interrelated yet formally

interrelated yet formally distinct steps in an integrated transaction may not be considered independently of the overall transaction. By thus linking together all interdependent steps with legal or business significance, rather than taking them in isolation, federal tax liability may be based on a realistic view of the entire transaction.^[2]

There are three tests for applying the step transaction doctrine: (1) a binding commitment, (2) a mutual interdependence of steps, or (3) the intent of particular result.^[3]

In general

In general, a tax shelter is any organized program in which many individuals, rich or poor, participate to reduce their taxes due.^[1] However, a few individuals stretch the limits of legal interpretation of the income tax laws. While these actions may be within the boundary of legally accepted practice in physical form, these actions could be deemed to be conducted in bad faith. Tax shelters were intended to induce good behaviors from the masses, but at the same time caused a handful to act in the opposite manner. Tax shelters have therefore often shared an unsavory association with fraud.