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By on February 20, 2017
On February 16th, the Federal Court of Appeals for the Sixth Circuit issued a very entertaining and interesting opinion in Summa Holdings Inc. v. Commissioner, holding that the taxpayers' use of a Domestic International Sales Corporation (DISC) and two Roth IRAs for their congressionally sanctioned purposes - tax avoidance - was permissible. The 6th Circuit opinion reversed a Tax Court decision that upheld an IRS determination that the substance-over-form doctrine allowed the transactions to be re-characterized as dividends to the taxpayers followed by excess Roth IRA contributions. The IRS had argued that the transactions should be re-characterized although it agreed that the taxpayers had complied with the relevant Tax Code provisions and that the purpose of the provisions was to lower taxes.
By on February 17, 2017
On January 19, 2017, the Texas Third Court of Appeals (the "Court") in Agri-Plex Heating and Cooling, LLC v. Hegar found that a business buyer may not be able to escape successor liability for hidden tax liabilities assessed after the purchase occurs. Agri-Plex Heating and Cooling, LLC v. Hegar, No. 03-15-00813-CV (Tex. App.-Austin January 19, 2017, no pet. h.) (mem. op.)). As a result and moving forward, a buyer purchasing a business should be cautious and plan accordingly because it could be liable for taxes incurred by the seller before the purchase but not known or ascertainable by either party at the time of closing.
IRS Launches New Audit Initiatives Targeting 13 Specific Tax Issues
By on February 2, 2017
The IRS Large Business and International division – which serves corporations, subchapter S corporations, and partnerships with assets greater than $10 million – has announced a new series of targeted audits, referred to as "campaigns." These campaigns will target 13 specific issues affecting a broad spectrum of taxpayers and industries, and marks a significant step forward in the IRS' move toward issue-based examinations.
