BarbriSFCourseDetails
  • videocam Live Webinar with Live Q&A
  • calendar_month March 5, 2026 @ 1:00 p.m. ET./10:00 a.m. PT
  • signal_cellular_alt Intermediate
  • card_travel Tax Preparer
  • schedule 110 minutes

Withstanding IRS Economic Substance Challenges: The Business Purpose Doctrine

Strategies for Structuring Reorganizations, Section 704(b) Allocations, Transfer Pricing Arrangements, and Other Transactions

$197.00

This course is $0 with these passes:

CPE
ALL
  1. keyboard_arrow_leftBack
BarbriPdBannerMessage

About the Course

Introduction

This webinar will review the economic substance doctrine and will offer strategies for compliance for partnerships, corporations, and other business entities. The panelists will discuss recent IRS and DOJ litigation positions on the doctrine and the related penalty and commentary on structuring transactions that the IRS will respect.

Description

The economic substance doctrine was codified in the Internal Revenue Code section 7701(o) in 2010, and, for many years afterwards, the IRS used it sparingly. In recent years, however, new IRS guidance and successes in litigation have empowered the IRS to use the economic substance doctrine more frequently to invalidate transactions.

A legitimate non-tax business purpose, which is generally required under the doctrine, is important in numerous planning contexts, including some reorganizations, partnership allocations, and transfer pricing arrangements. As IRC Section 7701(o) provides:

(o) Clarification of economic substance doctrine

   (1) Application of doctrine: In the case of any transaction to which the economic substance doctrine is relevant, such transaction shall be treated as having economic substance only if— 

    (A) the transaction changes in a meaningful way (apart from Federal income tax effects) the taxpayer's economic position, and 

    (B) the taxpayer has a substantial purpose (apart from Federal income tax effects) for entering into such transaction.  

Recent internal IRS guidance and case victories may signal an uptick in assertion of the economic substance doctrine (and the related penalty) to disallow tax planning. The IRS’s recent win in Patel v. Commissioner (US Tax Court) could empower the IRS to assert the economic substance penalty in future cases. In April 2022, the IRS' Large Business & International Division updated its procedures on asserting penalties for lack of economic substance. These changes include the removal of the requirement for executive approval, making it easier for the IRS to assert penalties for noncompliance. These consequences can be severe, as the economic substance penalty is strict liability.

What does all this mean for future tax planning? There are numerous areas in the Internal Revenue Code where the doctrine is potentially applicable, and our panelists will discuss a few important ones. Business purpose is a key requirement of business acquisitions and reorganizations under Treasury Regulation 1.368-1(b).

Listen as our speakers explain the economic substance doctrine and the best strategies for compliance.

Presented By

Edward L. Froelich
Counsel
McDermott Will & Schulte

Mr. Froelich represents clients in audit and litigation on all Federal tax issues. He is a former trial attorney of the Department of Justice Tax Division. In private practice he continues to litigate cases and represents clients in administrative controversies at both the audit and appeals level before the IRS. He represents large public companies, privately-held companies, partnerships, trusts, and individuals, successfully dealing with a variety of issues including international tax, transfer pricing, income tax accounting, research credit, and accounting method issues. He also advises on related procedural issues including obligation to file information returns such as those relating to employment taxes or to payment card transactions.

expand_circle_down Expand to View Full Bio expand_circle_up Collapse Bio
Samuel F. Hamer
Attorney
McDermott Will & Schulte

Mr. Hamer focuses his practice on US and international tax controversy matters. He advises on Internal Revenue Service examinations, supports transfer pricing analyses, and represents taxpayers in litigation before the US Tax Court and other federal courts. Before joining McDermott Will & Schulte, Mr. Hamer served as a judicial law clerk to the Honorable Albert G. Lauber of the Tax Court. During law school, he clerked in the US Department of Justice, where he worked on tax cases before the Supreme Court of the United States and US Courts of Appeals. Mr. Hamer also served as an editor of The Georgetown Law Journal.

expand_circle_down Expand to View Full Bio expand_circle_up Collapse Bio
Sebastian Voth
Principal
Hochman Salkin Toscher Perez, PC

Mr. Voth is a Principal of the law firm Hochman Salkin Toscher Perez P.C., where he specializes in tax investigations, litigation and appeals, and complex tax matters. Prior to entering private practice, he served for 15 years at the Internal Revenue Service including most recently as a Special Trial Attorney with the IRS Office of Chief Counsel’s Strategic Litigation Division leading trial teams in all phases of litigation before the Tax Court. During his tenure with the IRS, Mr. Voth served on the leadership team of the nationwide IRS Counsel mentoring program and mentored numerous IRS attorneys. He is the recipient of two Lucite Awards for significant Tax Court opinions and received a 2024 Special Act Award (Strategic Litigation), the 2023 Nationwide Innovator of the Year (LB&I), the 2022 Nationwide Special Trial Attorney of the Year (SB/SE), the 2017 U.S. Department of the Treasury Outstanding Litigator and the 2017 Nationwide Attorney of the Year (SB/SE).

expand_circle_down Expand to View Full Bio expand_circle_up Collapse Bio
Credit Information

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

Date + Time

  • event

    Thursday, March 5, 2026

  • schedule

    1:00 p.m. ET./10:00 a.m. PT

I. Introduction

II. Legislative history

A. Key cases

B. Recent developments

III. IRS challenges

A. Case development

B. Defenses

IV. Applications

A. Reorganizations

B. Other applications

VI. Best practices



The panelists will cover these and other critical issues:

  • Legislative history of the economic substance doctrine
  • Impact of Patel v. Commissioner on economic substance determinations
  • Examples of transactions likely to warrant IRS scrutiny
  • Strategies to comply with the economic substance doctrine when structuring transactions

Learning Objectives

After completing this course, you will be able to:

  • Identify allocations likely to garner IRS scrutiny for lack of economic substance
  • Determine the impact of Patel v. Commissioner on economic substance assertions
  • Decide how recent cases have affected taxpayer compliance relative to the business purpose doctrine
  • Ascertain specific strategies to withstand IRS challenges to business purpose
  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite:

    Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and their respective partners and shareholders.


BARBRI, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

BARBRI CE webinars-powered by Barbri-are backed by our 100% unconditional money-back guarantee: If you are not satisfied with any of our products, simply let us know and get a full refund. Contact us at 1-800-926-7926 .