Hastings International and Comparative Law Review


Karen B. Brown


This Article examines the treatment of the step-transaction doctrine in the United States and the United Kingdom. The author notes that in transactions not involving a legitimate business motive, both U.S. and U.K. courts will apply a substance over form approach in determining the tax consequences. In any transactions with a non-tax avoidance purpose, however, courts in both countries are reluctant to take the same approach. In those cases, form rules over substance. The author believes this distinction is illogical. This Article proposes that courts take a substance over form approach in all cases, regardless of whether there is a business motive.