Phelan Decision Showed How To Get Capital Gains Treatment While Engaging In Development Acitvity
The Phelan brothers were involved in both real estate development and construction. Along with their partner, they formed a single purpose entity (Jackson Creek Land Corporation-JCLC) to own the particular tract of land in question (which they designated Jackson Creek). JCLC was considered a partnership for income tax purposes. The court found the formation and operation of this single purpose entity very significant. It also noted that the Phelan’s real estate business conducted through other entities concerned commercial real estate rather than residential real estate projects, such as Jackson Creek.
How Much Of Alimony Tax Gap Is From Gaming The System?
Of the 266,190 returns that had discrepancies, IRS examined 10,870. That is 4% so I guess you could say, you are sharply increasing your chance of being audited by deducting alimony your ex-spouse does not pick up as income. On the other hand, you and your ex collectively have a 96% chance of getting away with something that is in your face blatantly wrong even though you are, in effect, ratting yourselves out.
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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.