scholarly journals Tax Shelters Sound Strategy Or Dangerous Game?

2011 ◽  
Vol 4 (4) ◽  
Author(s):  
Paul Masar ◽  
Scott Butterfield
Keyword(s):  
At Risk ◽  
Home Ownership ◽  
Internal Revenue Service ◽  
Retirement Plans ◽  
Internal Revenue ◽  
Tax Shelter ◽  
Tax Shelters ◽  
Activity Loss

Tax shelters, once thought to be extinct due to the at-risk and passive activity loss rules, continue to appeal to corporations and wealthy individuals.  While some legal activities such as owning your own business, home ownership, retirement plans, and like-kind or section 1031 exchanges may allow you to “shelter” income, some individuals and organizations continue to invest in schemes that the Internal Revenue Service finds unacceptable.  Known as abusive tax shelters, the IRS issued a new set of regulations on February 28, 2003 in an attempt to identify these transactions, and ultimately, end their use by taxpayers.  This article provides an overview of tax shelters, highlights some of the more famous tax shelter scandals, and provides guidance on the rules surrounding the use of tax shelters.

Required Minimum Distributions

2020 ◽  
Vol 52 (4) ◽  
pp. 127-137
Author(s):  
John G. Kilgour
Keyword(s):  
Life Expectancy ◽  
Internal Revenue Service ◽  
Retirement Income ◽  
Defined Contribution ◽  
Next Generation ◽  
Retirement Plans ◽  
Internal Revenue ◽  
Individual Requirement

Required minimum distributions (RMDs) are an important part of individual requirement accounts and defined-contribution retirement plans including 401(k), 403(b) and 457(b) plans. Such plans are intended to provide retirement income for the account owner and his or her spouse. They are not intended to pass untaxed wealth on to the next generation. RMDs do that by requiring that a portion of the balance in an account is distributed (and taxed) each year beginning by age 70½ (recently extended to age 72). This article examines the origins and extensions of RMDs, how they are calculated and how they work. It then assesses the recently enacted SECURE Act and the proposed updated Internal Revenue Service tables of the life-expectancy factors used to calculate the amount of the annual RMDs.

University 403(b) Plan Litigation

2017 ◽  
Vol 49 (3) ◽  
pp. 177-184
Author(s):  
John G. Kilgour
Keyword(s):  
California State University ◽  
Class Action ◽  
Internal Revenue Service ◽  
State University ◽  
Retirement Plans ◽  
Internal Revenue ◽  
Department Of Labor ◽  
Labor Regulations ◽  
Fiduciary Responsibility ◽  
Retirement Income Security

There have been a number of class action lawsuits filed against Section 403(b) retirement plans sponsored by prominent private sector universities alleging breaches of fiduciary responsibility and other failures prompted by new Internal Revenue Service regulations issued in 2007 under the Employee Retirement Income Security Act of 1974. More recently, the California State University 403(b) plan has been targeted for a class action lawsuit under state law. This article examines Section 403(b) plans, Internal Revenue Service and Department of Labor regulations and employer responses to the new rules. The consequences of these lawsuits could be immense.

scholarly journals An Empirical Examination Of The Effect Of The Section 465 At-Risk Rules On Equipment Leasing Tax Shelters

2011 ◽  
Vol 8 (4) ◽  
pp. 122
Author(s):  
John M. Beehler
Keyword(s):  
At Risk ◽  
Tax Reform ◽  
Empirical Examination ◽  
Tax Shelter ◽  
Tax Shelters ◽  
The Law ◽  
Tax Benefits ◽  
Equipment Leasing ◽  
The Impact

Congress enacted the at-risk rules in the Tax Reform act of 1976 to curb tax shelter abuses. It later added a recapture provision to the at-risk rules in the Revenue Act of 1978 designed to prevent taxpayers from temporarily increasing the amount at risk at year end. Tax Shelter promoters have attempted to avoid the at-risk rules through questionable interpretations of the law. This study examines various interpretations of the at-risk rules and the impact of the recapture provision. It concludes that (1) the inclusion of debt assumed in the amount at risk significantly affects the tax benefits accruing to investors whereas the inclusion of the note payable in the amount at risk does not; and (2) the recapture provision applies in many cases to equipment leasing tax shelters and operates as intended to limit tax benefits to investors.

