The hypothesis of this Article is that the accepted wisdom--that judicial doctrines are raised exclusively by the government or the courts for the government's benefit--is wrong. Instead, judicial doctrines are used in a much richer manner by courts and by taxpayers, as well as the government, than the “wisdom” would suggest. It is the first paper to question the accepted thought about judicial doctrines and to do so using social science methodology. Starting at the end and working forward, the evidence assembled for this Article from a group of trial decisions about federal tax controversies establishes that, under the language of the judges' opinions, taxpayers frequently raise judicial doctrines. Sometimes arguing that the doctrines should be applied and sometimes arguing that they should not, taxpayers often are able to prevail in their arguments. In other words, the data negate the accepted wisdom. The “sword” wielded by the government has a second edge, perhaps not as sharp as the government's, but nevertheless honed by the taxpayer for its use against the government. Indeed, circumstances can be predictably associated with the litigants prevailing in having judicial doctrines applied for their benefit, most notably the taxpayer prevailing when the business purpose or sham transaction doctrines are used. When a party raises a doctrine and also when the party raising a doctrine wants the court to apply the doctrine on behalf of a litigant, that litigant is likely to prevail in the doctrine's application.
Daniel M. Schneider,
Use of Judicial Doctrines in Federal Tax Cases Decided by Trial Courts, 1993-2006: A Quantitative Assessment,
57 Clev. St. L. Rev.
available at https://engagedscholarship.csuohio.edu/clevstlrev/vol57/iss1/4