Nilo Inc. sold an asset to PPQ Partnership, which is unrelated to Nilo. PPQ immediately sold the property to Nilo Western Inc., which is a 100% controlled Nilo subsidiary. The IRS could treat the two sales as one sale of the asset by Nilo to Nilo Western by applying the:

Question

Quizplus · Accepted Answer

The step transaction doctrine is designed to prevent taxpayers from avoiding taxes by breaking up a transaction into a series of steps that would achieve a tax advantage. In this case, the IRS could argue that the sale of the asset by Nilo to PPQ and the subsequent sale by PPQ to Nilo Western were really one transaction, and that Nilo should be taxed on the full amount of the sale.

Nilo Inc Sold an Asset to PPQ Partnership, Which Is Unrelated