October 19, 2000
In ACM Partnership v. Commissioner, (3rd Cir. 1998) the Third Circuit Court of Appeals served notice that the old and familiar rule of substance-over-form still has real vitality. In that case, the court determined that a structured transaction, which on its face satisfied all the statutory requirements for a capital loss deduction had insufficient economic substance to be respected for a tax purpose. A recent case, United Parcel Service v. Commissioner (1999 U.S. Tax Court), carries this concept into the area of insurance captives.