The step transaction doctrine is a judicial doctrine in the United States that combines a series of formally separate steps, resulting in tax treatment as a single integrated event.
By thus linking together all interdependent steps with legal or business significance, rather than taking them in isolation, federal tax liability may be based on a realistic view of the entire transaction.
This test is applied usually when there are long periods of time between steps in the transaction.
The mutual interdependence test combines a series of events if the steps are so interdependent that the legal relations created by one transaction would have been fruitless without a completion of the series.
[5] The intent, or end result, test combines a series of closely related events that do not have independent purposes.