Block on Trump's Asylum Ban Upheld by Supreme Court
This tax season, don't be a partner in shelter tax crime like the attorneys at Nix, Patterson & Roach in Texas.
In NPR Investments v. United States, the Fifth Circuit frowned upon the law firm partners' investment scheme to generate $65 million in artificial losses, so they could ultimately create a tax shelter for their huge litigation fees.
So what happened in this case?
The first lesson here is to not piss off the IRS -- especially when you're law partners who won more than $600 million in attorneys' fees from a huge tobacco litigation case, as Courthouse News reports.
Tax shelters are obviously schemes to help people avoid paying taxes. They can appear as offshore accounts, fake non-profit organizations, or dummy investment companies, and can be audited by the IRS.
"The Three Stooges" behind NPR Investments set up a foreign currency investment company, but audits soon revealed that pursuant to the scheme, there's no way that the partners could turn a profit. In fact, the investment scheme reported $65 million in artificial losses in order to deduct taxes, so it was deemed to be a "well-recognized 'abusive' tax shelter," according to Courthouse News.
Perhaps NPR should've realized the error of their ways when their fellow Texans were dinged for setting up a fake partnership for tax shelter purposes.
The judge in NPR Investments fined the trio a 40 percent gross valuation misstatement penalty. Additionally, the judge ordered each partner to pay a 20 percent penalty for the portion of underpaid taxes that's connected with any substantial, under reported income tax.
Luckily for NPR Investments and the law firm, they are both LLCs. Limited partners are protected from personal liability for the company's business decisions. So in NPR's case, each member's personal assets are probably safe when it comes to collecting the shelter tax penalties.
So when it comes filing your firm's taxes this year, be sure to be upfront with Uncle Sam because he's always watching.
Want more? Like us on Facebook.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.
Sign into your Legal Forms and Services account to manage your estate planning documents.Sign In
Create an account allows to take advantage of these benefits: