ACM Partnership v. Commissioner

Colgate-Palmolive realized $100 million in capital gains in 1988. In 1989 it joined with Merrill Lynch Capital Services and a Dutch bank to form ACM Partnership. ACM's transactions generated early capital gains for the foreign partner and later capital losses for Colgate, engineered to offset Colgate's 1988 gains. The IRS found the transactions were solely for tax avoidance, with no profit motive or economic substance, and disallowed the tax treatment.

Whether transactions related to corporate reorganizations are analyzed according to their economic substance rather than their form for tax purposes.