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Tax Shelters

Tax shelter promoter penalty isn’t divisible tax for full-payment rule

Tax shelter promoter penalty isn’t divisible tax for full-payment rule

Pfaff v. U.S., (DC 3/10/2016) 117 AFTR 2d ¶ 2016-507 A district court has concluded that the Code Sec. 6707 tax shelter promoter penalty isn’t a divisible tax. Accordingly, where the taxpayer did not pay the full amount of the penalty assessed by IRS, the district court did not have jurisdiction to hear the taxpayer’s […]

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Supreme Court won’t hear case finding foreign banks did not have capital interest in partnership

Supreme Court won’t hear case finding foreign banks did not have capital interest in partnership

TIFD III-E Inc. v. U.S., (CA 2 1/24/2012), 109 AFTR 2d 2012-632109 AFTR 2d 2012-632, cert denied 1/11/2016 The Supreme Court has declined to review the decision of the Court of Appeals for the Second Circuit, which, reversing the district court on remand for the second time, held that an interest overwhelmingly in the nature […]

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Bits ’n Pieces – emails show IRS’s Lerner had choice words for conservatives

Bits ’n Pieces – emails show IRS’s Lerner had choice words for conservatives

Emails show IRS’s Lois Lerner had choice words for conservatives. By John D. McKinnon – The emails show Ms. Lerner denouncing the Supreme Court’s Citizens United decision – widely hailed by conservatives – as a death-knell of democracy; and bemoaning President Lincoln’s success in keeping the South in the Union. Link to The Wall Street […]

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DC Circuit applies Supreme Court’s holding on partnership item & outside basis

DC Circuit applies Supreme Court’s holding on partnership item & outside basis

Tigers Eye Trading, LLC, et al. v. Comm (CA DC 6/26/2015) 115 AFTR 2d ¶ 2015-862 Based on the Supreme Court’s recent holding in Woods, the Court of Appeals for the District of Columbia Circuit (DC Circuit) has affirmed the Tax Court’s decision that the Code Sec. 6662(h) gross valuation misstatement penalty applied to a partner in […]

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Tax Court Strikes Down Son-Of-Boss Shelter And Imposes Penalty

Tax Court Strikes Down Son-Of-Boss Shelter And Imposes Penalty

436 LTD, Heitmeier, TC Memo 2015-28 The Tax Court has determined that a partnership that engaged in a complicated series of transactions that constituted a Son-of-BOSS tax shelter designed to create artificial losses should be disregarded for U.S. tax purposes. The Court disallowed most of the losses claimed by the taxpayer on the grounds that […]

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Tax Court: Legal fees paid by sham partnership partner were factual affected items under TEFRA rules

Tax Court: Legal fees paid by sham partnership partner were factual affected items under TEFRA rules

Bedrosian, (2015) 144 TC No. 10 The Tax Court has held that the issue of whether legal fees paid by a partner in a sham partnership were deductible, where it wasn’t clear which of the partner’s matters were covered by those fees, was a factual affected item. Thus, the Court had jurisdiction with respect to […]

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Tax Court: No Fraud Penalty For Taxpayer Who Entered Into Tax Shelter Deals

Tax Court: No Fraud Penalty For Taxpayer Who Entered Into Tax Shelter Deals

Jacoby, TC Memo 2015-67   The Tax Court has ruled that a taxpayer who entered into a “Midco transaction” to convert ordinary income into capital gain income, and who took deductions based on a questionable tax-favored investment product, significantly understated his tax liability but had none of the badges of civil fraud.  Click here for […]

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Fifth Circuit disallows $1 billion in deductions from abusive tax shelters

Fifth Circuit disallows $1 billion in deductions from abusive tax shelters

Chemtech Royalty Associates, L.P. v. U.S., (CA 5 9/10/2014) 114 AFTR 2d ¶ 2014-5234 The Court of Appeals for the Fifth Circuit, affirming the district court, has concluded that two transactions entered into by Dow Chemical Company that resulted in approximately $1 billion in deductions should be disregarded for tax purposes. The transactions lacked economic […]

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Court of Appeals for the Ninth Circuit affirms that OPIS tax shelter lacked economic substance

Court of Appeals for the Ninth Circuit affirms that OPIS tax shelter lacked economic substance

Reddam v. Comm., (CA 9, 6/13/2014) 113 AFTR 2d ¶ 2014-936 The Court of Appeals for the Ninth Circuit, affirming the Tax Court, has denied a taxpayer’s capital loss deduction from a tax and investment program, i.e., the Offshore Portfolio Investment Strategy (OPIS), concluding that the transaction had no practical economic effects other than the […]

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Court Case: Active-participation exception to farming syndicate not limited to individuals

Court Case: Active-participation exception to farming syndicate not limited to individuals

