United States. Congress

“ Exception for personal transactions of individuals.—In the case of an individual, paragraph (1) shall apply only to transactions entered into in connection with a trade or business or an activity engaged in for the production of income. ”

“ Application of doctrine.—In the case of any transaction to which the economic substance doctrine is relevant, such transaction shall be treated as having economic substance only if— `` (A) the transaction changes in a meaningful way (apart from Federal income tax effects) the taxpayer’s economic position, and `` (B) the taxpayer has a substantial purpose (apart from Federal income tax effects) for entering into such transaction. ”

“ Foreign parent corporation.—For purposes of this subsection, the term ‘foreign parent corporation’ means, with respect to any deductible related-party payment, the common parent of the foreign controlled group of entities referred to in paragraph (3) (A) . ”