Since codification of the economic substance doctrine in March 2010, taxpayers have expressed fears that IRS will assert the doctrine unpredictably, resulting in an in terrorem effect among taxpayers because of the lack of clear authorities interpreting the doctrine and the new 40% strict-liability penalty for falling on the wrong side of it. To promote [...]
Posted tagged ‘Penalties’
Will IRS Limit Exam’s Assertion of the Economic Substance Penalty? TIGTA Report Suggests Not.
December 31, 2010Deconstructing Canal Corp. v. Commissioner – Part III
September 8, 2010By Jonathan Prokup and Dustin Covello We now tackle the third question raised by our original post about Canal Corp. v. Comm’r: when (if at all) should courts defer to the opinion of a reputable tax advisor in deciding whether to uphold an assessment of penalties against a taxpayer? To be clear, deference in this [...]
Deconstructing Canal Corp. v. Commissioner – Part II
August 27, 2010By Dustin Covello and Jonathan Prokup Following up on our earlier post, Deconstructing Canal Corp. v. Commissioner – Part I, we now examine the second question raised by Judge Kroupa’s opinion. Specifically, where a taxpayer relies on the opinion of an advisor to establish a “reasonable cause and good faith” defense to the imposition of [...]
Deconstructing Canal Corp. v. Commissioner – Part I
August 19, 2010By Jonathan Prokup and Dustin Covello Many practitioners were taken aback by the recent Tax Court decision in Canal Corp. v. Commissioner, where Judge Kroupa issued a stinging opinion that not only recast a leveraged partnership distribution as a disguised sale, but also upheld penalties against the taxpayer for what the judge characterized as the [...]
After the Flood: Has Codification Changed Economic Substance?
March 27, 2010By Jonathan Prokup The passage of President Obama’s health-care legislation will no doubt have long-lasting consequences for the economy in general and the health-care industry in particular. Less noticed by the general public, but central in the minds of tax professionals, has been a single provision in the accompanying reconciliation bill that codifies the so-called [...]
Beware the Lure of an Employment Tax “Shelter”
March 12, 2010By George W. Connelly Let’s face it: employees are wonderful. We couldn’t do without them. However, they can be expensive. Beyond their base compensation, employers must pay federal taxes – in addition to withholding the employee’s share of income tax, FICA and Medicare, there is an employer’s share of Medicare and FICA that must deposited [...]
Son of BOSS Case Highlights Ongoing Dispute Over Application Of The Valuation Misstatement Penalty
March 12, 2010By Phil Karter The recent decision in Bemont Investments, LLC v. United States, USDC E.D. Tex., No. 4:07-cv-00009 (March 9, 2010) is another burr in the IRS’s saddle when it comes to enforcement of the substantial valuation and gross valuation misstatement penalties. These two penalties, particularly the 40% gross valuation misstatement penalty, are powerful weapons [...]
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Phil Karter
Jonathan Prokup
David Shakow
George Connelly, Jr.
Buck Buchanan
David Bernard
Dustin Covello
Heather Pesikoff
Hale Sheppard
dustincovello
