its first activities was a campaign to defeat corrupt politicians and judges at the polls and to establish standards of conduct for those in the legal profession.

The association continues to work at political, legal and social reform, and maintaining high ethical standards for the legal profession. The association also continues to implement innovative means by which the disadvantaged may be helped. Much of this work is accomplished through the Association's more than 160 committees, each charged to consider a specific area of law or the profession.

The association has grown to more than 23,000 members. To serve them, the association strives to move ahead in many areas. The library is the largest member-funded law library in the country, and provides members with a “gateway” to online services, including free use of LexisNexis and WestLaw, while continuing to provide more traditional library services. The Small Law Firm Center, Career Management Program and other benefits are constantly evolving to serve members’ needs. More than 150 continuing legal education programs are presented annually.

The public good remains one of the association’s highest priorities. The Legal Referral Service, jointly sponsored by the association and the New York County Lawyers’ Association, provides an array of services directly aimed at serving the needs of the public. The City Bar Justice Center identifies the most pressing legal concerns of New York’s neediest and uses novel approaches to address them, often involving community participation.

Speakers / Authors:

Photo of Eric Solomon

Eric Solomon
Ernst & Young LLP

Eric Solomon is the Director of Ernst & Young LLP’s National Tax Department in Washington, D.C. He has more than 30 years of tax experience in private practice and government service.

Mr. Solomon served as Assistant Secretary for Tax Policy at the U.S. Treasury Department from December 2006 to January 2009. In this role, he headed the Office of Tax Policy, which serves as the primary advisor to the Treasury Secretary on legal and economic matters relating to domestic and international taxation.

Mr. Solomon joined the Office of Tax Policy in 1999. He served as Senior Advisor for Policy, Deputy Assistant Secretary (Tax Policy) and Deputy Assistant Secretary (Regulatory Affairs) prior to his 2006 confirmation as Assistant Secretary.

From 1996 to 1999, Mr. Solomon was a principal in Ernst & Young LLP’s National Tax Mergers and Acquisitions group in Washington, D.C. Previously, he was Assistant Chief Counsel (Corporate) at the Internal Revenue Service, heading the IRS legal division responsible for all corporate tax issues. He began his career with law firms in New York City and was a partner at Drinker Biddle & Reath in Philadelphia.

Mr. Solomon received his A.B. from Princeton University (Phi Beta Kappa), his J.D. from the University of Virginia and his LL.M. in taxation from New York University. He is an adjunct professor of law at Georgetown University Law Center, where he teaches a course in corporate taxation.

Photo of John J. Clair, Jr.

John Clair
Latham & Watkins LLP

John J. Clair, Jr., is the managing partner of the Los Angeles office of Latham & Watkins LLP and is a member of the firm’s tax department. His practice centers on corporate taxation, specifically, advising clients on tax issues involved in mergers, acquisitions and divestitures; financial products and services; and administrative and judicial tax controversy work. Mr. Clair has represented investment banks, leveraged buyout funds, public companies, individual investors and foreign corporations in a variety of matters.

Mr. Clair has been recognized for his domestic tax work in the Legal 500 US and Chambers USA guides. In addition, he was cited as a leading tax attorney by the Los Angeles Business Journal in its 2009 "Who's Who in Law" feature and as a recommended attorney in World Tax 2010, a guide to the world's leading tax firms published by International Tax Review.

Mr. Clair is a member of the Los Angeles County, State of California, and American Bar Associations. He has written various articles for the Practising Law Institute and Tax Executives Institute. He has lectured before various professional tax organizations, including the University of Southern California Tax Institute, the University of Chicago Tax Institute, the Tax Executives Institute, the New York University Tax Institute, the UCLA Mergers & Acquisitions Tax Institute and the Practicing Law Institute.

Mr. Clair earned his J.D. in 1972 from the University of Pennsylvania Law School. He earned his B.A. with high honors from Brown University in 1968.

Mr. Clair is admitted to practice in California and is a registered foreign lawyer in England and Wales.

Photo of Matthew A. Rosen

Matthew Rosen
Skadden, Arps, Slate, Meagher & Flom LLP

Matthew A. Rosen, co-head of Skadden, Arps, Slate, Meagher & Flom’s Tax Group, represents clients in every aspect of tax work, with particular emphasis on acquisitions, divestitures and restructurings, both domestic and cross-border. He also handles matters involving partnerships of every type, joint ventures, foreign investments, real estate investment trusts, regulated investment companies and executive compensation. In addition, Mr. Rosen’s practice includes the development of financial instruments and financial products. His clients include many significant public and private companies, investment banks and investment funds.

Mr. Rosen frequently speaks at professional gatherings throughout the country. His topics often cover tax strategies for corporate acquisitions and dispositions, financial restructurings and the tax implications of financial products and instruments.

Mr. Rosen is regularly listed in Euromoney’s Guide to the World’s Leading Tax Lawyers and Euromoney’s Guide to the World’s Leading Tax Advisers. In addition, Chambers Global: The World’s Leading Lawyers for Business and Chambers USA: America’s Leading Lawyers for Business have repeatedly named Mr. Rosen in their top tier category for tax lawyers. He is also included in the Tax Directors Handbook 2009; The Best Lawyers in America 2010 in the specialty of tax law; The International Who’s Who of Business Lawyers; and Global Counsel 3000, which listed Mr. Rosen as a “recommended individual.” Portfolio magazine also included Mr. Rosen in its list of the top 10 tax attorneys in the United States. Mr. Rosen was previously selected by The American Lawyer magazine as one of 45 lawyers in the country under the age of 45 who “are making their mark now and will lead the profession tomorrow.”

Mr. Rosen earned an LL.M. from New York University in 1979, a J.D. from Boston University in 1976, and a B.A. from Swarthmore College in 1973. He is admitted to practice in New York and Pennsylvania.

Photo of William D. Alexander

William Alexander
Internal Revenue Service

William D. Alexander is the Associate Chief Counsel (Corporate) at the Internal Revenue Service. He has been with the IRS Office of Chief Counsel (Corporate) since 1990. Prior to joining the IRS, he was associated with Simpson Thacher & Bartlett in New York. He has a bachelor’s degree from Cornell University, a law degree from Columbia Law School, and an LL.M. in taxation from New York University School of Law.


Price (USD)

Standard Rate: $124.00
Subscribers: FREE
Pillsbury U Online: $124.00


Course Code : 776345

Release Date: 01/01/2011
Length: 1hr 10min
Format Type: Video
Recorded Date: 4/22/2010

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