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ESOP

Tax Court – ESOP violating anti-alienation and plan document requirements was disqualified

Tax Court – ESOP violating anti-alienation and plan document requirements was disqualified

Family Chiropractic Sports Injury & Rehab Clinic, Inc., TC Memo 2016-10 The Tax Court has concluded that there was no abuse of discretion in IRS’s determination that an employee stock ownership plan (ESOP) was not qualified under Code Sec. 401(a) for its 2010 and subsequent plan years and that the related trust wasn’t exempt under […]

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Tax Court upholds IRS’s retroactive disqualification of ESOP and related trust

Tax Court upholds IRS’s retroactive disqualification of ESOP and related trust

Fleming Cardiovascular, P.A., TC Memo 2015-224 The Tax Court has upheld IRS’s retroactive disqualification of an employee stock ownership plan (ESOP), finding that disqualification was warranted because the ESOP wasn’t operated in accordance with its terms and because additions were made to a participant’s account in excess of the contribution limits in Code Sec. 415(c). […]

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Tax Court: ESOP disqualified by stock allocation to officer who drew no salary

Tax Court: ESOP disqualified by stock allocation to officer who drew no salary

DNA Pro Ventures, Inc. Employee Stock Ownership Plan, TC Memo 2015-195 The Tax Court has upheld IRS’s disqualification of an employee stock ownership plan (ESOP), finding that the plan’s allocation of stock to a corporate officer’s account exceeded the contribution limits under Code Sec. 401(a)(16) because the officer didn’t receive any compensation from the corporation […]

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Court of Appeals 6th Circuit affirms; regular SOL rules apply to ESOP-owned securities excise tax

Court of Appeals 6th Circuit affirms; regular SOL rules apply to ESOP-owned securities excise tax

Law Office of John H. Eggertsen, P.C., (CA 6 9/08/2015) 116 AFTR 2d ¶2015-5214 The Court of Appeals for the Sixth Circuit, in a divided opinion in which it affirmed the Tax Court and agreed with IRS, has held that the general statute of limitations (SOL) on assessment rules contained in Code Sec. 6501 apply […]

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Adding active employee benefits to a retiree VEBA didn’t create disqualified benefit

Adding active employee benefits to a retiree VEBA didn’t create disqualified benefit

PLR 201530022 In a private letter ruling (PLR), IRS has ruled on various aspects of a voluntary employees’ beneficiary association trust (VEBA) being allowed to use funds reserved for retiree benefits to pay for health benefits for active employees. In one of its holdings, the PLR said that such a use will not create a […]

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6-year assessment period applied for ESOP distribution that wasn’t adequately disclosed

6-year assessment period applied for ESOP distribution that wasn’t adequately disclosed

Heckman, TC Memo 2014-131TC Memo 2014-131 The Tax Court has determined that the extended 6-year limitations period on assessment, and not the regular 3-year period, applied to the deficiency of a taxpayer who received but failed to report a distribution from his S corporation’s disqualified employee stock ownership plan (ESOP) that exceeded 25% of his […]

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Loan to ESOP was a prohibited transaction

Loan to ESOP was a prohibited transaction

PLR 201425019. In a Technical Advice Memorandum (TAM), IRS has concluded that a company’s loan to its employee stock ownership plan (ESOP) was a prohibited transaction and triggered an excise tax under Code Sec. 4975. Even if the loan met the documentation requirements of an applicable reg, it violated the reg in operation. Facts. On […]

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Collateral release method made share-purchase loan to ESOP a prohibited transaction

Collateral release method made share-purchase loan to ESOP a prohibited transaction

PLR 201425019. In a Technical Advice Memorandum (TAM), IRS has concluded that a company’s loan to its employee stock ownership plan (ESOP) was a prohibited transaction and triggered an excise tax under Code Sec. 4975. Even if the loan met the documentation requirements of an applicable reg, it violated the reg in operation. Facts. On […]

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Tax Court upholds IRS’s disqualification of LLC’s ESOP

Tax Court upholds IRS’s disqualification of LLC’s ESOP

In K.H. Company, LLC Employee Stock Ownership Plan v. Commissioner, TC Memo 2014-31, a declaratory judgment proceeding, the Tax Court has concluded that IRS did not abuse its discretion in determining that an ESOP, established by a corporation that was later changed to an LLC taxed as a partnership, was not qualified under Code Sec. […]

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S corporation hit with excise tax because its ESOP violated nonallocation rules

S corporation hit with excise tax because its ESOP violated nonallocation rules

In Ries Enterprises Inc. v. Commissioner, T.C. Memo. 2014-14, the Tax Court has held that an S corporation was liable for a $161,200 excise tax because its employee stock ownership plan (ESOP) violated the anti-abuse provisions of Code Sec. 409(p) by allocating shares during the tax year at issue to the plan’s sole participant and […]

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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Member CA Bar Member Orange County Bar US Tax Court Attorney