Document Type


Citation Information

Please cite to the original publication


In 1982, the American Law Institute described the collapsible corporation
rules, set out in § 341, as "characterized by a pathological degree
of complexity, vagueness and uncertainty." Four years later, it became
possible to augment this description by saying that § 341 became triply
anomalous with the enactment of the Tax Reform Act of 1986. First, as a
tax avoidance device, the collapsible corporation rested on a tax rule that
was repealed in 1986. Second, § 341 was nevertheless preserved virtually
intact by the 1986 Act; indeed, its reach was slightly expanded.
Third, the punitive remedy employed by § 341 to discourage the use of
collapsible corporations became, at most, a slap on the wrist. Thus, the first and second anomalies are neutralized, rather than multiplied, by the

Date of Authorship for this Version


Included in

Law Commons