Tax Practitioner Credentials and the Incidence of IRS Audit Adjustments

2003 ◽  
Vol 17 (1) ◽  
pp. 1-14 ◽  
Author(s):  
Peggy A. Hite ◽  
John Hasseldine
Keyword(s):  
Random Selection ◽  
Internal Revenue Service ◽  
Internal Revenue ◽  
Tax Returns ◽  
Selection Of

This study analyzes a random selection of Internal Revenue Service (IRS) office audits from October 1997 to July 1998, the type of audit that concerns most taxpayers. Taxpayers engage paid preparers in order to avoid this type of audit and to avoid any resulting tax adjustments. The study examines whether there are more audit adjustments and penalty assessments on tax returns with paid-preparer assistance than on tax returns without paid-preparer assistance. By comparing the frequency of adjustments on IRS office audits, the study finds that there are significantly fewer tax adjustments on paid-preparer returns than on self-prepared returns. Moreover, CPA-prepared returns resulted in fewer audit adjustments than non CPA-prepared returns.

The Internal Revenue Code and Religious Institutions

2017 ◽  
Author(s):  
Edward A. Zelinsky
Keyword(s):  
Social Security ◽  
Income Tax ◽  
Income Taxes ◽  
Religious Institutions ◽  
Retirement Plans ◽  
Payroll Taxes ◽  
Internal Revenue ◽  
Tax Exempt ◽  
Unrelated Business

This chapter examines the Internal Revenue Code’s treatment of religious entities. The federal tax statute embodies three diverse approaches to taxing and exempting sectarian organizations and activities. Some provisions of the Code—the charitable deduction, the general income tax exemption for eleemosynary institutions, the federal unemployment tax—exempt religious entities and other charitable, educational, and philanthropic institutions. Other provisions of the Code narrowly target churches for tax exemption. For example, the Code relieves churches of filing requirements with which nonchurch religious entities and other eleemosynary organizations must comply. Similarly, churches’ retirement plans receive lenient treatment under the Code. Churches receive procedural protections from IRS audits.Yet other provisions of the Code tax churches as for secular entities. Churches generally pay FICA taxes—Social Security and Medicare payroll taxes—on the compensation paid to nonclerical employees. These payroll taxes can be considerable. Churches also pay federal income taxes on their unrelated business incomes.

The Effects of Capital Campaigns on Local Nonprofit Ecologies

2018 ◽  
Vol 47 (3) ◽  
pp. 645-656 ◽  
Author(s):  
Joanna Woronkowicz
Keyword(s):  
Nonprofit Organizations ◽  
Internal Revenue Service ◽  
Arts Organizations ◽  
Natural Distribution ◽  
Capital Campaign ◽  
Internal Revenue ◽  
Capital Campaigns ◽  
Short Period ◽  
Distribution Of Resources ◽  
Nonprofit Arts

When charities launch capital campaigns, they hope to attract large amounts of resources in a relatively short period of time; however, other charities in the area are likely to see such campaigns as disruptive to the natural distribution of resources to area nonprofits by disproportionately directing area donations to a single organization. This study seeks to understand the effects capital campaigns have on both the fundraising performance of other nonprofits and the makeup of a local nonprofit ecology. The analysis uses data from a randomly sampled set of nonprofit arts organizations that had capital campaigns for facilities projects between 1994 and 2007 and Internal Revenue Service Form 990 data on 501 (c) (3) nonprofit organizations in each county. The results illustrate that a capital campaign positively affects the fundraising performance of other charities in a local nonprofit ecology, but that campaigns decrease the size of a local nonprofit ecology.

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