Joe Biden’s Tax Returns – No Reason Democrats Need To Overpay Their Taxes
You will find case law about taxpayers having income recharacterized because of low S corporation salaries, but I do not think that there are any such cases where the taxpayers were taking six-figure salaries. The reason for this is probably that there are a lot of C corporation cases where taxpayers are hit for taking salaries that are too high. A recent example was Dr. Afzal Ahmed, who wiped out $2.78 million in profit by taking a bonus. The IRS disallowed a million of the bonus.
As Rubin notes in his article Newt Gingrich was also criticized for using this technique, and I stood up for him too.
Florida Man Blows IRA Bankruptcy Protection
The facts, in this case, were pretty egregious. Will bankruptcy trustees start scrutinizing plan operations closely in order to find some foot fault that would disqualify them? Self-directed IRAs have always made me a little nervous and I find it a little shocking that the transactions described in this decision would not have set off alarm bells at the custodian. I’m thinking there might be a bigger story there.
The practical takeaway I get from the decision is that if you have reason to be concerned about asset protection, you might want to think about whether a self-directed IRA is your best choice since apparently, it is not just the IRS you have to worry about looking over your shoulder.
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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.