Tax Court Approves Penalty But Does Not Allow IRS To Pile On
Photocredit Pixabay - Pexels Originally published on Forbes.com. Just because somebody believes things that I find preposterous and even harmful, doesn't stop me from...
IRS Drubbed In Tax Court On Partnership Interest Deductions
As it turned out, William Lipnick never received any of those debt-financed distributions. The distributions had gone to his father Maurice Lipnick, who had transferred some of the interests to Willam during his lifetime with the balance passing after his death in 2013.
This made William’s relationship to the partnership debt different than his fathers. To William, the debt was part of his acquisition basis in the partnership. For Maurice the debt traced to however he happened to spend the money – likely making it investment interest. For William, the debt traces to his acquisition of the partnership interest making it deductible against the partnership income allocations.
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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.