Revenooers Upset About Latest Gift Tax Flounder
Seems IRS has its hair on fire over the latest loss in court on the issue of gifts of assets at discounted valuation amounts.
And to add insult to injury, the court in question is the infamous Ninth Circus (oops – that would be ‘Circuit’) Court of Appeals – one level below the Supremes!
In the case of the Estate of Anne Y. Petter v. Comm, the appellate court affirmed the Tax court which upheld an IRS-favored gift tax valuation formula which produced a higher gift tax than was originally reported by the taxpayer, who had given a number of units in her family limited liability company (LLC) to her kids.
But the kicker in this case was that the taxpayer’s gift documents had provided for the eventuality of a valuation challenge, and in the event of a successful challenge by IRS, then any LLC units gifted and deemed to be worth more than planned would bounce over to the taxpayer’s charitable foundations, thereby giving rise to more income tax deductions!
As recently reported in the Wall Street Journal, “The IRS didn’t like that one bit, because it meant the penalty for an exaggerated discount was simply a donation to a charity, not a check to Uncle Sam.”
WSJ goes on to note that the IRS has declined to comment on the case.
What a surprise.
And speaking of IRS foibles, we hear from the White House’s own Office of Management and Budget that despite all of Obama’s protestations to the contrary about the wonders of government, it still took we and thee something like 8.8 billion hours to fill out federal forms in fiscal year 2010!
The good news is that this number was down about 10 percent from the previous fiscal year, but that’s due mainly to the way in which the government estimates how long it takes to fill out all of their forms.
Kind of like what happens every month, right, when some government stat or other is later revised in a way which makes the government look better.
But the Wall Street Journal further notes that the paperwork burden has increased by about 19 percent over the past decade, up from 7.4 billion hours in fiscal 2000.
And all of this in view of Obama’s incessant bleating about how much he’s doing to see to it that Federal agencies cut red tape in favor of job creation.
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at firstname.lastname@example.org, and invites readers to consider his other commentary at at http://blog.nolo.com/taxes/