The judicial doctrine 'business purpose' can decrease the taxpayer's ability to employ effective planning techniques. 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.
Taxpayers can use the step-transaction doctrine to obtain various tax advantages. False, TP's are restricted to the actual legal form of the transactions in which they engage, but the IRS has the option to employ the step-transaction doctrine to reduce tax benefits.