You Don’t Need a Matchmaker at the Family Reunion
Seems like since they already were acquainted with one another, they did not really need a qualified intermediary. Just as well they used one, though, since it got them out of that nasty related party resale rule. Well, that’s what they thought. It’s not what the IRS thought, though. And the Tax Court and the Eleventh Circuit agreed with the IRS. Treaty Fields, surprise, surprise, had higher basis in the Barnes and Nobles than Ocmulgee had in the Weslyan property. But that’s not all. Ocmulgee was a C corp and Treaty Fields was a partnership.
Shoemaker’s Children
It is interesting to note that the instructions Form 8082 state “… you generally must report items consistent with the way they were reported to you on Schedule K-1.” It goes on to state, however, that you should report “any inconsistency” between your tax treatment and the way the partnership reported on “its return”. Presumably, Mr. Wallis didn’t see the H&K return, but apparently the 1099-MISC was supposed to be enough of a clue.
Follow Me
Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.