Principal, Jackel Tax Law; Contributor Tax Notes; Elected Member, American Law Institute (ALI); Fellow, American College of Tax Counsel (ACTC); Member DC, NYSBA, ABA tax sections; Special Tax Advisor.
Some further points that have been raised with me: 1. Except for extraordinary items under 1.706-4, which is a special limited rule, and simultaneous transactions, such as those in Turner Broadcasting (Tracinda), https://lnkd.in/eCgdEr4z, there is no authority yet (IRS ruling or case law that I can find) which says that one transaction occurs before another on the same single day. Not that it cannot happen, it is just that there is no general principle establishing that that I know of. (I don’t count, and never had counted, any possible CC:Corp letter rulings because those never contain any legal reasoning at all to support its rulings). 2. Some may argue that the step transaction doctrine can respect the ordering of the steps, and that the steps that occur there can occur on the same day. Thus, it is argued, one can cite those cases as authority for respecting the ordering on the same single day. But those cases did not and do not turn on something having to happen on a particular day before or after another event occurring on the same single day. Without a simultaneous transaction or a transaction with an extraordinary item, there is no authority type rule-just logic one would argue. 3. Maybe there should be such a rule and maybe one can convince a court that there is one today, but I cannot find such a rule right now. Of course, one can do a rescission and if respected you can change the ordering, but that is a different situation. 4. Now documents frequently state the ordering and when things happen. In fact, in one of the two cases I discuss in the short TN article, the document’s ordering for two same single day events was respected in the court’s order. And I say in the article that if that court ends up holding what the judge says in the order, then it has broken new ground authority wise. 5. The ordering of events in documents is always going to be favorable to the drafter’s position and sometimes those whereas clauses may be true and sometimes they may not be true. 6. I think that if you really need to have the order of events respected as separate on the same day in a certain ordering, under today’s law do them on two separate consecutive days. Or have the IRS write a rule saying so. Otherwise you are just relying on logic and common sense which is often not enough.
