Whenever a series of transactions results in significant tax savings, the IRS may attempt to apply the concept of substance over form by 'telescoping' or 'collapsing' several transactions into one.

Question

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This statement is true. The IRS uses the substance over form doctrine to look beyond the legal form of a transaction and focus on its economic substance. Telescoping or collapsing several transactions into one is one way the IRS does this, particularly when it believes that the transactions were structured solely to achieve tax savings without a legitimate business purpose.

Whenever a Series of Transactions Results in Significant Tax Savings