Liberty Global’s Tax Appeal to Test Economic Substance Doctrine

The Tenth Circuit on Tuesday is set to consider whether Liberty Global Inc.‘s exploitation of a loophole in the 2017 Republican tax law can support its $110 million refund claim, a case that tax advisers say has the potential to boost the IRS’ ability to target tax avoidance strategies.

The economic substance doctrine under IRC Section 7701 only allows a business to take advantage of tax benefits if a transaction has some purpose besides reducing tax liability and causes some change in the business’s economic position.

“Taxpayers and practitioners will have to think a little more carefully about whether ...