Taxpayer’s Attempted Characterization of Stock as Debt Rejected: Aventis, Inc. v. Commissioner
- February 19, 2026
- Publications
In their latest article for the New York Law Journal, Elliot Pisem and David E. Kahen explain Aventis v. Commissioner: why the FASIT failed statutory and grandfather rules, and how the court applied substantial‑compliance and debt‑vs‑equity tests.
“The detailed analysis in Aventis of FASIT provisions is perhaps only of historical interest. More generally, however, the decision underscores that, in distinguishing between debt and equity for tax purposes, labels and treatment for accounting and other non-tax purposes continue to matter, at least where they contradict a taxpayer’s desired tax characterization, even though such labels are not necessarily determinative of the result.”