Tax Coda Weekly Digest — December 21, 2025
This week showed how quietly risk can build before it surfaces all at once.
Economic substance waited until litigation made it unavoidable. Transfer pricing edged closer to a permanent enforcement tool. Courts shut down claims that stretched statutes past recognition. And enforcement data showed where attention is actually landing.
1. When Economic Substance Becomes a Litigation Surprise
We looked at how the economic substance doctrine now appears late, not early. It no longer announces itself at the planning stage. It shows up after positions harden and facts settle. By the time it appears, it is no longer a theory. It is leverage.
Why It Matters:
Economic substance is no longer telegraphed during examinations.
Taxpayers lose the chance to course-correct early.
Litigation risk increases even for otherwise technical compliance.
Takeaway:
Economic substance has learned to wait.
2. Facebook Reignites Transfer Pricing Battle With the IRS
Facebook returned to court over periodic transfer pricing a…
