In determining whether a sale has taken place consideration should only be given to the legal form of the contract of sale.

Question

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Consideration should not only be given to the legal form of the contract of sale, but also to the substance and economic reality of the transaction. Some transactions may be structured in a way that makes them appear as a sale, but the substance and economic reality may indicate that no sale has taken place. Therefore, it is important to look beyond the legal form of the contract to determine whether a sale has truly taken place.

In Determining Whether a Sale Has Taken Place Consideration Should