Sumner Redstone Liable For Tax On Long Ago Gift
It seems like a really good argument, but it went nowhere. What is disturbing about this is that if you have a tax assessed and you don’t pay it, the IRS has ten years to collect it from you and then you are home free. (I don’t recommend that as a strategy, by the way, even though the current disarray at IRS is making it more practical) It does seem that there should be some limit on when they can come after you about an unfiled return.
Photographer Inspired By Ansel Adams Does Not Fare Well Against IRS In Tax Court
Regardless, the S Corp had passed through nearly $100,000 in loss to Mr. Kantchev in 2007, most of which was carried forward into 2008 along with another nearly $10,000 loss. The IRS did not attack the losses with Section 183 (hobby loss). They had a more subtle trap. Generally, when you make a film you are supposed to capitalize your costs and recover them through depreciation deductions.
Now it happened that until this year producers could elect to deduct production costs. There are limits and qualifications, but it is pretty clear that “Tiger Lily” met those and that Victory could have elected to expense the costs. Only the corporation didn’t. Mr. Kantchev argued that the corporation effectively made the election by deducting the costs. It is worth noting that there are some elections that you make that way. The election under Section 181 – Treatment of certain qualified film and television productions – just does not happen to be one of them.
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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.