Step Transaction Doctrine

Step Transaction Doctrine means:
a doctrine used by the U.S. Internal Revenue Service to collapse a multistep transaction into a single transaction-often taxable. The step transaction doctrine prevents a taxpayer from arranging a series of business transactions (or events) in order to obtain a more favorable tax result than if a single transaction had occurred. For example, the U.S. Internal Revenue Service (IRS) may collapse a liquidation-reorganization into one transaction to make the event taxable.