Professor Ventry Comments on Tax Shelter Codification in Tax Notes
Professor Dennis J. Ventry, Jr. was prominently featured in a Tax Notes article on Congress' recent codification of the economic substance doctrine used to determine whether a transaction may be considered a legitimate business venture or an abusive tax shelter. Tax Notes is the flagship publication of Tax Analysts, the leading publisher of tax information worldwide.
As part of the Health Care and Education Reconciliation Act of 2010 recently signed into law by President Obama, Congress codified the judicial doctrine and added a new 40 percent strict liability penalty for transactions lacking economic substance. In Jeremiah Coder's article on the legislation, "Will Economic Substance Codification Be Worth It?" published in the April 5 edition of Tax Note, Professor Ventry is repeatedly referred to for analysis of the legislation's impact. He is quoted and paraphrased in statements asserting that the new statute makes it significantly more difficult to satisfy the economic substance standard, which previously required a "not insignificant" expected pretax profit.
The new standard requires "expected pretax profit to be ‘substantial' in relation to expected net tax benefits - a significantly more stringent threshold than ‘not insignificant,''' Professor Ventry said, adding that the 40 percent liability penalty should serve as a significant deterrent.
Professor Ventry is an expert in tax policy and has written widely in the field. His research interests include family taxation, tax expenditure analysis, legal ethics and professional standards, tax and legal history, tax compliance and administration, and public finance.