Natural persons who fail to disclose a reportable transaction to the IRS are subject to a $10,000 penalty. Other nonreporting taxpayers are subject to a $50,000 penalty. The penalties are increased to $100,000 and $200,000, respectively, for natural persons and other taxpayers who fail to disclose a reportable transaction that is a listed transaction.
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Transactions of InterestTransactions built on charitable contributions of successor membership interests. In a typical transaction, Advisor owns all of the membership interests in an LLC that owns real property. Taxpayer purchases a successor (or remainder) interest in the LLC, which entitles Taxpayer to own all of the membership interests in the LLC after a set term of years. After holding the successor interest for more than one year, Taxpayer donates it to charity and claims an inflated deduction. “Toggling” grantor trust transactions in which grantors attempt to avoid recognizing gain, or claim a loss greater than any actual economic loss by purportedly terminating and then re-establishing grantor status. These grantor trust transactions usually occur within 30 days. One variation involves a trust funded with gain and loss options; another variation involves a trust funded with cash or securities. For More InformationContact your BKD advisor or:Lisa G. Workman National Tax Director 417.831.7283 |
