David Elkins (Netanya; Google Scholar), Gregory v. Helvering: A Red Herring that Shaped Tax Jurisprudence, 21 Berkeley Bus. L.J. 171 (2024) (reviewed by Michelle Layser (San Diego; Google Scholar) here): 

The Supreme Court’s decision in Gregory (affirming Learned Hand’s opinion in the Second Circuit) is one of the most influential decisions in the field of taxation. It is the source of a number of significant doctrines, including business purpose, economic substance, substance over form, and sham transactions. Although the literature and the case law continue to disagree about the exact ratio decidendi of Gregory, there is one foundational fact that is undisputed. From those directly involved in the proceedings (including the taxpayer’s own counsel) to the generations of commentators and judges over the generations, everyone who has looked at the case agrees that Mrs. Gregory exploited the reorganization provisions of the relevant Revenue Act for the purpose of reducing her tax liability. It is her use, misuse, or abuse — depending upon one’s perspective — of those provisions that has been the focal point of debate for almost a century. Today, there is a near unanimous consensus that her exploitation of the reorganization provisions was abusive and that the courts correctly denied her the benefits she sought.

This Article argues that that the decision in Gregory, along with most of the subsequent discourse, derives from a basic misunderstanding of Mrs. Gregory’s tax planning maneuver.

A close examination shows that the corporate reorganization provisions, which have been the focus of the discourse for almost a century, conferred no tax benefit. Rather they were a red herring, successfully diverting attention from the provisions that actually provided the benefits. Had the courts fathomed the inner workings of Mrs. Gregory’s tax plan, the result might have been much different, with significant implications for the subsequent development of tax law.

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