Business Purpose

Business Purpose means:
a test applied to various transactions. A transaction must serve a bona fide business purpose, other than a tax purpose, to qualify as a valid transaction for tax purposes. A transaction that takes the form of a corporate reorganization as a disguise to conceal its real character, and the object and accomplishment of which are the consummation of a preconceived plan having no business or corporate purpose, is not a plan of reorganization. Former Tax Regulation (check if this Reg. is current here) §1.368-l(c). Gregory v. Helvering, 35-1 USTC #9043 [USSC, 1935]. The business purpose test has also been applied to the treatment of a corporation as a separate entity, leaseback transactions, and reinsurance arrangements between domestic and foreign insurers.