Some CRATs are CR*P, So Sayeth the IRS and Department of Justice... [ read ]
In a February blog post, IRS Sends a Shot Across the Bow to Taxpayers With Grantor-Retained Annuity Trusts, I discussed the IRS blowing up a taxpayer's GRAT planning and sending a message to taxpayers and tax professionals. Soon after, another message was sent when the Justice Department filed a civil complaint in a Missouri District Court accusing five individuals and two LLCs of promoting an abusive tax scheme involving charitable remainder annuity trusts (CRATs) to eliminate capital gains taxes.
Tax Court Determines That Officer-Shareholder Compensation is Not Reasonable... [ read ]
In a recent memorandum decision, Clary Hood Inc. v. Commissioner, T.C. Memo. 2022-15, the Tax Court considered the issue of reasonable compensation to an owner/executive of a construction company. Unfortunately, the Tax Court held that the company failed to establish how the amount it deducted as compensation for its CEO and shareholder was both reasonable and paid solely as compensation for his services. To add insult to injury, the Tax Court held the company liable for an accuracy-related penalty for one of the years under consideration.
Texas Comptroller Streamlines Process for Requesting Certificates of No Tax Due with Introduction of New Form... [ read ]
Beginning today, March 15, 2022, anyone requesting a Certificate of No Tax Due from the Texas Comptroller must now use Form 86-114 Joint Request for Certificate of No Tax Due to make the request. This is a change from the prior procedure, which allowed for informal requests by emailing very limited information to a dedicated Comptroller email address.
Supreme Court Asked to Weigh in on FBAR Penalty Circuit Split: Fifth or Ninth? Boyd or Bittner? Per Form or Per Account? Inquiring Minds Want to Know!!!... [ read ]
The Supreme Court passes on most of the cases it is invited to decide, but appellate court splits are often the key to a Supreme Court opinion. Following the 5th Circuit Court of Appeals holding in United States v. Bittner, there now exists a divide among the 5th Circuit and 9th Circuit in the determination of the penalty that can be levied by the IRS when a taxpayer non-willfully fails to report offshore accounts on an FBAR. Mr. Bittner has requested that the Supreme Court settle the circuit court dispute.
January Tax Decisions... [ read ]
This blog post summarizes a few noteworthy court decisions released in January 2022 that pertain to federal tax matters.
IRS Sends a Shot Across the Bow to Taxpayers With Grantor-Retained Annuity Trusts... [ read ]
An IRS legal memorandum involving a grantor-retained annuity trust (GRAT) released on December 30, 2021, should be a wake-up call to taxpayers and tax professionals. The memorandum blows up the taxpayer's GRAT by determining that the business asset held in the taxpayer's GRAT was egregiously undervalued allowing the IRS to disregard the GRAT and treat the entire transfer of assets to the trust as an outright gift. Not surprisingly, there are some unique and difficult facts regarding the GRAT and asset at issue, but it is a reminder of the importance of a good valuation and dotting all the I's and crossing all the T's when doing complex tax planning.
December Tax Decisions... [ read ]
This blog post summarizes a few noteworthy court decisions released in December 2021 that pertain to federal tax matters.
IRS Voluntary Disclosure Program Now Squarely Looks at Virtual Currency Issues and Provides Additional Clarity for Penalty Structure... [ read ]
On February 15, 2022, the IRS announced that it had changed its form (Form 14457) for making a voluntary disclosure with the IRS.
Crypto Clarity on the Horizon? Taxpayer Rejects Complete Government Concession for Issue Clarity... [ read ]
It is not every day that the IRS agrees to pay a refund and the taxpayer declines. In Jarrett v. United States, No. 3:21-cv-00419 (M.D. Tenn.), one taxpayer did just that.
Taxpayer Loses Round One on Substantial Compliance But Still Has a "Reasonable" Chance to Save Its Easement Charitable Deduction... [ read ]
In a February 8th order in Hickory Equestrian LLC v. Commissioner, USTC No. 347-21, the U.S. Tax Court partially granted the IRS motion for summary judgment regarding the taxpayer's $6.4 million easement deduction. The court agreed with the IRS that the partnership's omission of cost basis on Form 8283, "Noncash Charitable Contributions", constituted a failure to satisfy the substantiation requirements of Reg. Section 1.170A-13(c). However, the court left open the possibility that the taxpayer could still save its charitable contribution deduction based on reasonable cause.
