Planning Point: An investment that is considered a tax shelter
is subject to restrictions, including the requirement that it be disclosed and registered.
In a decision released shortly after the Tax Court's decision in the Countryside case, the Seventh Circuit in Valero upheld the district court's order, rejecting Valero's claim that the tax shelter
exception to the tax practitioner/client privilege did not apply to the documents in question.
An organizer of a tax shelter
is required to register the tax shelter
with the IRS on Form 8264, Application for Registration of a Tax Shelter
, on the first day the tax shelter
is offered for sale.
On its own, outside of the tax shelter
initiatives, Appeals does not have the authority to grant this benefit.
Schallheim and Wells (2006) measure nondebt tax shields based on the difference between taxes paid and financial statement tax expense in an attempt to capture the effect of "off financial statement" deductions such as accelerated depreciation, stock option deductions, tax shelters
, and the like.
Now with its admission of "unlawful conduct," KPMG--along with law firms and banks with which it jointly sold tax shelters
--will be more vulnerable to lawsuits from tax shelter
clients who had to pay the IRS back taxes and penalties.
You should always seek professional advice before purchasing a tax shelter
These conditions include: 1) fees of more than $100,000 paid to outside firms for assistance in creating the shelter, 2) confidentiality agreements between the participating parties involved in the tax shelter
, 3) sheltering of at least $5 million, and 4) the use of a "straw man" that doesn't gain any tax benefit.
The final instructions indicate that a taxable party to a prohibited tax shelter
transaction must provide a statement, to any tax-exempt entity that is party to the transaction, that the transaction qualifies as a prohibited tax shelter
Because these actions have substantially curbed tax shelter
activities, no further action is warranted.
The sole issue before the appellate court was whether the tax shelter
investors had a legitimate claim of privilege that precluded the disclosure of their names to the IRS under IRC section 7525: