The “economic substance” doctrine allows tax authorities to disregard transactions that lack a non-tax business purpose or economic substance beyond creating tax benefits. This doctrine is outlined in Internal Revenue Code (IRC) section 7701(o) and has been established through court decisions. In the case of Acqis Technology v. Commissioner (TC Memo 2024-21), the court reaffirmed the importance of this doctrine in preventing tax evasion schemes. The case involved proceeds from the settlement of patent infringement claims, where the taxpayer’s actions were considered to lack economic substance and were disregarded by the Commissioner. This highlights the significance of conducting transactions with a legitimate business purpose and economic substance to avoid tax implications.