Introduction
How many times have we watched a movie, read a book, or listened to a colleague talk about an action that appeared to be a no-risk proposition, only to turn into a nightmare? At some point, the general lament is uttered: "It seemed like a good idea at the time, but..."
Tax plans can be like that, too. A company identifies an acquisition target, proposes a merger with a supplier, or considers an internal restructure. Teams of lawyers, accountants, and operations personnel perform appropriate due diligence. The deal closes. At some point, blemishes, problems, errors float to the surface. The same lament is uttered: "It seemed like a good idea at the time, but..."
However, in comparison to the personal nightmare which may have ramifications for a long period of time, an opportunity to undo what was done exists in the business world. Moreover, it exists in the tax world if parties acts quickly. The magic elixir is embodied in the doctrine of rescission. Where it applies, the parties can separate from each other and the transaction is treated as if it never occurred.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.