John Prebble (Victoria University of Wellington, Faculty of Law) & Chye-Ching Huang (University of Auckland, Business School) have posted The Rescission Doctrine: Clothes Without an Emperor?, 131 Tax Notes 737 (May 16, 2011), on SSRN. Here is the abstract:

The rescission doctrine, sometimes called the unwind doctrine, is understood to provide that a transaction may be disregarded for federal income tax purposes if the parties return to the status quo ante in the same tax year. Its origin is Rev. Rul. 80-58, which relied on Penn v. Robertson. In August 2010 the New York State Bar Association Tax Section explained that the requirements for a valid rescission are confused. This report analyses Penn v. Robertson and finds that it does not in fact support the principle of rescission. The lack of a legal basis for rescission accounts for the confusion about what are the requirements for a valid rescission.

To be coherent, any clarification about what constitutes a valid rescission must first address the absence of legal authority for the doctrine. In considering whether the government should remedy this absence and, if so, how, policymakers must establish that there are convincing arguments grounded in either legal principle or tax policy for tax law to give effect to rescissions. It should not be assumed that those arguments exist.

See also John Prebble & Chye-Ching Huang (University of Auckland, Business School), The Fabricated Unwind Doctrine: The True Meaning of Penn v. Robertson, 7 Hastings Bus. L.J. 117 (2011).