Seventh Circuit Allows Do-over On Tax Court Stipulations For Deceived Taxpayers
Mr. Shamrock and Ms. Bigg had filed a petition with the Tax Court, pro se, disputing a $170,000 notice of deficiency. They hired Grant Niehus to represent them before the IRS and Tax Court. Mr. Niehus represented himself as being a lawyer and a CPA. It turned out that even though he had been to law school, he had not been authorized to practice law since 2009 and he was not a CPA at all.
Mr. Niehus had negotiated stipulations that included an agreement to take only 50% of a $435,751 deduction for real estate losses. After signing the stipulations, Mr. Shamrock and Ms. Bigg learned of the deception. They hired Sheldon Drobny as their representative. Mr. Drobny was a CPA and authorized to practice before the IRS and the Tax Court. Mr. Drobny requested that the stipulation be set aside.
LLC Lease Structure Costs Idaho Charity Property Tax Exemption
Putting on my federal tax hat, which is pretty much my favorite, I would think that was no problem. A single member LLC, unless it elects otherwise, is a disregarded entity. That means that you can freely take things out of it and put things into it without recognizing gain or loss and, for federal income tax purposes, transactions between you and your single member LLC have as much tax significance as transactions between me and my shadow. So the fact that the Youth Ranch was leasing from the LLC for the greater of $25,000 per month or its mortgage payments would be a transaction that could be washed right out of any federal tax significance.
Then they applied for a property tax exemption on the building, which apparently was solely dedicated to charitable use. Oops.
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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.