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Substance over form and tax planning

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1. What does substance over form mean? How would this doctrine be applied in a tax controversy?

2. For most businesses, does the time and money spent in tax planning pass the cost vs. benefit test? In other words, how valuable is tax planning? Can you think of an example of planning for a small business in the formation stage? For an individual, why is estate tax planning so important?

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Solution Summary

A brief discussion of the benefits and costs of tax planning for an organization.

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Substance over form is important to remember that what you do as opposed to what is required. When you supply substance, there is added effort and "going beyond the norm" involved. Having a small business that provides information, keeps receipts, and provides spreadsheets and is open with auditors, but the letter of the law says that any mistakes must be paid along with a fine and interest. In the case of taxpayers who make mistakes in doing their taxes or using ...

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