UH Law Center's Professor Bret Wells Encourages 10th Circuit to Uphold Economic Substance Doctrine in Liberty Global Tax Dispute

JULY 22, 2026 –University of Houston Law Center’s Professor Bret Wells, whose scholarship was cited by federal appeals court in the closely watched Liberty Global Inc. v. United States tax case, filed an amicus brief recently asking the U.S. Court of Appeals for the Tenth Circuit to stand by its earlier ruling, arguing that judges should not allow transactions that have no economic substance apart from tax benefits from being used as a means to garner tax benefits that were unintended by Congress.

The filing comes as the Tenth Circuit considers a petition for rehearing. The court cited Wells’ 2010 law review article, “Economic Substance Doctrine: How Codification Changes Decided Cases,” twice in its original opinion. In his amicus brief, Wells defended the Tenth Circuit majority’s earlier conclusion that the economic substance doctrine remains relevant whenever taxpayers pursue benefits Congress did not intend through transactions lacking a meaningful non-tax purpose. Courts, he wrote, have “for decades refused to uphold transactions that comply with the literal terms of the tax code if the structured transactions had no economic substance apart from their potential tax benefits.”

Quoting United States v. American Trucking Association, Wells said the courts follow plain meaning in most cases, but when the plain textual meaning produces results at odds with legislative purpose, judges may “look beyond the words to the purpose of the act.”

At the center of the dispute is Liberty Global’s “Project Soy” transaction, which Wells described as a “a slight-of-hand of “now you see it . . . now you don’t.” The case involved a series of transactions involving foreign affiliates, which the company designed specifically to create a tax advantage. Liberty Global argued it was entitled to the tax deduction because it mechanically complied with the tax code’s terms and that section 7701(o) could not override tax statutes.

Wells characterized the company’s argument as an effort to exploit unintended interaction between provisions enacted in the 2017 Tax Cuts and Jobs Act, which was designed to impose a transition tax on historic foreign earnings while subjecting future earnings to the Global Intangible Low-Taxed Income or Subpart F regimes.

“The taxpayer’s Project Soy transaction is devoid of economic consequence except for its potential to glitch the tax system so as to cause CFC earnings and capital gain on CFC stock to permanently escape the US tax base in an unanticipated manner,” he wrote, adding, “The application of the economic substance doctrine prevents transactions entered into solely for tax reasons from capturing unanticipated tax benefits.”

While the immediate dispute concerns Liberty Global, the brief also urged the court, if it grants rehearing, to revisit a district court ruling that invalidated Treasury Department temporary regulations, arguing both that the agency’s procedures complied with administrative law requirements and that the regulations reflected “the best reading of the statute.”

The case is being closely watched by tax professionals because its outcome could shape the future application of the economic substance doctrine to complex international tax planning strategies and whether taxpayers may rely on literal readings of tax statutes when they appear to conflict with lawmakers’ intent.