Taxpayer Controversy

Representative Cases:​

​UNREASONABLE COMPENSATION - Undislosed expert for defense of the principal of a China based research and development effort for a "pharmaceutical" product not yet FDA approved for use in the U.S.  Taxpayer claimed $60 million net operating loss was the culmination of annual losses where tax returns had never been filed.  IRS also  questioned executive's reporting of interest income on loans to the venture as his only source of income (i.e. no salary, etc.).

LACK OF ECONOMIC SUBSTANCE - Taxpayer created a unique retirement vehicle for participating members of an Indian tribe.  The intention was to expand the program to other tribes as well.  Members were able to shelter approximately 75% of their tribal income by taking deductions for the payment of consulting fees for the program and interest expense on loans to the new entity.

FILING OF AMENDED BUSINESS AND PERSONAL TAX RETURNS - Undisclosed expert for tax counsel.  Client Husband, involved in under reported income claims by Wife in separate divorce proceeding.  Used available information to reconstruct corrected business income for several years.  Taxpayers were the owners of a mobile home sales business.  Results believed to have been used by client in temporary orders hearing.  Multiple attorney withdrawals and garnishment actions delayed divorce proceedings.

​FAILURE TO REPORT INCOME - Undisclosed expert for defense of the owner of a small business accused of under-reporting his income for federal tax purposes.  Taxpayer owned a window replacement business and a failed restaurant.  Bank records analyzed to show inherited and other non-income funds as a source of cash to the taxpayer.  Case settled at field investigation level.