Burnett Ranches, Limited v. U.S., (CA 5 5/22/2014) 113 AFTR 2d ¶ 2014-848. The Court of Appeals for the Fifth Circuit, affirming the district court, has concluded that the Code Sec. 464(c)(2)(A) active-participation exception to a partnership being classified as a farming syndicate could be met by an individual who actively participated and owned a […]

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Tax Court strikes down Son-of-BOSS structure with corporate partner

Tax Court strikes down Son-of-BOSS structure with corporate partner

The Markell Company, Inc., TC Memo 2014-86. The Tax Court has determined that a complicated series of transactions entered into by a family-owned corporation were essentially a Son-of-BOSS tax shelter designed to create artificial losses. The Court first found that the entity formed to facilitate the transactions didn’t warrant treatment as a partnership and should […]

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Supreme Court vacates decision on valuation misstatement penalty for sham partnership transactions

Supreme Court vacates decision on valuation misstatement penalty for sham partnership transactions

In Nevada Partners Fund, LLC, (CA 5 6/24/2013) 111 AFTR 2d 2013-2416, cert granted, judgment vacated, and case remanded, the Supreme Court has granted certiorari and vacated a decision of the Court of Appeals for the Fifth Circuit that held that the valuation misstatement penalty didn’t apply in situations where an entire transaction was disregarded […]

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Court of Appeals Case, Tenth Circuit: Tax Shelter Lacked Economic Substance and Penalties Applied

Court of Appeals Case, Tenth Circuit: Tax Shelter Lacked Economic Substance and Penalties Applied

In Blum v. Commissioner, (CA 10th Cir., 12/18/2013), 112 AFTR 2d ¶ 2013-5690, where a taxpayer chose to litigate a tax shelter scheme, i.e., the Offshore Portfolio Investment Strategy (OPIS), that IRS had formally disallowed as a general scheme many years before, the Court of Appeals for the Tenth Circuit has affirmed the Tax Court’s […]

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U.S. Supreme Court finds valuation misstatement penalty applies to partnership’s sham transaction

U.S. Supreme Court finds valuation misstatement penalty applies to partnership’s sham transaction

In a unanimous opinion, the Supreme Court, in U.S. v. Woods, (S Ct 12/3/2013) 112 AFTR 2d ¶2013-5512, resolving a split in the circuits, has concluded that the Code Sec. 6662(e) valuation misstatement penalty could be imposed where IRS denied a partnership’s ordinary and capital loss deductions that arose from a transaction that lacked economic […]

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Payment in STARS transaction demonstrated reasonable prospect of profit

Payment in STARS transaction demonstrated reasonable prospect of profit

In Santander Holdings USA, Inc., v. United States (DC MA 10/17/2013) 112 AFTR 2d ¶ 2013-5403, a district court has concluded that payments which a taxpayer received in a Structured Trust Advantaged Repackaged Securities (STARS) transaction were to be taken into account as pre-tax income to the taxpayer, rather than as a tax rebate, in […]

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Tax penalty for two Texans? Supreme Court weighs partner problem

Tax penalty for two Texans? Supreme Court weighs partner problem

As reported in Reuters, Tax penalty for two Texans? Supreme Court weighs partner problem, the U.S. Supreme Court on Wednesday grappled with a case about a steep penalty the Internal Revenue Service imposed on two Texas businessmen over a sham tax shelter, with legal arguments centered on whether their partnership shielded them or not. The […]

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Court may determine accuracy-related penalties in TEFRA partnership proceeding

Court may determine accuracy-related penalties in TEFRA partnership proceeding

In a case involving a Son-of-BOSS transaction being challenged in a TEFRA unified partnership proceeding, the Court of Federal Claims has held in Arbitrage Trading, LLC v. The United States, (January 30, 2013) Case No. 06-202 T, that it lacks jurisdiction to consider the applicability of the accuracy-related penalty to the outside basis of the […]

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Supreme Court to weigh IRS penalties on alleged tax dodges

Supreme Court to weigh IRS penalties on alleged tax dodges

As reported in Reuters, “Supreme Court to weigh IRS penalties on alleged tax dodges,” the U.S. Internal Revenue Service’s practice of slapping steep, 40-percent penalties on participants in certain alleged tax shelters will soon come to trial before the Supreme Court.  Though it rarely hears tax matters, the court has decided to weigh in on […]

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Wind Tax Credits Breathe New Life Into Our Economy

Wind Tax Credits Breathe New Life Into Our Economy

As reported in the Huffington Post, as we launch into this new year, one of the best pieces of news I’ve heard was the decision by Congress last week to extend important tax credits to one of America’s most promising industries: Wind power. Over recent months, essential job-generating tax credits for American wind companies have […]

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Tax break extension breathes new life into U.S. wind power

Tax break extension breathes new life into U.S. wind power

As reported in Reuters, the U.S. wind industry is powering up once again after Congress extended a critical tax credit that wind companies say will save tens of thousands of domestic jobs and allow more clean energy projects to ramp up this year. About half of the sector’s 75,000 jobs in the United States had […]

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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