In the past, both the staff of JCT and the Senate Finance Committee have recommended that corporate participants be required to disclose to shareholders the payment of understatement penalties exceeding $1 million and assessed in connection with a corporate
tax shelter. The JCT staff further recommended that the disclosure be in the form of a separate annual statement or other report provided to shareholders and that the disclosure include the amount of the penalty and the factual setting under which the penalty was imposed.
Planning Point: An investment that is considered a
tax shelter is subject to restrictions, including the requirement that it be disclosed and registered.
The Tax Court also pointed out that PwC had no stake in the outcome of the Countryside transactions that Egan gave advice on and that the firm was paid on the same hourly basis for the advice as it was for the tax preparation services provided by Egan to the Winn organization as evidence that the advice was not the promotion of a
tax shelter.
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.
Some recent research investigates
tax shelters. Desai (2003) compares taxable income reported on financial statements to actual tax collections and detects a growing wedge between these two series.
In the 1990s, nearly every big and midsize accounting firm was moving aggressively into the
tax shelter business for individuals and corporations, and the growth attracted the attention of U.S.
Both bills impose new penalties up to $200,000 for failure to comply with existing
tax shelter disclosure regulations, and increase the penalties for underpayments related to transactions required to be disclosed under the regulations.
One tax term that comes up at this time of year is
tax shelter. A
tax shelter does just what the term implies -- it shelters your other income from income tax.
The primary efforts to confront the
tax shelter issue have been in the tax courts.
The 100 per cent
tax shelter stimulated production and the following two years saw a resurgence of feature filmmaking.
* Through regulations and other forms of guidance issued since 1999, the IRS has clearly put tax practitioners on notice that it considers
tax shelter transaction that generate noneconomic tax losses as not allowable for federal income tax purposes.
