Sloppiness and the Tax Shelter

Partnership taxation is one of those areas where things may not work exactly as many practitioners expect, and those unexpected workings are things that tax shelter promoters have attempted to make use of.  But if you are going to try and use the technical details of the tax law to force the IRS to grant you a tax benefit that otherwise doesn't seem like something that should happen, it's helpful to follow the detailed requirements yourself. 

Unfortunately for the taxpayer in 7050 Ltd. v. Commissioner, TC Memo 2008-12, that didn't quite happen--and while one bullet was dodged, another problem proved fatal to the benefit the taxpayer was after, and the court never had to deal with whether the shelter actually would have worked if executed as it was supposed to have been.

The materials are available at http://www.ezollars.com/2008-05-05_Sloppy.pdf .

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